Ofgem may be ‘edgy’ about supplier non-compliance with P272

Half hourly meter reading now mandatory for larger non-domestic energy customers

Energy regulator Ofgem may be “edgy” about non-compliance after the introduction of P272 and mandatory half hourly metering for relevant businesses customers, an expert has told Utility Week.

The assertion was based on the content of “strongly worded” letters issued by Ofgem in the run up to the market milestone, which came into effect on 1 April.

“[Ofgem] have been sending out letters and they don’t normally do that unless they are getting edgy,” said Tony Thornton, head of transformation at energy market governance organisation, Gemserv.

He continued: “I am sure they will be concerned about compliance and…I wouldn’t have thought they will be shy in coming forward to deal with any suppliers that are non-compliant.”

P272 requires all energy suppliers with non-domestic customers in profile classes 5-8 to provide them with smart or automatic meters which can support half hourly metering. The new regulation came into force on Saturday, a year after it was originally intended.

Thornton observed that while suppliers have had “plenty of time” to put the necessary provisions in place for half hourly metering, it is still likely that there will be “laggards” after the P272 “go-live” date.

While Thornton said he had no evidence that specific individual suppliers had failed to meet the P272 deadline, he did say that Ofgem’s “strongly worded” letters to the market in early 2017 suggest the regulator has “had feedback to suggest the deadline will be challenging”.

“I’m looking at the tone of some of these [letters] and it looks a little bit like finger wagging,” he added.

Ofgem itself declined to comment further on the likelihood of non-compliance with P272, but reiterated the message sent to the market in its letter of 22 February which stated:

“After the implementation date, we will continue to work with Elexon to monitor whether suppliers have complied with their obligations, including their compliance in respect of newly acquired customers. In the event of non-compliance, we will consider whether to prioritise opening an investigation on the basis of the facts, as set out in our Open Letters.”

The letter also reminds laggardly suppliers that they will have to “fully co-operate with any compliance action that they are involved in”.

The introduction of mandatory half hourly metering for non-domestic energy users is designed to incentivise innovation in the energy market via new time of use tariffs and demand side response.

Thornton told Utility Week that the benefits of P272 will not primarily be associated with improved billing accuracy – a key benefit anticipated from the domestic smart meter rollout. Instead, the new regulation represents a “kick” to the industry to do more to “drive some kind of behavioural change through different use patterns”.

Gemserv’s transformation expert also said he expects the arrival of P272 to “break open the data collector and the meter operator space a little bit so that these kinds of larger non-domestic customers can go to alternative sources, for example, for data collection”.

“It’s around that analytics side of thing that it get a little bit more interesting,” he said, “because it means that customers can go to different sources to get analysis and understanding and data management services.”

Thornton cautioned market commentators not to expect the benefits of P272 to appear “magically overnight” but, he said “you can see why Ofgem are so keen on it, because it will set up and environment to encourage these kinds of things to happen.”