Elexon to oversee half hourly settlement

Code administrator Elexon has been selected by Ofgem as the senior responsible owner (SRO) for the implementation of Market-wide Half Hourly Settlement (MHHS).

Under the proposals Elexon will have responsibility for establishing, operating and managing appropriate programme structures and governance to ensure timely and effective implementation of MHHS.

Previous proposals had Ofgem as both programme sponsor and SRO. However in a consultation document published today (22 January) the energy regulator unveiled plans to place responsibility for management and delivery of the programme with industry, while Elexon takes on the role of SRO.

Elexon will be required to manage the transition to new systems and services, co-ordinate activity and communicate with stakeholders, as well as monitor and report on the implementation progress of more than 180 organisations.

While reliance on the regulator will be reduced, Ofgem will remain as programme sponsor which will ensure it can exercise step-in powers if needed. Furthermore, Ofgem will be responsible for approving or rejecting the changes to codes which ultimately implement settlement reform.

In its consultation document, Ofgem highlights two issues it believes need addressing.

One is the challenges around securing streamlined decision making and ensuring that all parties progress in line with programme requirements and plans.

To mitigate these, Ofgem proposes to establish a “robust governance structure” and by placing binding obligations on parties to engage and operate in accordance with the programme management and governance structure.

Additionally, Ofgem sees risks around conflicts of interest, including those arising from parties with responsibilities for system delivery also having responsibility for programme management and decision making.

As such it also proposes to implement arrangements to ensure all parties have an appropriate voice in governance, an appropriate separation of responsibilities, decision making that is clearly focused on consumer outcomes, and a strong independent assurance function with a specific remit to consider conflicts of interest.

Mark Bygraves, Elexon chief executive, said: “Market-wide Half Hourly Settlement is a major regulatory reform, which will help to deliver net zero and allow customers to play their part in meeting the net zero objective.

“Since 2017, Elexon’s settlement experts have worked closely with Ofgem and the industry in developing the new Target Operating Model (TOM), which sets out all the industry services and settlement arrangements for MHHS.

“Our wealth of experience in managing settlement and changes to the BSC puts us in good stead to step up and perform this role and we look forward to continuing to work with Ofgem and the industry to do so.

“We are developing a detailed strategy on how we would lead the programme during the design, build and test phases, which we will share in more detail with our customers and stakeholders soon.

“Moving to Market-wide Half Hourly Settlement is a ‘once in a generation’ change. We truly believe this transformation programme is pivotal to enabling the wider smart system and the consumer and societal benefits that will result from it.”

Ofgem is due to confirm how and when to implement MHHS this Spring.