Ofgem approves advanced half-hourly settlement deadlines

Ofgem has approved a set of early deadlines for advanced current transformer meters to be settled on a half-hourly basis.

The regulator said segregating the migration of these “relatively complex meter points” to half-hourly settlement will reduce risks to the wider transition.

Current transformer meters are used for loads that are too large to be practically measured by whole current meters. These meters use transformers to step down the current to a measurable level. The readings they take are then multiplied by the step down ratio to determine the current of the full load. This is in contrast to whole current meters where the full load passes through the meter and is measured directly.

In 2014, Ofgem approved modification P272 to the Balancing and Settlement Code (BSC), which required all advanced meters within profile classes 5 to 8 to be settled on a half-hourly basis. This defined an advanced meter as one installed under Standard Licence Condition (SLC) 12.18 of the electricity supply licence. However, the requirement for half-hourly settlement introduced by P272 does not cover advanced meters installed under other SLCs.

Ofgem has now approved the BSC modification P432, which will require new connections with current transformer meters to be settled on a half-hourly basis from modification’s implementation date of 15 April 2024. It will also require all current transformer meters to be half-hourly settled by the M14 milestone for the Market-Wide Half-Hourly Settlement (MHHS) programme. M14 is the deadline for all suppliers to accept Metering System Identifiers under the new Target Operating Model. Last year, this deadline was postponed until March 2026.

P432 will additionally align the BSC definition of an advanced meter with the definition in the electricity supply licence.

The original proposal, submitted in July 2022, was for all new connections with current transformer meters to be half-hourly settled from October 2022, and for all current transformer meters to be half-hourly settled by October 2023.

However, Ofgem sent back the modification due to concerns that the transition to half-hourly settlement could unfairly expose customers to excess capacity charges for the use of the distribution network. Those concerns have since been addressed with the approval of the Distribution Connection and Use of System Agreement modification DCP414, which will take effect at the beginning of April.

A revised version of P432, with a new set of deadlines, was resubmitted to Ofgem in November 2022. The final modification report said P432 is expected to affect 50,000 current transformer meters, accounting for 800 to 1,500GWh of electricity consumption each year.

The report noted that the early migration of current transformer meters to half-hourly settlement was recommended by the Code Change and Development Group, which was responsible for building the Target Operating Model for the MHHS programme. It said current transformer meters present a “disproportionate risk in migration and that is why they are being drawn out earlier.”

Nevertheless, the BSC panel voted to reject P432, citing suppliers’ concerns that the higher cost to serve half-hourly settled customers would mean their bills would rise at a time when they are already experiencing high inflation.

The final modification report also highlighted concerns raised by one work group member that suppliers would be reluctant to serve low-volume current transformer customers if they are being settled on a half-hourly basis because it is “too labour intensive.”

Explaining its decision to go against the recommendations of the panel, Ofgem acknowledged that “some-domestic and microbusiness customers” currently face “challenges” in securing competitive contracts, whether they are half-hourly settled or not, but said it is already addressing this issue through a series of consultations on the non-domestic retail market, including one issued in July 2023.

“In this consultation we noted that while the number of contracts available to most non-domestic customers was improving, not all businesses experienced this improvement in outcomes such as those in reported higher risk sectors. We cannot address sector-specific challenges,” it added.

“However, we are currently consulting on proposed licence changes, which we believe will help all non-domestic customers more broadly, in a statutory consultation which closes on 31 January 2024.”

Ofgem also cited the benefits of the MHHS programme more broadly – estimated at £1.6 billion to £4.5 billion by 2045 – and said P432 will “de-risk” the wider transition. It said the approved set of deadlines, although later than originally proposed, will still give enough time to resolve issues that emerge with the migration of advanced current transformer meters to half-hourly settlement.