March 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) work on Third Party Intermediary (TPI) Governance: Following the conclusion of Ofgem’s Microbusiness Strategic Review, a licence requirement was introduced requiring Suppliers to only work with TPIs who have signed up to a Qualifying Dispute Settlement Scheme (QDSS). Until now, the Energy Ombudsman was the only scheme provider; however other schemes are currently being developed. Ofgem’s consultation of proposed guidance for QDSS’ has recently closed, and details on the consultation and draft guidance can be found here.
• REC have also recently run two workshops for Suppliers and TPIs about how to best govern this area to ensure that the consumer experience remains positive and that TPIs can continue to operate in their vital role in the non-Domestic sector. Outcomes of these sessions have not yet been published, however we will continue to keep you up to date with developments. Further details of the REC’s interest in this area can be found on slide 25 of their Forward Work Plan 2022-2025 here.
• The Non-Domestic Alternative Fuel Payment Scheme (NDAFP): To provide some financial aid to non-Domestic customers, the government has implemented the NDAFP scheme, which seeks to provide support to customers who are not connected to the gas grid and use an alternative fuel to heat their premises. Eligible customers will now have received a payment of £150 against their electricity account, and further information, including who is eligible, can be found here. We have also updated the FAQ page on our website with the relevant details here.  The Department for Energy Security and Net Zero (DESNZ) have confirmed that any eligible customers who have not received the NDAFP payment will be included in a new scheme in future, however no details have yet been provided.
• 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.

Gas

• Reform of Gas Demand Side Response (DSR) Arrangements: Following feedback from both industry and Ofgem regarding their use of the UNC Urgent Modification process in order to implement the required changes for their gas DSR product  (UNC 0822 – Reform of Gas Demand Side Response Arrangements (Urgent) and UNC 0833 (Urgent) – Enabling Demand Side Response (DSR) Market Offers to be made by Non-Trading System Transactions), National Gas Transmission (previously called National Grid Gas) have raised a UNC Review Group to discuss and explore possibilities to create a robust gas DSR product: UNC 0835R – Review of Gas Demand Side Response Arrangements. Corona Energy support this much more transparent and inclusive approach to engagement and will continue to monitor any changes developing out of this Review group.
• 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 is being discussed at Workgroup with some Workgroup members being concerned that the Modification development is being distracted by considering consequential impacts of the CDSP AGUE contract which is outside the vires of the UNC. The proposer has agreed to take this point away for consideration before coming back to the next meeting with an updated Modification Proposal.
• 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 continue to develop alongside UNC 0831 and we will keep you updated with the progress of these Modifications.

What is a Shipper?

In our newsletter we often report on Modifications going through the Uniform Network Code (UNC) and refer to Shippers – which is a type of industry participant that isn’t discussed too often.

A Shipper, or Gas Shipper, is a party who is responsible for moving Gas. The movement of gas can be done either by transportation ships or via the gas pipelines (owned by Gas Transporters). Often your energy Supplier will also be a Shipper, however, sometimes a Supplier will work with a separate Shipper to make sure that gas is able to reach their customers successfully.

What does this mean?

Gas Shippers are regulated by Ofgem in a similar fashion to most other industry participants – there are a number of Gas Shipper Licence Conditions that need to be fulfilled in order for Ofgem to issue a Gas Shipper Licence to an organisation applying for one.

It’s unlikely that you will have to deal with a Shipper directly as most of the time your Supplier will either be a Shipper, or arrange any actions for your Shipper to undertake on your behalf.

Although not discussed as frequently as Suppliers or Transporters, Gas Shippers fulfil a key role in keeping the gas flowing to your premises.

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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