June 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 announced their intention to implement a mandatory TPICoP by 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 we’re currently awaiting a REC Change Proposal to be raised and for the TPICoP drafting to be released. In the meantime you can find further details on the REC’s work plan here.

Gas

• Reform of Gas Demand Side Response (DSR) Arrangements: National Gas Transmission (NGT) (previously called National Grid Gas) continue to work on their UNC Review Group to discuss and explore possibilities to create a robust gas DSR product: UNC 0835R – Review of Gas Demand Side Response Arrangements. Two Modifications have to date originated from the review: UNC 0844 – Enabling Direct Contractual Arrangements with Consumers for Demand Side Response 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 Review Group was recently  extended by 10 months based on its good output and NGT will continue to work with Shippers and end user consumers to refine their Gas DSR product. We will continue to keep you updated of these developments.
• Unidentified Gas (UIG) Modifications: Following the closure of Corona Energy’s Modification UNC 0781R – Review of the Unidentified Gas process, Modification UNC 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 continues to develop in the Workgroup, with some discussions held regarding the specifics of how the new UIG allocation tables would be displayed in the legal text – however, this was swiftly put to one side as it was slowing down the progression of the Modification for an issue of very little impact.  It was also noted that the tables in the Modification are being referred to as ‘AUGE Tables’, however these may be renamed as the AUGE will no longer be responsible for calculating UIG allocation factors. Additionally there was some updates required to the business rules due to the current complexities of the existing AUGE contract not being within the UNC, which the prosper agreed to update ahead of the next meeting.
• An alternative Modification  UNC 0831A –  Allocation of LDZ UIG to Shippers (Class 3 and 4) Based on a Straight Throughput Method has been raised by Brook Green Trading, aiming to encourage movement to Daily Metering, reduce levels of UIG and discourages risk premiums by removing Product Classes 1 and 2 from the uniform allocation of UIG as these classes provide accurate daily meter readings. UNC 0831A will be updated as a result of the discussions held on the business rules for UNC 0831, and it was noted that the proposer is considering including Product Class 2 in the uniform allocation of UIG – with only Class 1 being exempt. We will continue to keep you updated of the ongoing developments of UNC 0831 and 0831A.
• A Rough order of magnitude (ROM) impact assessment has now been completed by Xoserve, and further Working Group discussions will be held at the end of June.

Diversity, Equity and Inclusion in the UK Energy Market

At Corona Energy, we celebrate diversity, equity and inclusion. With June being Pride Month, we wanted to highlight some of the great work being done within the UK energy market to champion this.

What does this mean?

Diversity, equity and inclusion (EDI) are three linked values, which are key to many organisations in fostering a supportive and inclusive workplace.

There are a number of programmes and events within the UK energy market embracing EDI, some of which have been listed below:

• Tackling Inclusion and Diversity in Energy (TIDE): A taskforce created by Energy UK aiming to improve inclusion and diversity across the energy sector. More details can be found here.
• Pride in Energy: Pride in Energy is a network run by Energy UK, the Domestic Supplier Trade Body, and celebrates members of the LGBT+ community and their allies in the energy industry. More details can be found here.
• Equity, Diversity and Inclusion Conference: An annual conference jointly hosted by Energy UK, Ofgem and the Energy Networks Association (ENA). The one-day conference seeks to bring together leading professionals from across energy industry to provide a platform in which everyone is welcome to share knowledge, experiences, and best practice to drive lasting change in the sector and beyond. This year’s conference is on 29 June 2023, with further details being 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 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 following the development of the Retail Energy Code (REC) and the forward-looking plan to implement Ofgem as the industry’s Strategic Body.  In these reforms, 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.

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