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Settlement Reform Webinar – Developments and Consultation
Date: 22 July 2020
Location: Online
Time: 10:00
Introduction
On 22 July 2020, Ofgem’s Settlement Reform Team held a webinar to present and seek views
on key aspects of our consultation on the impact of introducing market-wide half-hourly
settlement (MHSS). In the interests of transparency, and recognising the difficulty that some
parties had in following the presentations on the day, we are now publishing a suite of
documents relating to the event. They are:
• the slide pack that we presented on the day
• this document, which provides more detail about the matters covered in the slides
• a Q&A document addressing the questions raised by stakeholders during the event, and
• an audio recording of the event.
We trust that publishing these documents will assist stakeholders in formulating their views on
matters contained in the consultation document and Draft Impact Assessment. The deadline
for responding is 14 September 2020.
Before then, we hope that you will play an active part in our next webinar, which is on 3
September. In drawing up the agenda for that event we have listened carefully to what
stakeholders have told us they want to discuss. We will therefore be focusing on the
implementation timetable, the impact of introducing MHHS for export MPANs, and on the
changes proposed to the settlement timetable. We look forward to discussing these and other
important matters with you on the day.
Overview
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What follows is an outline of the material that we covered in the slides that we presented on
22 July. The running order was as follows:
1. Draft Impact Assessment: costs, benefits (quantified and unquantified) and overall net
impacts
2. Stakeholder discussion about implementation timescale and programme governance
3. Consumer impacts and load shifting assumptions
4. Access to data
5. Target Operating Model
1. Draft Impact Assessment
Key points
The expected net benefit to consumers from MHHS ranges from £1,607m-£4,557m up to
2045. This is based on our preferred option, implementation over 4 years for import and
export MPANs.
The main cost drivers were suppliers’ IT costs and operational costs. Suppliers’ costs varied
considerably, and we are keen to hear from individual companies about the key drivers for
them.
Even the lowest benefit sensitivity scenario (low load shifting scenario - 2h shifting window)
shows substantial positive net welfare benefits above the costs.
We welcome further input from all stakeholders, especially in relation to:
• your own cost drivers and estimated costs
• the effect of Covid-19 on your capacity to start the transition to MHHS and to complete it
within a period of approximately 4 years.
We will seek further opportunities to engage with stakeholders, whether multilaterally or
bilaterally. Please email the team at half-hourlysettlement@ofgem.gov.uk if you’d like to
initiate a conversation with us.
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Slide 7 – developing the economic case for MHHS
The slide summarised the key milestones and activities involved in producing the Draft Impact
Assessment (IA), and noted the key stages of policy development after the current
consultation closes on 14 September. Ofgem remains keen to engage with stakeholders in
order to refine the existing evidence base and we plan to publish the Full Business Case, with
Final IA, as part of our final decision on MHHS in the spring of 2021. Licence amendments and
code changes would follow, as appropriate, thereafter.
Slide 8 – draft IA options under consideration
This slide outlined the three main options that Ofgem has considered: option 1 - keep the
elective HHS arrangements; option 2 (preferred) - MHHS for all MPANS with a transition
period of about 4 years; option 3 - MHHS for import-related MPANs with a transition period of
about 5 years.
Based on the evidence we have seen, we consider that:
• option 1 would not deliver sufficient levels of load shifting to meet our objectives for
the project; and
• option 3 would unnecessarily delay the benefits arising from MHHS for import-related
MPANs, and would preclude any benefits that could arise from MHHS for export-related
MPANs.
We have considered whether a transition to MHHS could be completed more quickly, for
example within a 3-year period. After receiving feedback, we concluded that it would not be
practicable for a number of reasons, including commitment of industry resources to delivering
faster switching.
Balancing the desire to deliver the benefits of MHHS as soon as possible, with the need to
ensure that the new arrangements (including central systems) are robust, we believed - at the
time of our analysis - that a transitional period of approximately 4 years would be appropriate.
This timeframe still represents a challenge, but we consider it likely to be realistic and
achievable with appropriate programme governance. However, the analysis that underpinned
the IA was carried out before the Covid-19 emergency.
Slide 9 – Headline Draft IA net benefits of our preferred option for MHHS
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The slide noted that the expected net benefit to GB consumers ranges from £1,607m-£4,557m
up to 2045.
This figure is in Net Present Value terms (NPV) relative to the counterfactual using 2018 as
the base year. Throughout the draft IA, economic costs and benefits are in 2018 financial year
prices covering the period from 2021 to 2045. The net benefit refers to the modelled benefits
to consumers and the monetised direct costs and is calculated by subtracting the monetised
direct costs from the modelled consumer benefits. The range reflects the different scenarios
we modelled, such as varying levels of load shifting.
It is important to bear in mind that the monetised figures do not represent the full benefits to
consumers. We expect that option 2 will achieve further benefits from greater competition and
product and service innovation, which should improve outcomes for consumers.
Better quality and more frequent settlement data for both imported and exported volumes,
combined with greater administrative efficiency, should encourage non-traditional players with
disruptive business models to enter the market and compete with existing suppliers. This new
entry, together with new price signals, should stimulate an innovative response from those
already in the market.
A faster settlement timetable means suppliers would need less collateral to cover their
potential settlement liabilities. This should reduce barriers to new entry. For example, MHHS is
expected to accelerate the growth of new energy ‘tariff-only’ propositions, third party
managed energy services involving smart controls, bundled ‘asset and tariff’ offerings
managed by the consumer or on their behalf; and offer consumers new ways to offer flexibility
to the energy system such as peer-to-peer trading and grid balancing services.
Slide 10 – Monetised costs of MHHS
This slide set out the estimated monetised costs of our preferred option on different
stakeholder types. The estimates are based on responses to the RFI that we published in
August 2019, and follow-up engagement.
Clearly MHHS would impose significant costs on the industry. We have made extensive efforts
to ensure we understand these costs, and their drivers, as well as possible.
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Where the costs have been difficult to obtain or verify we have adopted a consciously cautious
approach to ensure that we are, as far as possible, mitigating the risk of underestimating
these. In particular, where we have not been able to get a quantitative answer to a question in
the RfI from a particular stakeholder, we have sought to fill in the gaps by estimating the
costs using data from similar stakeholders. Chapter 3 of the Draft IA also describes how
stakeholder costs might differ under option 3 (and we have quantified those costs where
possible).
Slide 11 – Monetised supplier costs of MHHS
Supplier costs amount to nearly ¾ of the total. Based on evidence to date, suppliers’ major
cost drivers are:
• IT costs, especially one-off costs of upgrading IT systems to interact with the new
central settlement systems, and to forecast demand without profile classes
• operational costs, especially for ongoing HH data collection, transfer and processing, and
one-off costs for managing customer contract communications, HH data processing and demand
forecasting.
Some suppliers expected ongoing cost savings from better demand forecasting and lower
balancing costs.
Suppliers’ responses varied considerably. The aggregated data in the IA masks significant
differences, no doubt reflecting the strengths and weaknesses of individual suppliers’ existing
systems and operations. That's one reason why we remain so keen to hear from individual
suppliers, to get your views on the factors that will be most important for you.
We have not received evidence to date about the ongoing costs that could be incurred by
software providers that provide settlement-related services to suppliers. However, we have
sought to estimate this, and some ongoing costs have been included in the total costs. Should
we receive evidence, we will consider it carefully and adjust our cost estimates as appropriate.
Slide 12 - Dealing with uncertainty through estimated cost ranges
Estimating costs over a long time frame is inherently uncertain. One of the ways we have tried
to deal with this was asking stakeholders to qualify their quantitative responses to the RfI
using a +/- uncertainty margin. We used this information to build a cost range and we
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presented this range in slide 12. The central cost of £492.5m is our best estimate of costs on
the evidence received to date. The range of £399.7m to £591.9m illustrates the degree of
uncertainty involved in calculating the costs of MHHS.
We have excluded some reported costs from these ranges because they do not appear
reasonable to us. In particular, we do not propose to include the costs to suppliers of reading
traditional meters every month. This is because we expect the BSC Performance Assurance
Framework will take into account the extent of smart meter penetration and make appropriate
adjustments to targets if necessary. On the other hand, we included in our central estimate
some costs of reading traditional meters every three months and we included a 50%
uncertainty for those costs in the high range. We believe this is a proportionate and
conservative approach.
We also considered the potential costs of offering new HHS products (such as Time of Use
tariffs). Some suppliers told us they would need to update billing systems to be compatible
with offering such products. This investment is not required by MHHS, so we have not included
it in our central estimate of costs or in the cost ranges. We acknowledge that some of these
costs might have to be incurred to realise the full potential of the estimated benefits.
However, it is important to note that even if all these extra costs were included, total
monetised costs would still be lower than the bottom of the range of quantified benefits.
Slide 13 - Monetised benefits of MHHS
This slide is intended to help readers navigate their way through section 4 of the draft IA,
which sets out our estimation of the monetised direct benefits of MHHS. Section 4 of the draft
IA describes how we have used a GB power market model - the Dynamic Dispatch Model
(DDM) - to calculate these benefits. The DDM analysis estimates very significant benefits
from MHHS. Section 4 also estimates potential carbon emissions savings and reports on the
sensitivity analysis using a Distribution Networks Model (DNM) to capture potential benefits at
the distribution network level.
We have sought to capture the benefits of load shifting under certain scenarios for fossil fuel
price and load shifting windows. We have assumed an 8-hour window in which demand in any
half-hour is allowed to shift (either up to 4 hours earlier or up to 4 hours later). We think this
is a good approximation of small users’ ability to offer flexibility across different technologies.
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We tested the implications of this assumption through two sensitivity tests that restrict the
shifting window to 4 hours and 2 hours. This analysis seeks to capture:
• generation and network investment savings through better use of existing assets
• operational savings as load shifting reduces the need to operate generation assets at
peak time
• the carbon emissions saved as the lower demand can be satisfied with less polluting
generation.
Finally, using evidence from the RfI we sought as far as possible to quantify the direct benefits
from:
• more accurate demand forecasting, resulting in a reduction in the residual imbalance
that the Electricity System Operator needs to resolve, and the costs of doing so
• a more accurate and efficient settlement process with better quality data and fewer
errors, reducing suppliers’ exposure and the amount of collateral needed to cover it.
Other significant benefits such as the effect on competition, innovation and customer
outcomes cannot be quantified and/or attributed solely to MHHS. They are covered in section
5 on unquantified benefits.
Slide 14 – System wide benefits from load shifting
This slide sets out the extent of system wide benefits. Even the lowest benefit sensitivity
scenario (low load shifting scenario - 2h shifting window) shows substantial positive net
welfare benefits above the costs, albeit by a significantly lower margin than our central
estimate (Central Fossil Fuel prices – 8h shifting window).
Slide 15 – Net consumer impacts
The table in this slide sets out the net position for consumers after taking account of
monetised costs and benefits under option 2 (our preferred option) relative to the
counterfactual. It makes clear that MHHS under option 2 is expected to have a significant net
benefit for consumers compared with the counterfactual of retaining the existing elective HHS
arrangements.
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Slide 16 – Refining the evidence base
We welcome further input from all stakeholders, especially in relation to:
• your own cost drivers and estimated costs
• the effect of Covid-19 on your capacity to start the transition to MHHS and to complete
it within a period of approximately 4 years.
We will seek further opportunities to engage with stakeholders, whether multilaterally or
bilaterally. Please email the team at half-hourlysettlement@ofgem.gov.uk if you’d like to
initiate a conversation with us.
2. Interactive Sessions
Session 1 on the transition period
Key points
We have proposed that there should be a 4 year transition, comprising a 3 year
implementation period, for code and system changes and qualification for the new TOM; as
well as stakeholders preparing and testing their new systems. There would then be a 1-year
migration period during which all MPANs would be moved to the new settlement system. The
transition period would start in spring/summer 2021.
We would like to hear stakeholders’ views on this timetable, including the impact of COVID-19.
Slide 17 – Transition period
Within our consultation document our preferred option for transition is over a 4 year period,
starting just after we published our Full Business Case (FBC). In the consultation document,
which was written prior to COVID, transition was due to start in January 2021.
The chart on slide 17 shows the addition of a 6-month delay. This is the delay we expect to
the publication of the FBC. With the additional of the 6-month delay it is therefore intended
that transition will start around mid-2021. It is proposed to still take 4 years and so full
transition to MHHS would be mid-2025.
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Our proposed transition consists of a 3-year implementation period, where governance, code
changes, system changes and qualification processes for providers of the new TOM services
would take place. In this 3-year implementation period, we expect suppliers, BSC central
settlement systems and other industry parties (such as supplier agents, the Data
Communications Company (DCC) and registration systems) to prepare and test their IT
systems in readiness to implement the TOM. We have also included a 1-year business
readiness period for suppliers, so they can get their processes and business ready for the new
system.
Following this 3-year implementation period is a 1-year migration period, in which all the
MPANs would move from the current market roles into the new market roles and be settled
under the new TOM. During this time there would be parallel running of the old and new
market roles, so that there would be no big bang implementation and instead migration could
be managed.
At the end of migration (the point by which all MPANs are settled under the new TOM), the
cutover to the new settlement timetable would occur.
Our aim is to balance the desire to deliver the benefits of MHHS as soon as possible, with the
need to ensure that the new arrangements are robust. When we first did our analysis, our
preferred option was to complete the transition to MHHS over approximately a 4-year period.
We consider this timeframe to be realistic and achievable with appropriate programme
governance. However, in the light of the COVID-19 pandemic, we are reviewing the project
timelines, and are looking at the impact on the start date for implementation as well as the
length of the transition period. We still consider that a 4-year transition period is likely to be
realistic, but we do recognise that there may well be factors related to the COVID-19 situation
which could impact this.
This interactive session is aimed at gathering stakeholder views on both the start date and the
length of transition, and if there are any factors that might impact these timings.
Questions:
1. Do you think your organisation will be able to start transitioning towards MHHS, from
when the Full Business Case is published in spring 2021?
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2. Do you think your organisation will be able to complete the transition within a period of
about 4 years?
Summary of answers:
1. Do you think your organisation will be able to start transitioning towards MHHS, from
when the Full Business Case is published in Spring 2021?
Yes – provided clear expectations on suppliers are published
Yes – but depends on details, particularly around supplier agent qualification
Yes – in terms of code changes, but will take longer until resources are available for the
technology modifications.
This is ambitious, given Faster Switching (would want to avoid overlapping system
changes) and the uncertainty over COVID-19.
Not clear what MHHS looks like in detail. The TOM is too high level at the moment and
it will be hard without the full details of the code changes.
Won’t be able to start immediately. Realistic start time for business changes will be +1
year after FBC.
In current climate is difficult to tell. There may be a second wave of COVID. Quite
ambitious to start transition that soon.
2. Do you think your organisation will be able to complete the transition within a period of
about 4 years?
Yes, if the industry gets everything lined up and it is all clear
Yes, although a 1 year migration may be a bit short. Lots of complex meters, and 1 year
would require a high volume of MPANs to be migrated every day. If it is completed, exceptions
may not be cleared in this time. Some areas may be easier to migrate then others.
Yes, but would be reliant on third party service providers and industry parties being ready.
Depends on ELEXON capacity to support qualification process
Not sure how realistic this is considering other previous changes (P272).
There is a lot of other change, such as faster switching and smart meter roll out which is
taking up a lot of resource.
No, we don’t believe other industry parties will be ready in this timeframe.
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Session 2 on Programme Governance
Key points
We expect that we will need a number of roles to oversee the transition to MHHS: Programme
Management Office (PMO), System Integrator (SI), Programme Party Co-ordinator (PPC)
and Assurance.
We are considering three possible options:
1. The delivery could be led by a relevant industry party/body. Ofgem would have a hands
off approach and would not be delivering any of the functions.
2. Ofgem could procure a 3rd party to take on these roles on our behalf and so we would
have direct control on delivery and have ultimate responsibility.
3. A mixture of the above, where an industry body/party takes responsibility for part of
the functions (such as PMO and SI), and Ofgem is responsible for others, for example the
assurance function.
Slide 19 – Programme governance
We realise that delivering MHHS will involve major changes both to market participants’
systems and to the market rules. Therefore, we believe central oversight is required to ensure
that system changes are completed on time and to the requisite quality.
Implementation of the new arrangements will require changes to ELEXON, the Data
Communications Company (DCC) and registration systems, as well as changes to all supplier
and supplier agent systems and potentially the communications systems currently used, to
provide the information required for MHHS to operate. Given the extensive number of parties
involved, we anticipate that it will be necessary for there to be a substantive programme
management function.
We expect that we will need a number of roles to oversee the transition to MHHS. We see
these as being:
Programme Management Office (PMO) to create and manage the overall
programme delivery plan;
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The System Integrator (SI) to oversee, coordinate and manage the integration,
testing and transition to live operations of the new central settlement system and service
components;
Programme Party Coordinator (PPC) to monitor and track progress of all parties.
The PPC will provide the programme parties with information and updates relevant to the
programme, scrutinise the programme parties’ self-assessments and report on party readiness
to the PMO; and an
Assurance function to satisfy Ofgem that these arrangements are operating
effectively.
Ofgem is overall project sponsor, but we don’t necessarily need to lead on these delivery
functions and so we are considering where these roles should sit. Whilst experience of Project
Nexus and the Switching Programme has shown that there are advantages in Ofgem taking an
active sponsorship role and leading on PMO and programme party coordination functions, we
consider that there are equally advantages in industry bodies taking responsibility for these
functions.
When coming to a decision we are keen to hear and understand stakeholders’ thoughts and
views on what key factors should be taken into account when deciding the governance
structure and delivery model.
Question:
Based on previous reform experience, what are the key factors we should take into account
when deciding the governance structure?
Summary of answers:
Based on previous reform experience, what are the key factors we should take into account
when deciding the governance structure?
Cost should be considered.
Clear milestones to ensure progress can be monitored. Achievable milestones with stage and
gates to ensure development is going as planned before moving on. Need enforcement when
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parties don’t meet targets. Need to be clear where obligations and the authority to enforce
these obligations sit.
Ofgem led – but quick and agile. Suppliers are important but should not be in the driving
seat. All DNO’s must be involved to include regional flexibility markets.
Ofgem should remain involved in all decision making.
Needs to be centrally coordinated and closely managed with the Performance Assurance
Framework.
Whoever is leading will need to be impartial. Need to ensure consistency across different
parties.
More industry led, get parties involved who are the ones who have to implement.
If roles go to existing bodies they will need budget to fulfil this properly.
Keep it simple.
3. Consumer impacts and load shifting assumptions
Key points
Some of the factors that are likely to affect load shifting potential (and peak consumption
reduction) in the future include: Types of tariffs offered by suppliers; Availability of
technologies that allow automatic load shifting; Price signals and consumers’ response to
those price signals.
Distributional impacts analysis is often a broad-brush exercise. How different groups of
consumers respond to price signals may determine the distributional impact on them.
We welcome stakeholder views about our load shifting assumptions and about our analysis of
consumer impacts issues more generally – have we captured the right issues, are there gaps
in our analysis, what further evidence can stakeholders provide on potential consumer
impacts?
Slide 22 – Potential consumer impacts: evidence gathering to date
The four themes about which we sought stakeholder views in the Call for Evidence were:
Consumers’ ability and/or willingness to engage with their electricity usage
Consumers’ ability and/or willingness to load shift/offer flexibility
Consumers’ access to, and ability/willingness to, take up technology to offer flexibility
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Consumers’ ability to understand and choose a suitable tariff, eg ToU tariffs
Slide 23 – Potential take up of load shifting and flexibility
Some of the factors likely to affect load shifting potential (and peak consumption reduction) in
the future include:
The types of tariffs offered by suppliers
The availability of technologies that allow automatic load shifting
Price signals and consumers’ response to those price signals
We have estimated a range of values for load shifting (see slide 24) from a review of
research and trials that look at load shifting in response to price signals, looking at two key
parameters shown on this slide for determining the extent of load shifting away from peak
usage.
Slide 24 – Load shifting assumptions in the Draft IA
The values in the table increase in a linear way from 2025 to 2045. They show the range of
estimates for the proportion of customers with a smart tariff (column 1), the percentage of
demand shifted at peak by customers with a smart tariff (column 2), and the resulting
estimate of the range for system load shifting that can be attributable to MHHS (except for
heat pumps demand) (column 3).
Alongside these quantitative assumptions, we have made qualitative assumptions, comparing
the impact of MHHS with the impact of elective HHS, about load shifting potential for different
consumer types who have access to different kinds of technology:
• Domestic and small non-domestic low energy users (no EVs, no heat pumps) – very
low load shifting potential under Elective arrangements, significant potential under MHHS
• Domestic high energy EV users – significant load shifting potential under Elective but
higher still under MHHS. Overall, higher potential than for Domestic low energy users (no EVs,
no heat pumps)
• Domestic high energy heat pump users – we have assumed very high load shifting
potential under elective, with no significant difference to this shift after MHHS implementation
• Small non-domestic EV users - very low load shifting potential under Elective
arrangements, significant potential under MHHS. We have assumed less flexibility from non-
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domestic users than from domestic users on the basis that these vehicles are used for
business operations.
Slide 25 – Distributional impacts on consumers
Distributional impacts analysis is often a broad brush exercise. How different groups of
consumers respond to price signals may determine the distributional impact on them:
• Some consumers who are able to flex may also be relatively affluent and either be indifferent
to sharper price signals or have the means to respond if they want to reduce bills. Arguably,
they’re also more engaged energy consumers
• Some consumers may struggle to respond to price signals but have the means to do so if
needed. Others may be able to respond if helped. A proportion of these consumers may
become more engaged as a result
• Some consumers may have neither the ability nor means to respond to price signals. For
these consumers, addressing possible detriment may involve ensuring that existing protection
mechanisms are appropriate, using them more flexibly to meet future challenges, and adding
to them if new sources of detriment are identified. These consumers may be broadly
disengaged.
Seeking out good quality datasets:
• The Smart Energy Research Lab (SERL) run by various academic institutions, which
aims to gather actual usage data from smart meter consumers who agree to share it for
research purposes, is a potential source
• We are considering how to make effective use of Ofgem’s revised IA guidance and
refreshed consumer archetypes to carry out this analysis. The guidance and archetypes are on
Ofgem’s website.
Other factors relevant to distributional impacts:
• Time – Professor Jacopo Torriti’s work at Reading University assessing peak time
energy usage by activity identifies which family groups may benefit more and which may not
benefit based on existing consumer behaviours, and can help us understand whether and what
interventions may be useful for different consumer types.
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4. Access to data
Key Points
Opt-out granularity: we have decided that domestic consumers will be able to opt-out of
sharing HH data for settlement / forecasting. We have proposed that data from opted-out
customers should be collected at daily granularity for settlement and forecasting under MHHS;
we are also asking whether any special consideration should be made in this regard for some
or all existing smart meter customers.
Customer comms: we have asked whether stakeholders feel there should be a central element
to the communication of settlement / forecasting and associated data sharing choices to
consumers.
Licence amendment and data access framework transition: we have said these rules will be
introduced via amendments to the electricity supply licence. We expect that the licence
amendment process will take a minimum of 3-6 months following publication of the Full
Business Case.
Migration: we expect there to be a period of time between the data access framework
transition date and the migration period, where a number of existing smart meter customers
decide to change tariff / supplier. These customers will then be subject to the new framework
at that point, as if they were new smart meter customers.
Slide 28 – Recent publications
Open letter:
We published the open letter in April 2020. The letter builds on the access to data
decision letter that we published in 2019 (this was our response to our consultation held in
2018).
The letter sets out the timeline going forward for the transition to the new access to
data framework under MHHS and provides clarification on some points.
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Draft IA consultation:
• In terms of the currently open consultation, we have asked three questions on the
MHHS access to data framework. These are explained in the full in the consultation.
Consultation questions 11 and 12 - Opt-out granularity:
We have said that domestic consumers will be able to opt-out of sharing HH data for
settlement / forecasting.
Data can currently be collected at daily resolution by default, but consumers can opt-
out to monthly if they wish
We are proposing that data for opted-out customers should be collected at daily
granularity for settlement and forecasting under MHHS, and have set out the reasons why we
think this is the right approach in the consultation. We are interested to hear stakeholders’
views
We are also asking whether any special consideration should be made in this regard for
some or all existing smart meter customers, for example those who had already opted out to
monthly resolution of data collection on the date that the new MHHS data sharing framework
enters into force.
Consultation question 13 - Customer comms:
Based on discussions with suppliers, we know that communicating settlement and
associated data sharing choices to consumers in order that they can make an informed choice
will be difficult
We also see advantages in all consumers receiving a similar message on settlement
and forecasting, to avoid confusion in the marketplace.
We also however note that some suppliers may prefer from a commercial perspective
to tailor their own messaging
We are therefore asking in the consultation whether stakeholders feel there should be a
central element to the communication of these concepts, to ensure clarity and consistency of
message. If so, we would like to hear what stakeholders feel the role should involve, and who
should fulfil it.
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Slide 29 – Access to data: implementation timeline
The purpose of this timetable, as set out in our recent access to data open letter, is to
illustrate to stakeholders the sequence of events we expect to lead us to the new MHHS data
sharing framework. The timetable is schematic and not to scale. Key events on the timeline
are highlighted in bold in the text below.
We have previously set out the main headline decisions for the access to data framework as
follows:
1. There will be a legal obligation on the party responsible for settlement to process
domestic and microbusiness consumers’ HH data for settlement purposes
2. Domestic consumers will be able to opt-out of this processing
a. As noted, we are currently consulting on what the opt-out resolution should be (it is
currently daily by default but consumers can opt all the way out to monthly). We think it
should be daily, but are interested in hearing stakeholder’s views.
b. We are also consulting on whether any special consideration needs to be made in this
regard for customers who have already accepted their smart meters on the date of the rule
change
3. Non-domestic consumers will not be able to opt-out of HH processing
4. Existing domestic customers with smart meters should have their HH electricity
consumption data processed for settlement purposes only on an opt-in basis, or an opt-out
basis for existing microbusiness customers with smart / advanced meters, consistent with the
framework that was in place when they had their smart / advanced meters installed. At the
point at which a consumer then makes a choice to change electricity contract or supplier, they
will then be subject to the new rules.
Licence amendment and data access framework transition:
These rules would be introduced through amendments to the electricity supply licence.
We expect that the licence amendment process will take a minimum of 3-6 months following
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publication of the Full Business Case, which is planned for spring 2021. You can see the
licence amendment re: data access event on the schematic timeline.
These new rules would only be applicable to customers who accept a new smart meter,
or take a decision to change supplier or tariff, after the point at which the text in the licence
enters into force, which we call the data access framework transition date. This may be a
short period of time after the actual licence amendment itself. The wording in the licence will
determine when this date / event will be.
After the data access framework transition date has passed:
1. new customers accepting smart meters will be subject to the new framework
2. existing smart meter customers who switch tariff or supplier will be subject to the new
framework.
However, it is very important for you to note that consumer data will not be processed
under this framework until MHHS is implemented, which will be some years later. The purpose
of the data access framework transition date being before this is so that customers accepting
smart meters / changing contract in this interim period are subject to the new framework, and
their data can therefore be processed on that basis when MHHS is implemented.
In the meantime and until implementation, supplier licensees are required to abide by
the existing framework and only process HH data from domestic consumers on an opt-in basis
/ microbusinesses on opt-out. This includes for consumers who are being half-hourly settled
under the elective scheme.
Note, we recognise we need to give some more thought to certain practicalities of the
data access framework transition date. For example, on this date there will be many
different customers at different stages of the smart meter installation customer journey. We
need to think about how far along the journey the customer needs to be to be treated as an
‘existing customer’, meaning they will remain on the old framework until they change supplier
/ contract. Possibilities include the installation date, the date at which the original appointment
was booked, or the date on which the consumer was presented with the data sharing guide.
Migration period:
In our draft IA we have set out that our preferred option is for an implementation
timetable, or transition period, of four years. This would comprise an initial
implementation period (green) of three years, followed by a one year migration period
(red). The migration period can only start once all necessary processes for migration are in
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place. The beginning of the period is the migration start date. During this period both systems
will run in parallel, allowing suppliers to migrate their customers over to the new TOM
gradually. At the end of this one year migration period, the migration end date, all
customers should have been moved over to the new TOM. The cutover to the new TOM and
settlement timetable will happen after this point.
We have also said that, if all of the necessary systems and processes are in place
before the migration start date, there may be an early migration period where suppliers can
begin to migrate their customers across to the new TOM.
We expect there to be a period of time between the data access framework
transition date and the migration period. During this time a number of existing smart
meter customers will change tariff / supplier. These customers will then be subject to the new
framework at that point, as if they were new smart meter customers.
To be clear and as noted before, only once we have passed the migration start date (or
the start of any early migration period) can consumers’ data be processed under the new
MHHS data sharing framework.
Interactive session 3 on data access
Question:
What do you see as the main issues for your organisation in implementing the MHHS data
access framework?’
Summary of responses:
We received eight replies in total. The majority centred around the difficulty of supplier
messaging and the risk of subsequent confusion and scepticism amongst consumers. As we
noted at the workshop, we are cognisant of the potential difficulties that suppliers will face in
communicating the concepts of settlement / forecasting and associated data sharing options to
consumers, which led us to ask question in our draft IA consultation around whether there
should be a central element to this. We look forward to receiving stakeholders’ views. We
think that clear communication of these concepts and the individual and system-wide benefits
of sharing the data to consumers will help minimise confusion and result in fewer consumers
opting out.
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5. Target Operating Model (TOM)
Key Points
Our consultation invites views on the DWG recommended TOM; and on our preferred position
that HH electricity consumption data should be sent to central settlement services in non-
aggregated form.
Following the delivery of the DWG preferred TOM, the DWG have been stood down and we
have entered the next phase of the TOM design – the Development Phase. This consists of two
new industry working groups, chaired by ELEXON, who are further developing the TOM design
– AWG & CCDG.
We now publish monthly newsletters which provide updates on the workgroups progress and
allows an opportunity for stakeholders to engage with and feedback on the work prior to
formal consultations.
Slide 32 – DWG Preferred Target Operating Model
The slide shows the high level Target Operating Model (TOM), which was delivered by the
Design Working Group as its preferred TOM. This TOM is currently being consulted upon via
the Ofgem MHHS consultation.
The TOM sets out the design for new market-wide settlement arrangements when most
meters will be smart and advanced meters. It also sets out the services required to deliver
settlement period (ie HH) level data from a meter to a central settlement body
This diagram illustrates the key features of the TOM. In this, there are two types of
metering services, one for smart and non-smart meters and another for advanced meters, as
well as an unmetered supplies operator service. There are three data services that collect data
and supporting information. These services output settlement period level data to the BSC
central settlement services.
Our consultation questions on this are:
1. We propose to introduce MHHS on the basis of the Target Operating Model
recommended by the Design Working Group last year. Do you agree? We welcome your views.
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2. Ofgem’s preferred position is that HH electricity consumption data should be sent to
central settlement services in non-aggregated form. Do you agree? We welcome your views.
Slide 33 – Target Operating Model
Following the delivery of the DWG preferred TOM, the DWG have been stood down and we
have entered the next phase of the TOM design – the Development Phase. This consists of two
new industry working groups, chaired by ELEXON, who are further developing the TOM design.
Code Change and Development Group (CCDG): are developing the more detailed
areas of the TOM, such as the registration, appointments and data arrangements. The CCDG
are also working with representatives from the affected industry codes to identify the changes
required to the different codes to implement the TOM
Architecture Working Group (AWG): are developing the system architecture design
required to enable the TOM. They are looking at the interfaces between services, the data
items, the frequency of exchanges as well as the security requirements.
The output of both of the working groups will be put out for consultation and we welcome
feedback throughout the process from interested parties, on both the detail of the TOM
development and the process by which we are engaging with the wider industry.
Slide 34 – Target Operating Model
We have started publishing monthly newsletters which provide updates on the workgroups
progress and allows an opportunity for stakeholders to engage with and feedback on the work
prior to formal consultations.
We are keen to ensure all parties have the opportunity to stay informed and input into the
work of the two groups. We therefore welcome your feedback on this, and would like to hear
from you though our HHS inbox.
Email: Half-hourlysettlement@ofgem.gov.uk
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Settlement Reform Webinar – Developments and Consultation
ANNEX
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