Design Working Group reconfirms transition approach for Target Operating Model

The ELEXON-led Design Working Group (DWG) has reconfirmed its approach for transitioning from the current electricity Settlement arrangements to its preferred Target Operating Model (TOM) for Market-wide Half Hourly Settlement (MHHS).

What is Market-wide Half Hourly Settlement?

ELEXON is working with the DWG to design arrangements for moving to MHHS in electricity. Smart meters can record customers’ usage every half hour. Settling this consumption on a half hourly basis aims to encourage customers to shift their usage to cheaper times of the day, helping to enable a smarter and more flexible energy system.

The Design Working Group’s approach to the transition

The DWG consulted on its transition approach in June 2019. The DWG’s aim is not a ‘big bang’ implementation of the TOM. Instead there would be a phased transition approach from the existing arrangements. This gives electricity Suppliers and other industry parties a window within which to transition to the TOM arrangements.

Consultation responses validate the approach

ELEXON received 25 responses which the DWG has now reviewed. The responses validate the DWG’s approach, and only minor clarifications to it are required.

You can find the DWG’s detailed discussion of the responses in its Headline Report (meeting 19) 17 July 2019.

The DWG is now drafting its final report and recommendations to Ofgem for submission at the end of August 2019.

Some respondents to the latest consultation have commented on areas that fall outside of the DWG’s remit. These comments will be considered by Ofgem and other groups as part of further work outside of the DWG.

Next steps from regulator Ofgem

The regulator will make the final decisions on the TOM, the transition approach and the business case for moving to MHHS.

About the DWG

The development by the DWG of the TOM and transition approach form one work stream in Ofgem’s wider Significant Code Review on Electricity Settlement Reform.

The preparation of the final report to Ofgem will conclude two years of work by the DWG. On behalf of the group, ELEXON would like thank everyone from across the industry who has inputted into the process and responded to consultations.

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