Formal title: Revisions to the Supplier Hub Principle
SmartestEnergy Limited raised P332 on 28 January 2016. This Modification seeks to address issues associated with customer preferred Supplier Agents. The original Proposal was to make Supplier Agents signatories to the BSC to facilitate changes to the Supplier hub principle. The Proposer is now minded to reduce the scope to the non-DCC sector and to Meter Operator Agents.
The P332 Proposer contends that the BSC when originally created was designed to support the Supplier hub principle and to this end is silent on the practice of ‘customer preferred agents’ (CPAs). The ‘appointment’ of Agents by customers, outside of the Supplier hub principle, makes managing Agent performance and delivery of obligations within the BSC difficult, resulting in a reduction in a Supplier’s ability to manage performance against industry targets and risking non-delivery of specific obligations.
As per ELEXON’s communication concerning the impact of COVID-19 the timeline for P332 has been pushed back 3 months. The Assessment Consultation is now due to be issued in August. ELEXON are planning to host the 7th workgroup during May 2020 to review the draft legal text and side-letter.
The seventh Workgroup meeting was held on 6 February 2020. The workgroup reviewed case studies provided by members and concluded that the issues identified are common to CPA and non-CPA sites, however, the amount of time and effort needed to resolve these issues for CPA sites is often higher than for non-CPA sites. The Workgroup decided not to conduct any further analysis or evidence gathering at this stage. The Proposer confirmed their preferred solution would be a side-letter as part of the Qualification process, requiring Agents to agree to treat all appointments the same regardless of contract status, such that they meet all relevant BSC requirements. This will bring DCs back in to scope and refer directly to CPAs.
The sixth Workgroup meeting was held on 27 November 2019. The majority of the Workgroup believes P332 should continue (not be put on hold any further). Workgroup Members agreed to provide case studies for instances where CPAs have been the cause of, or a significant contributing factor, in issues resulting in BSC underperformance. It is hoped that this evidence can be used to do more targeted evidence gathering. A revised P332 progression plan is being developed and will be presented to the Panel on 16 January 2020 for approval.
On 10 October 2019, the Panel approved a three-month extension to allow for a further P332 Workgroup meeting, following Ofgem’s response (see documents below) to the Panel’s letter (see documents below).
At its September 2019 meeting, the Panel sought Ofgem’s latest view on P332. The Panel paused P332 in September 2017, as the baseline against which it was being assessed was likely to significantly change. This was primarily as a result of Ofgem’s Significant Code Review (SCR) on market-wide Half Hourly Settlement, but also Ofgem’s review of the Supplier Agent functions and future supply market arrangements.
On 12 September 2019, the Panel sought Ofgem’s views as to whether P332 is in line with Ofgem’s current strategic direction. The Panel also sought to understand whether P332 is or will be within the scope of any of Ofgem’s programmes of work. Ofgem responded on 9 October 2019. Ofgem confirmed P332 is not within scope of any of its programmes of work and believed it could be addressed under the current arrangements.
The Proposer believes that whilst the market has moved on over the last two years, the P332 issue has not yet been addressed under the BSC or any of the wider Ofgem initiatives. He is minded to reduce the scope only to Meter Operator Agents, as this is where the majority of issues arise and where the greatest number of direct contracts between customers and Agents (MOAs) exist. He is proposing that MOAs become signatories to the Code and directly liable for performance with the option of charges to incentivise performance or penalise underperformance.
Given the scope of the original P332 issue against the new baseline of the Target Operating Model (TOM) for Market-wide Half Hourly Settlement, the scope of P332 is likely to change. The issue of CPAs with respect to Settlement performance is likely to be confined to the Advanced Market Segment under the TOM. This will comprise today’s Half Hourly market plus any Non Half Hourly settled Meters with Advanced capable metering already connected.
An interim report on P332 was presented to the Panel on 13 Jul 17 (in accordance with F 2.6.10). Given the likely assessment duration and effort, the Panel sought Ofgem’s views to whether the findings of this report are consistent with their provisional thinking and strategic direction. The Panel considered Ofgem’ response at its meeting on 14 September 17. The Panel directed the P332 Workgroup to pause its work whilst the Significant Code Review (SCR) on market-wide Half Hourly Settlement is on-going as this could change the baseline against which P332 is developed and assessed.
This decision was in-line with the views of the majority of the P332 Workgroup members from its 5th meeting. An update was provided to the Panel on 10 May 2018. The Panel agreed to continue to ‘pause’ P332 until December 2018, pending Ofgem’s policy decision on Supplier Agent functions and the further development of the Target Operating Models as part of the SCR.
ELEXON is drafting business requirements for consideration by the Workgroup at its next meeting in June.