Ofgem: “lack of coordination and pace” in new charging arrangements

Ofgem has attacked power and gas suppliers and distributors for their “lack of coordination and pace” in bringing on new charging arrangements needed if consumers are to benefit fully from smart metering.

The regulator has urged the power industry to up the rate of progress in its deliberations to introduce half hourly (HH) settlement for customers currently on monthly, non-half hourly (NHH) metering.

Ofgem’s stand-in markets chief Rachel Fletcher said were the industry to continue fail to make satisfactory progress Ofgem could intervene: “We have tools available to direct industry to take action, where they have failed to do so or to act in the consumer’s interest,” Fletcher wrote in an open letter.

She added: “In light of the lack of co-ordination between industry parties, we are considering whether new licence conditions or other measures, including a Significant Code Review are necessary to ensure licence holders facilitate the realisation of the long-term benefits of smart metering.”

However the regulator has asked the Balancing and Settlement Code panel to put back by at least a year its proposed April 2015 deadline for mandating a shift to HH settlement for monthly NHH meter users. Ofgem said it needed to the time to be able to factor in any decision following consultation on a new HH distribution Use of System (DUoS) tariff needed to implement HH settlement for consumers on monthly NHH metering.

Fletcher said she accepted the “complexity” of the process but was “disappointed that industry has not progressed the changes necessary to enable consumers to move from NHH to HH settlement.” Fletcher said the industry’s slow pace was “holding up the realisation of the benefits of smart metering.”

The industry has been working on changes to the Common Distribution Metering Methodology since 2012, to create HH charges that will make it possible for the mostly commercial customers using the monthly NHH meters.

Fletcher said government, Ofgem and industry are agreed that smarter markets cannot be realized without changes to the arrangements that underpin how market participants interact with each other and consumers. However, the current Distribution Use of System charging arrangements do not align with allowing consumers on monthly NHH meters – metering profile class five to eight – to move to HH settlement.

Fletcher said the gas sector had also dragged its feet in implementing important reform. Fletcher said there had been sluggish progress in Project Nexus which included reform of gas settlement to link accurately consumers’ consumption and their suppliers’ charges