Utility Week

UTILITY WEEK | 15TH - 21ST MARCH 2019 | 19 Policy & Regulation calls to help interested parties keep abreast of developments and decide whether they want to attend panel meetings. It also pub- lishes a regular change report, with a page on each of the proposals currently being considered. "It's all about putting informa- tion out there to enable all parties… to keep themselves informed," he adds. Bygraves views Elexon's role as a man- ager rather than just an administrator, providing all of the services that underpin the operation of the BSC. It is a model that Ofgem is keen to see others adopt. Stew Horne, head of energy networks and systems at Citizens Advice, says Elexon's more proactive approach to supporting the change process has encouraged smaller parties to raise their own modifications. "On some of the other codes where the parties have to do the heavy li„ing, that's a signifi- cant barrier to change." Consistent objectives Horne believes governance could also be improved by setting a consistent set of objec- tives across the codes. "You might try to push the same change through two codes," he remarks, "and it might pass through one but not the other because they don't agree." Along similar lines, he says a stronger steer from Ofgem could reduce delays. Last year, Elexon published a white paper out- lining proposals to create a new type of BSC party called a customer notification agent, which would allow customers to buy power from multiple suppliers. Horne thought a modification to create such a party would be promptly submitted by one of the suppliers that stood to benefit, or even by one of the big six trying to "break from the pack". Instead, he explains: "Nobody proposed a modification for nine months, which seems crazy because everybody's talking about this future market and the benefits are really tangible. It just seems like a clear example where if Ofgem drove the process more, or if smaller parties were empowered to make changes, you'd start to see faster and more fundamental change." Energy UK's Martin agrees Ofgem should be "a lot more vocal" on code changes. He gives the example of UNC621, which sought to align the charging arrangements for gas with those in the rest of the EU. Ofgem even- tually decided the proposal wasn't compli- ant with the EU directive it was intended to implement – and therefore rejected it. "You can go through a very long pro- cess of code modification – over a number of years in some cases – and Ofgem will say 'That's not what we wanted; can you start again, please?' And we've seen that a number of times over the years." Martin says earlier guidance from Ofgem would "save a lot of time on its own". This is also a problem recognised by UK Power Reserve's Smith: "Ofgem are observers for most code governance. However, they tend to be quite quiet until it reaches the authority decision stage, which means a lot of time and effort has been invested, without much feedback on whether or not it's likely to be successful." But not everyone agrees Ofgem should have a stronger presence in the code change process. "Actually we think Ofgem should step away and get less involved," says Stefan Leedham, director of governance at Electralink. He believes the regulator should only step in when modifications have a significant impact on consumers and policy goals. If the change process were quicker, taking "weeks rather than months or years", it wouldn't matter so much if the regulator rejected a proposal at the end of the process. Excessive influence As previously mentioned, another pressing issue that will need to be addressed by code reform is the excessive influence of large incumbents. "If you look at most of the code panels out there today, you'll find a lot of employ- ees of big companies or historical fossil fuel companies on there," says Martin, who was once a member of the Connection and Use of System Code (CUSC) panel. Although one renewable developer now has a seat on the CUSC panel, the rest of the elected positions are held by the representatives of large incumbents or their subsidiaries, including Scottish Power, Eon, SSE, Uniper and Engie. Martin says few of their smaller rivals are willing to spare the resources to have employees sitting on panels: "There's a whole host of issues that won't be relevant to that person as well. "You might have one or two mods a year that are actually material to them… but due to the nature of the codes you could be sat there for multiple meetings without getting any useful input into codes, which makes it a challenge for them to then justify their time on those panels." Angela Love, director of strategy and com- munications at Elexon, says one option may be to provide funding for dedicated seats for specific groups of under-represented parties. However, Leedham says this will not solve the underlying problem of a lack of engage- ment: "Just creating the seats doesn't mean that they'll be able to fill them. "For several years under the SPAA [Supply Point Administration Agreement], the small supplier seat was held by EDF Energy," he adds. "And then if you pay for it, what you tend to find is that you just end up with consultants filling it that answer to the people who pay them." Martin says the concerns of smaller parties could also be alleviated somewhat by changing the appeals process for modifications: "Currently, you can only appeal to the CMA [Competition and Markets Authority] if Ofgem goes against the decision of the code panel. "If the panel is, for example, made up of large thermal generators, not that they are, you've got no way to appeal that through the CMA if you felt hard done by." continued overleaf

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