January 2023 Industry Newsletter

Welcome to the Corona Energy 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 Business, Energy and Industrial Strategy (BEIS) 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

• The Energy Bill Relief Scheme (EBRS) and the Energy Bill Discount Scheme (EBDS): The government has recently announced that the EBRS will be ending on the 31 March 2023 and will be replaced with the EBDS, which will run from 01 April 2023 until 31 March 2024. The specifics of the EBDS are still being considered and you can find more information about the schemes on the government’s website here. We have also included details of the EBRS and EBDS schemes in the FAQ section of our website here. If you have any questions regarding these schemes, please contact us on 0800 804 8589.

Gas

• Changes to Capacity Booking with Network Exit Agreements (NExAs): Details of NExAs and their purpose have been included later in this newsletter. Following the implementation of UNC Modification 0701 – Aligning Capacity Booking under the UNC and Arrangements Set Out in Relevant NExAs, from June 2023, customers who have a NExA in place with their Gas Transporter will not be able to arrange Supply Offtake Quantity (SOQ) increases beyond that of those defined within the NExA. Additionally, any SOQ increases beyond the NExA will be reduced, with notice of this change being provided via your Shipper. As NExAs are bilateral agreements between the customer and the Gas Transporter, these agreements are outside the scope of the Shipper and they will not be aware of the arrangement. If you are contacted by your Shipper to inform you that your SOQ will be reducing as this is outside the definitions of the NExA, we would strongly recommend contacting your Gas Transporter to discuss the matter – as the Shipper will be unable to help.
• Reform of Gas Demand Side Response Arrangements: National Grid Gas (NGG)’s Modification UNC 0822 – Reform of Gas Demand Side Response Arrangements (Urgent) was raised to allowed meters consuming more than 2 million Therms per annum to receive a payment for committing to reduce their gas usage prior to a National Gas Supply Emergency. This reform was approved and implemented on 17 October 2022 with some criticism that their use of the UNC Urgent Modification Process meant that the proposal was not adequately impact assessed. As a result of this lack of assessment, an additional Modification 0833 (Urgent) – Enabling Demand Side Response (DSR) Market Offers to be made by Non-Trading System Transactions was required to close some gaps in the solution. Although NGG was further criticised by both industry parties and by Ofgem in their decision letter relating to the use of the UNC Urgent Modification Process and adding unnecessary time and cost to the development of their solution, Modification 0833 was approved and implemented on 09 December 2022. Following feedback received from the wider market and Ofgem, NGG have paused a potential third urgent clarifying UNC Modification and will undertake a more considered approach to designing and implementing the scheme expected throughout 2023.
• Unidentified Gas (UIG) Modifications: Following the closure of Corona Energy’s Modifications 0781R – Review of the Unidentified Gas process, Modification 0831 – Allocation of LDZ UIG to Shippers Based on a Straight Throughput Method has been raised by SSE seeking to introduce a uniform allocation of UIG, where a set UIG value is applied evenly to all meters. This approach removes volatility and commercial challenges to the Allocation of Unidentified Gas Expert (AUGE) allocation table annually. It will also save money as an AUGE would not be required, and will create more transparent and easy to understand methodology. The Modification is being discussed at Workgroup with some discussions being held around the specifics of the proposed legal text, however there seems to be general support for the concept. We will keep you up to date as the Modification progresses. 

Network Exit Agreements (NExAs)

A Network Exit Agreement, or NExA, is a bilateral agreement between a gas consuming customer and the Gas Transporter. A Gas Transporter owns and runs the pipeline that delivers gas to your property.  The agreement made between the two parties relates to the offtake of gas from the network. The agreement can include details such as the gas pressure, gas quality and related notice periods for any changes in these arrangements. Due to the nature of a NExA being a bilateral agreement between the customer and the Gas Transporter, your Shipper and Supplier would not be aware of this agreement or its details.

What does this mean?

If you have a NExA in place, you should be aware as you would have negotiated this directly with the Gas Transporter. If you are attempting to make amendments to your supply, such as the amount you consume (usually referred to as the Supply Offtake Quantity or SOQ) through the usual route via your Shipper, this may be rejected on the basis that the amount has already been defined by the NExA. If you have any questions regarding a NExA that you may have in place, we recommend getting in touch with your Gas Transporter.

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 implementation of Market-Wide Half Hourly Settlement is expected in late 2024.
2. Code Governance Reform
   The framework of the UK’s Energy rulebooks, called Industry Codes, is currently going through huge reform with the development of the Retail Energy Code (REC). The REC seeks to take complex industry processes from various industry codes and bring them together into a single, dual fuel code. This will make a more transparent repository of these key processes.  In this reform, it is likely that Supplier obligations will change which might have an impact on our Customers. We will keep you informed if this is the case.
3. Ofgem’s Targeted Charging Review (TCR)
   Ofgem are currently undertaking a Targeted Charging Review. This looks at how Networks apply their charging methodologies. The review relates to the complex world of Network charging arrangements that are passed through to consumers via their Supplier. Tariffs and groupings have now been finalised by the networks and we will keep you updated of the changes when these are implemented.
4. 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.

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.

Copyright Statement: All content within the Corona Energy newsletter are the property of Corona Energy unless otherwise stated. All rights reserved. No part of the newsletters may be reproduced, transmitted or copied in any form or by any means without the prior written consent of Corona Energy.