Home Understanding Ofgem and BEIS latest meter and tariff methodologies

Further to Gilmond’s previous update on energy price cap extension, Ofgem and BEIS have issued further consultations on default tariffs.

 

Ofgem Smart Meters Non-Pass Through Charges and Default Tariffs

Ofgem have issued 4 consultations on default tariffs:

  • Two connected consultations relate to the Smart Metering Net Cost Change non-pass through (SMNCC) allowance, one for credit meters and the other for pre-payment meters (PPMs) and the potential changes for the winter 2021/22 cap;
  • One consultation for COVID-19; and
  • The fourth consultation for Network Cost Allowance.

Ofgem’s consultation on the default tariff cap is requesting input on areas for consideration involving the assessment of data, the impact that COVID-19 has had on smart meter installation costs and input on the uncertainty adjustment and any feedback on the approach.  The PPM consultation focuses on the areas on the SMNCC differing methodology from that for credit meters.  This includes PPM asset life, cost to serve, other costs and considerations.

The third consultation investigates the impact of COVID-19 and possibly applying a £21 charge per dual fuel customer, based on benchmarked customer consumption levels of 3,100 kWh for single rate electricity and 12,000 kWh for gas. There has not been enough evidence to show the impact of COVID-19 on PPM customers, for any tariff increase to be considered currently.

The fourth,  is on how the Network Cost Allowance is determined within the default tariff, for electricity and gas in effect April 2021.

 

BEIS Smart Meter Policy Framework Consultation

The Department for Business, Energy & Industrial Strategy (BEIS) issued their Smart Meter Policy Framework Post 2020:  Minimum Annual Targets and Reporting Thresholds for Energy Suppliers consultation also, implementation expected on 1st July 2021.  This new Framework is looking to have specific individual targets set per Supplier and reflects Ofgem’s threshold for large suppliers as 150,000 gas and/or electricity customer accounts.  The suggestion is for these targets to be set on the following, and be assessed based on the installations throughout the Rollout Year as opposed to the levels of smart coverage:

  • Total number of premises without an existing smart metering system or Advanced Meter supplied by the Energy Supplier on the last day prior to the preceding Rollout Year;
  • Total number of supplied premises on the last day prior to the preceding Rollout Year, and
  • The universal tolerance percentage for that Rollout Year, to be issued by the Secretary of State

Microbusinesses while having minimal evidential support, due to their passivity, will require Suppliers ensure proactive interaction to guarantee installations progress.

The tolerance levels have two options for calculation, with the first having an expected market-wide rollout by 30 June 2025 with a tolerance value for the first two years.  And the second having a varying tolerance in the second year, being recalculated from the installations accomplished the prior year.  The third and fourth years would be recalculated similarly.

 

A Changing Market

Changes such as these mentioned above can cause costly software updates.  Is your software platform supporting you as is required in this constantly evolving market?

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