MHHS should not place limits on elective arrangements

Mandatory half hourly settlement (MHHS) should not place limits on existing elective arrangements within the sector, Octopus Energy’s regulation director has warned.

Rachel Fletcher was speaking to Utility Week after Ofgem set out a roadmap to introducing MHHS in 2025. She pointed to the fact Octopus already uses HHS on an elective basis, with around 40,000 of the disruptor brand’s customers on smart tariffs.

The former Ofwat chief executive said: “From our point of view the concern is to make sure that the timeline doesn’t slow down the innovators and the companies that are actually powering ahead and doing this on an elective basis.

“Industry-wide process change by definition can be lengthy and cumbersome. There are a number of other programmes you can look at to verify that. I think there’s a real opportunity for this programme to learn from the innovators and those that are early adopters of smart tariffs about how you actually do this in a way that is not cumbersome and overly complicated.

“That’s really important and I think it’s really important that the programme itself doesn’t get in the way of innovators and disruptors. I think you could have a really healthy symbiosis of learning what is being done under elective arrangements and making sure that is used to streamline and simplify the overall industry programme arrangements.”

Fletcher also said it was important to ensure other areas of the market properly reflect costs and added that “sharp and appropriate” price signals are needed to drive customer behaviour changes around the pattern of their energy use.

She added: “Now that we are pushing on half hourly settlement, let’s make sure that the balancing market and the charging arrangements also properly reflect differences in time of use costs. Half hourly settlement in and of itself isn’t enough. You need to have really sharp and appropriate price signals to drive that behaviour.”

Elsewhere Marzia Zafar, head of customer policy and strategy at energy tech firm Kaluza, told Utility Week that she would bring the deadline for MHHS forward to 2024 considering forecasts by National Grid of the number of electric vehicle (EV) drivers on the road.

She said: “If it were up to me I would actually make sure that it was implemented around 2024 simply because if you look at the National Grid scenarios and forecasts, they are forecasting millions of cars on the road by 2025.

“What we are interested in as a technology and solutions provider is that MHHS opens the door for customers to get financial incentives to be part of the decarbonisation agenda. We want to make sure that we capture these customers who are buying EVs in 2024/25. We want to be able to give them the financial incentive to engage.”

Meanwhile Mark Bygraves, chief executive of Elexon, the company chosen as the senior responsible owner for the programme, said while there was an “enormous amount of work” ahead the 2025 deadline was a realistic target.

He said: “Whilst four-and-a-half-years seems a long time away in actual fact there is an enormous amount of work that needs to be done. We at Elexon are certainly looking forward to engaging with industry during the coming weeks and months and thereafter and in particular to starting the mobilisation phase of this very important programme.

“In short the timetable is achievable, or is realistic, but we need to get started, we need to get motoring and I look forward to engaging with industry to do that.”