Ofgem sets out key criteria for MHHS intervention

Ofgem has outlined a list of five key scenarios in which it says it would intervene to make decisions in the process towards market-wide half hourly settlement (MHHS).

The regulator finally gave the green light to MHHS last week and said the implementation of the new system is expected to take place over a period of four and a half years, with a go-live date of October 2025.

While Balancing and Settlement Code manager Elexon has been named as the senior responsible owner (SRO) overseeing the programme, Ofgem proposes to intervene only in response to certain triggers, or where the independent assurance provider (IPA) recommends an issue be escalated to the regulator.

Ofgem listed the five thresholds in its consultation on the implementation of MHHS, its proposed governance framework and structure.

The five criteria are:

• If there is a proposed “material or fundamental change” to the target operating model (TOM) baseline
• If there is a significant proposed or forecast shift in either costs (materially higher) or benefits (materially lower) than its impact assessment suggests
• Where significant delays to planned implementation are experienced or forecast
• Where a situation arises in which a party or parties argue that their interests are being treated less favourably, without good reason, than those of other parties
• Where a situation arises in which a stakeholder argues that the design process is not taking proper account of the interests of end consumers, or a change would have a material impact on consumers

Ofgem added it does not intend to get involved in the day-to-day running of the programme and that it would ideally expect to be actively involved in only limited circumstances as a decision maker. It expects further involvement will primarily be related to taking decisions on recommendations put forward by Elexon or the IPA where the thresholds are met.

“In exceptional circumstances we could go further and direct the SRO or programme parties to take a particular course of action to bring the programme back on track,” the regulator added.

The consultation further outlines a set of assurance principles which it considers must be met by the IPA, as well as the obligations on relevant parties such as Elexon, the Data Communications Company (DCC) and energy suppliers.

Responding to last week’s decision, large energy supplier Eon said the announcement was a “really important part of the development of the retail market”.

A spokesperson added: “It sets the foundation for a range of positive measures that will help customers take control of their energy and allows energy suppliers to bring forward better services and technology – all of which contribute to reducing emissions and helping to deliver the UK’s net zero target.

“This is squarely in line with what we want for a future energy system and we want it as soon as possible.”