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Ofgem has proposed delaying an increase in the amount the Data Communications Company (DCC) will be penalised by if it fails to hit performance targets.
In a decision document published today (11 January) the regulator confirmed plans, first unveiled in October, to increase the company’s revenue at risk against the operational performance regime (OPR) from a minimum of £7 million to £10 million of revenue it recovers in excess of costs.
Once implemented the increase will apply to all three components of the OPR, retaining the present weighting of 70 per cent for system performance and 15 per cent each for customer engagement and contract management.
In October Ofgem decided to incentivise five system performance measures: service availability, firmware management, install and commission, prepayment, and change of supplier.
As of 2021/22, service availability, install and commission and prepayment will each hold a 33.3 per cent weighting, while firmware management and change of supplier will hold a 0 per cent weighting.
In addition, it decided to measure performance, where relevant, by meter generation (SMETS1, SMETS2) and assess performance separately across the three DCC communication service regions (north, central and south) for SMETS2 meters.
However following concerns raised by the DCC, the regulator says 2021/22 could be used as a transition phase for the this incentive.
In explaining its decision to delay its implementation, Ofgem said it considers it reasonable to provide DCC with time to trial the new measures and make improvements to its performance before its margin is put at risk.
As such Ofgem has published a further consultation which proposes implementing the increase in regulatory year 2022/23 as opposed to 2021/22 as was initially planned. The consultation asks whether respondents would prefer either a six month or one year grace period.
Ofgem is also proposing to run a trial of the customer engagement and contract management incentives during 2020/21.
Additionally Ofgem is consulting on the process for implementing the changes, including on setting the performance levels and values for the system performance penalty mechanisms; and detailed processes for the customer engagement and contract management incentives.
The regulator expects to publish its decision in March this year.
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