Design Working Group’s Target Operating Model receives preliminary Ofgem approval

Ofgem has given preliminary approval to the Target Operating Model (TOM) design for Market-wide Half Hourly Settlement (MHHS), as delivered by the ELEXON-led Design Working Group (DWG). Ofgem has also given preliminary approval to the DWG’s approach for transitioning from the current Settlement arrangements to the TOM.

This follows submission of the DWG’s final report to Ofgem in August 2019 and concludes the DWG’s work. We are delighted to have achieved this significant milestone.

Moving to the MHHS TOM will help progress towards a smarter energy system, as settling consumption every half hour will encourage the roll out of more dynamic and flexible ‘time of use’ energy deals, where consumers save money if they shift their energy usage away from times of peak demand. The TOM will also leverage the roll out of smart meters to speed up the Settlement process significantly, reducing the current 14 month reconciliation period to four months.

What happens next?

The TOM is a key output of Ofgem’s Significant Code Review (SCR) on Electricity Settlement Reform. Ofgem’s decision on the TOM is preliminary and not final. It will continue to gather information and feedback through its Request for Information and Impact Assessment, before publishing its final decisions in Q3 2020 as part of its Full Business Case.

New industry working groups

Ofgem has now also launched the next phase of the TOM development work under its SCR. This will include formation of two new industry working groups, which will be chaired by ELEXON:

  • A Code Change and Development Group, which will identify the Industry Code changes needed to implement the TOM, and develop outstanding areas of detail to support the DWG’s TOM design.
  • An Architecture Working Group, which will design and develop the system architecture and interfaces needed to implement the TOM.

Ofgem is looking for people to join these working groups. If you are interested please visit Ofgem’s website to find out more.

You have until 22 October 2019 to make your application to join the working groups by contacting HalfHourlySettlement@ofgem.gov.uk

Ofgem also welcomes any comments on the proposed governance arrangements for these groups by 29 October 2019. Comments can be sent to the email address above.

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