Citizens Advice’s submission to Ofgem’s Request for Information for Market-wide Half-hourly Settlement
To build the business case for a reform of the electricity settlement system, moving to half-hourly settlement (HHS), Ofgem has requested data and insight from organisations. In our response we point out the risks of settling consumers per half-hour usage, list the benefits of HHS of import and export, and outline some of the impacts on consumers, competition and supplier behaviour. Our key points include:
In the drive to a more cost-reflective electricity bill through smart meters, time of use tariffs, HHS, and soon new network charging rules, some consumers could see their bill rise to a level which they are unable to afford. 10.9% of households in England (2017), 26.5% in Scotland (2016) and 23% in Wales (2016) were in fuel poverty. 30% of consumers said in 2017 that they were worried about paying for their energy bills. Whilst we have various schemes which help people pay their bills such as the Warm Homes Discount, such schemes may not be sufficient for a future energy market where peak pricing and the ability to be flexible determine your bill. There is likely to always be a minority of customers who are unable to reduce their peak demand and be flexible. Thinking ahead to a time when a price cap may not be in place to protect consumers from excessive prices, Ofgem, government and suppliers need to find ways to identify and protect such consumers.
We are concerned that making the mandatory minimum data collection from smart meters drop down to daily reads would have negative impacts on competition. As the Data Access and Privacy Framework (DAPF) states, its goals are to “promote competition and innovation in the developing energy services market” and “place the onus on energy suppliers to clearly explain why they wish to access this information and incentivise the development of products and services to offer to consumers in return for more detailed access”.
We are concerned that non-half-hourly settled (NHHS) customers that will be settled using load shapes will end up paying more than under the current profiling system. One reason for this could be that, since HH customers on time of use tariffs will be charged on a cost-reflective basis, suppliers would spread the remaining costs across NHH customers only. Compared to profiling times, when this was the majority of customers, in the future the amount of NHHS customers will be a minority. Particularly we are concerned for those customers who end up in this category through necessity rather than choice, for example because they cannot have a smart meter.