Utility Week

UTILITY Week 26th February 2016

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utILIty WeeK | 26th February - 3rd march 2016 | 25 Operations & Assets Market view T here is a view that to a large extent energy codes have performed extremely well to date, contending with significant change and market transfor- mation initiatives. However, codes and their governance were not specifically designed to deal with complex cross-code change. For the past two years, Gemserv has been listening to, and assessing, the concerns high- lighted by energy companies. We have heard how the volume of change is overwhelming them, especially those relatively new to the market, and that they are frustrated with how codes are inconsistent, overly complex, and can be difficult to access. We have proposed a solution that builds on what already works, does not run contrary to the Competition and Markets Authority's proposed remedy, and comple- ments the third phase of Ofgem's code gov- ernance review. Importantly, it does not introduce yet more change and risk to the energy market at a time when it is already undergoing fundamental reforms such as smart metering, faster switching, new cen- tralised registration, and transition to a low- carbon economy. Our proposed solution can be introduced within 18 months. It deals with the chal- lenges of today and is robust enough to cater for 2020 and beyond. At its heart lies a standard code model (SCM), embedded and governed in a reformed Code Administration Code of Practice (CACoP). The SCM would drive sim- plification, consistency, transparency, co- ordination and accessibility across all codes; including for example, detail about optimal change decision-making practices such as a code party voting model. We believe embedding these principles would increase the harmonisation of codes, leading to a consolidation of codes where it makes sense to do so. It would pave the way for a consolidated retail code, containing all the code governance elements that are perti- nent in support of retail competition, deliver- ing a one-stop shop for retail suppliers. An industry strategic body would over- see the SCM and reformed CACoP, and drive service improvements by advising on ever- improving best practice, and providing a critical strategic oversight of change. However, there are still important ques- tions to consider, including the extent to which industry representatives will want to be part of, and involved with, the strategic body. Establishing the strate- gic body by evolving the existing CACoP cross-code work group ensures efficiency, retaining the elements of CACoP that work well. The remaining elements of CACoP would be reformed to provide robust gov- ernance to support the strategic body's objectives (right). Our thought leadership paper contains more detail about our proposal, giving fur- ther examples of the guidance that could be issued and a timeline for implementa- tion. Our proposal would be relatively quick to implement because it would deliver ben- efits without the need to introduce more top- down regulation. The first step is to publicly consult on the role, nature and makeup of the strate- gic body, the content of the standard code model, and the scope of a reformed CACoP. This could be published for consultation through the existing CACoP cross-code work- ing group by summer 2016. The high-level design could be published in winter 2016, with a go-live date in spring 2017. The production of key outputs and code alignment with the standard code model could be initiated within six months of go- live – in winter 2017. Tony Thornton, head of transformation, Gemserv Build on what works Are energy code governance arrangements so flawed that we need to start again? What is the best solution? Tony Thornton suggests a possible approach. Strategic body objectives A forum with a clearer, stronger mandate where complex and cross-code changes can be discussed to advise on co-ordina- tion of change. Oversee the development, implementa- tion, and management of the Standard Code Model principles, including consul- tation and engagement. A means for Ofgem's strategic steer to be considered against the full breadth of code changes, and a vehicle to dissemi- nate that understanding to Code Panels. To provide a cross-code sounding board for any market participant that wrestles with code governance, while driving a continuous improvement ethos. Produce consolidated code-change plans to help market participants have greater transparency on future change. Oversee an annual cross-code customer satisfaction survey to help benchmark best practice and drive further code gov- ernance improvements. Advise on different codes' content and processes in dedicated code awareness sessions to allow greater accessibility and informed engagement. Gemserv's code governance solution Standard code model Strategic oversight cross-code co-ordination co-ordination consistency Transparency accessibility Simplification principles reformed cacop Standard code model

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