Ofgem removes barrier to elective half-hourly settlement

Ofgem has approved a measure to prevent the re-emergence of a problem whereby customers moving to half-hourly electricity settlement would be double charged for use of the transmission network in the year in which they migrated.

The issue concerns customers in profile classes 1-4, which cover all domestic customers and some smaller non-domestic customers.

It arose because the transmission charges for non-half-hourly (NHH) meters are based on consumption during peak periods throughout the whole year, whereas the charges for half-hourly (HH) meters are based on consumption during the three half-hours of greatest demand over the winter season – also known as the triads.

According to Ofgem, this created a barrier to voluntary migration. To rectify the situation, the regulator approved in 2016 the CUSC modification CMP266, which stipulated that consumers moving to half-hourly settlement should be charged under the non-half-hourly methodology for the year in which they migrate. They should then be charged under the half-hourly methodology in future years.

The modification also said that customers within measurement classes F and G should be charged under the non-half-hourly methodology from April 2017 to April 2020, by which point Ofgem expected half-hourly settlement to be mandatory for all customers.

For context, all non-half-hourly metered customers within profile classes 1-4 fall within measurement class A. If they shift to half-hourly settlement then they are transferred to F and G.

However, Ofgem announced in September that it was delaying its final decision on the introduction of mandatory half-hourly settlement until the third quarter of 2020, meaning the problem would return temporarily.

To prevent this from happening, the regulator has now approved the CUSC modification CMP318, which extends the measure until 31 March 2023.

Ofgem said the new cut-off is aligned with the planned implementation date for the changes to the transmission charging methodology which it is considering as part of its ongoing review of forward-looking charges and grid access arrangements.

CMP318 was proposed by National Grid Electricity System Operator.