Ofgem fast-tracks price freeze payment arrangements

Ofgem has granted urgent status to two code modifications appointing Elexon and Xoserve as the respective administrators for the electricity and gas payment schemes for the government’s Energy Price Guarantee.

The guarantee will limit unit rates and standing charges for electricity and gas for two years to bring the annual energy bill for a typical household down to £2,500.

From 1 October, the average unit prices for dual fuel customers on default tariffs paying by direct debit will be capped at 34p/kWh for electricity and 10.3p/kWh for gas, with the government covering the difference between these rates and suppliers’ costs.

For fixed tariff customers paying by direct debit, unit rates will be reduced by up to 17p/kWh for electricity and 4.2p/kWh for gas to bring them down to, but not below, “floor” rates averaging 34p/kWh and 10.3p/kWh respectively.

National Grid Electricity System Operator has proposed a modification to the Balancing and Settlement Code (BSC) named P446 that would appoint Elexon as the administrator for the payment scheme for electricity suppliers, whilst Northern Gas Networks has proposed an equivalent modification to the Uniform Network Code (UNC) designated UNC824 that would appoint Xoserve as the administrator for the payment scheme for gas suppliers.

Both modification proposals state that details of the payment schemes, including payment calculations, timetables and reconciliation processes, will be set out in a scheme document established by the secretary of state. This document will also include suppliers’ obligations and the scheme agreement they will need to accede to be eligible to receive payments.

According to the proposal document for UNC824, gas shippers for suppliers will be eligible to participate in the gas payment scheme and will be expected to do so. It also noted Xoserve, the central data services provider for the gas system, will need to make relevant changes, including approvals for data permissions, without following the standard data services contract procedures.

Ofgem has granted urgent status to both modifications to ensure they can be approved in time for the introduction of the Energy Price Guarantee on 1 October. The BSC and UNC panels are scheduled to submit their recommendations to Ofgem on 22 September, with the regulator making its final decision one week later.