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Ofgem has defended new powers to develop and modify industry codes, which it is set to receive under the current Energy Bill, claiming they have been necessitated by companies dragging their feet on programmes such as the introduction of half hourly charging for business customers.
The regulator is set to be handed the new powers under the bill, currently in pre-legislative scrutiny, at the recommendation of the Competition and Markets Authority.
Ofgem will be able to directly modify industry codes to drive through significant change such as half-hourly charging for domestic customers and next-day switching.
Last week Ofgem’s partner, consumers and competition, Rob Salter-Church told MPs that delays to the introduction of half hourly charging for business customers were a prime example of the need for the controversial new powers.
Salter-Church told the Energy and Climate Change select committee it took four years to develop the necessary code modifications “despite Ofgem encouraging industry to try to co-ordinate across the codes”.
He said: “That programme, from start to finish, will take six years. There are only about 150,000 sites that will be transferred into mandatory half-hourly settlement, as opposed to the 30 million that we are considering under [the domestic settlement] programme.”
Ofgem’s acting senior partner, networks, Maxine Frerk said: “Clearly industry have the expertise in the detail of those codes and we would have to collaborate very closely with them but what they lack… is any real incentive to make those changes.
“These are changes that are going to improve competition in the market. Inevitably, industry themselves do not have the incentive to drive them through.”
Last year representatives of the Balancing and Settlement Code Panel and Npower Business Solutions director of markets and innovation Wayne Mitchell both blamed Ofgem for the delay to the half-hourly charging programme, telling the Energy and Climate Change select committee the regulator’s reluctance to use its existing powers meant changes were not driven through.
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