Corona Energy October 2023 Industry Newsletter

At Corona Energy we believe in putting the Customer first.  We use our position as one of the largest non-domestic energy suppliers in the UK to voice your needs, views and concerns at key regulatory meetings. This can involve lobbying Ofgem, The Department for Energy Security and Net Zero (DESNZ) and other regulatory bodies and industry parties to ensure you are represented and treated fairly.

As part of our service to you, this monthly newsletter will keep you informed of the latest developments in the world of energy regulation in a way that is informative, easy to read and useful to our Customers.

Monthly Roundup

What has been going on in the last few weeks?

Gas and Electricity

• Ofgem and Retail Energy Code (REC) Third Party Intermediary Code of Practice (TPICoP): Following the conclusion of Ofgem’s Microbusiness Strategic Review and two REC workshops for Suppliers and Third Party Intermediaries (TPI) about how to best govern this area, the REC have implemented a draft TPICoP from 01 October 2023. It is expected that the TPICoP will sit under REC governance and include provisions such as standardised LOAs, TPI performance assurance regimes and a push for increased transparency. REC are currently consulting on the high level principles of the proposed TPICoP and REC Change Proposal R0137 has been raised. In the meantime, you can find further details on the REC’s work plan here and a full copy of the draft TPICoP here

Gas

• Reform of Gas Demand Side Response (DSR) Arrangements. Ofgem approved on 7^th August 2023 UNC 0844 – Enabling Direct Contractual Arrangements with Consumers for Demand Side Response which aims to enable NGT to contract directly with consumers for the voluntary reduction of gas demand, and UNC 0845 – Enhancements to Demand Side Response (DSR) Arrangements including a D-5 Product aims to extend existing Gas DSR eligibility and increase the lead-time for any Gas DSR curtailment to 5 days. The DSR auction resulted in 9 customers making offers against 12 offtakes. The total volume accepted is 6.4 GWh at a total cost (option fees only) of £6.6m. Some volume was taken across all the within-day, D-1 and D-5 products. UNC 0852 – Shipper notification in relation to option exercise for Customer Demand Side Response has been raised, which seeks to ensure that NGT inform the relevant Shipper in the event that a Customer DSR option is  exercised.  In addition, UNC Modification 0856 Introduction of Trials for Non-Daily Metered (NDM) Demand Side Response (DSR) has been raised to allow NGT to explore how NDM sites can be included in DSR trials.  National Gas Transmission (NGT) (previously called National Grid Gas) continue to work on their UNC Review Group to discuss and explore possibilities for on enhancing the gas DSR product: UNC 0835R – Review of Gas Demand Side Response Arrangements It is expected to concluded by March 2024.   We will continue to keep you updated of these developments.  In the meantime if you have taken part in the DSR auction and have accepted offers, please inform your gas supplier.

• Unidentified Gas (UIG) Modifications: Following the closure of Corona Energy’s Modification UNC 0781R – Review of the Unidentified Gas process, two modifications have been raised. UNC 0831 – Allocation of LDZ UIG to Shippers Based on a Straight Throughput Method raised by SSE seeks to introduce a uniform allocation of UIG to all LDZ meters.  UNC 0831A –  Allocation of LDZ UIG to Shippers (Class 2, 3 and 4) Based on a Straight Throughput Method raised by Brook Green Supply seeks to introduce a uniform allocation of UIG to all LDZ meters, excluding Product Class 1 (PC1).  As PC1 meters are settled on a daily basis. Product Class 2 meters (PC2) were also considered for removal of UIG allocation, however for the moment this has been disregarded following discussions regarding the current Central Data Service Provider (CDSP) system constraints.

Hydrogen

• Government has recently published a consultation on hydrogen blending, Hydrogen blending into Gas Distribution Networks which sets out how hydrogen can be introduced to the existing gas networks. The proposals is for networks to contain up to 20% of hydrogen by volume. Government asks for views on impacts to customer’s equipment, how Calorific Value should be determined, and whether shippers or networks are best placed to manage the procurement of hydrogen. Supporting this, UNC Modification 0849R – Commercial Framework Review to Enable Hydrogen Blending has been raised. It is expected a decision on whether hydrogen blending will occur by the end of the year.

Government has also concluded its consultation on hydrogen transport and storage business models.  For the hydrogen transport business model, a RAB-style model combined with a form of revenue support (which may apply jointly or separately) is the preferred high-level design. For the hydrogen storage business model, the minded-to position is a model which includes a minimum revenue floor to provide investors certainty.  Strategic planning for the network will be undertaken by the new FSO.

There are also a number of trials being undertaken, including H100 (300 homes connected to new hydrogen network installed parallel to the gas network) from 2025, and the Redcar hydrogen community which will supply up to 2,000 homes, starting in 2025.  

What is the Energy Ombudsman’s Broker Alternative Dispute Resolution (ADR) Scheme?

As part of Ofgem’s Microbusiness Strategic Review, which concluded in 2022, the Energy Ombudsman were tasked with setting up a dispute resolution scheme to resolve energy related third party intermediary (TPI), otherwise known as Broker, complaints. This scheme operates in a very similar way to the Energy Ombudsman’s long running approach to resolving Energy Supplier related complaints.

What does this mean?

The Energy Ombudsman’s Broker ADR scheme is open for Microbusiness customers, which means that you are able to utilise their scheme if your organisation satisfies one of the following criteria:

• employ fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than €2 million; or
• uses no more than 100,000 kWh of electricity per year; or
• uses no more than 293,000 kWh of gas per year.

If satisfied, the Energy Ombudsman may be able to help resolve disputes relating to the service that you have received from your TPI/Broker if you are unhappy with the outcome of your complaint directly with your TPI/Broker.

Further details on the Energy Ombudsman’s ADR scheme can be found here.

Energy Regulation Horizon for 2023/2024

As you may be aware, 2023/2024 is set to be another year of major reform in the world of energy. We have compiled the Top 4 items to watch out for this year.

1. Market-Wide Half Hourly Settlement

This industry project run by Elexon and Ofgem seeks to utilise the output of smart metering (half-hourly consumption data) to input more accurate data into Settlements in order to reduce reliance on forecasting. The estimated benefit of this project is c. £1.5-£4.5bn. The transition to Market-Wide Half Hourly Settlement is expected to commence in Q2 2025.

2. Demand and Microgeneration Management

Demand Side Response (DSR) and peer-to-peer trading means that we are heading towards a world where you can purchase your energy from your peers. These are people in your local area of the grid who are generating energy with small turbines or solar panels. Currently, the existing networks and associated regulations in the UK need to be updated to align with new technology and innovation but it is interesting to see what opportunities could be used in the future. If you are interested in DSR, we have articles on Battery Storage and the future of the network on our website.

About the Writer

This newsletter has been updated by Alison Wiggett, Corona Energy’s Regulatory and Compliance Manager. If you have any questions about the content of this newsletter you can contact Alison at alison.wiggett@coronaenergy.co.uk.

Disclaimer: The information provided in this newsletter is intended to be a general guide and should not be taken to be legal and/or regulatory advice. At no time will Corona Energy actually or be deemed to be providing advice and no actions taken by Corona Energy shall constitute advice to take any particular action or non-action. Whilst every effort is made to provide accurate and complete information in this newsletter, Corona Energy cannot guarantee that there will not be any errors. Corona Energy makes no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of the newsletters and expressly disclaims liability for errors and omissions in the contents of this newsletter. Neither Corona Energy, nor its employees and contractors make any warranty, expressed or implied or statutory, including but not limited to the warranties of non-infringement of third party rights, title, and the warranties of merchantability and fitness for a particular purpose with respect to content available from the newsletters. Neither does Corona Energy assume any legal liability for any direct, indirect or any other loss or damage of any kind for the accuracy, completeness, or usefulness of any information, product, or process disclosed herein, and do not represent that use of such information, product, or process would not infringe on privately owned rights.

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