Change of supply process set for a major overhaul

Why is OFgem pushing for this change?

In 2017, Ofgem launched a programme which will deliver regulatory and operational changes to speed up the switching process and aims to make it more reliable. “Why?” you might ask?  Ofgem believes that the current switching arrangements, which were developed in the 1990s, are complex for suppliers and can lead to delays, errors and costs which are borne by customers.  With the advent of smart meters, proposals for universal half-hourly settlement, price caps, and more fundamental changes to the energy system itself due to renewable generation, Ofgem believes that now is the right time to reform the switching arrangements too.

what stage IS THE PROGRAMME AT?

Throughout 2018, Ofgem developed their proposals, specified the solution architecture and  ran a tender process to procure the Central Switching Service (CSS) service provider.  We are expecting an announcement very soon about who has been successful in winning the bid. The industry is now about to move into design, build and test phase which will mark the start of a major industry IT programme.  According to the industry plan, system testing is scheduled for Summer 2020 and implementation is from Summer 2021.

what are the NEW SWITCHING PROPOSALS?

Currently, we have separate switching arrangements for gas and electricity and these would be replaced with a single Central Switching Service (CSS). This will harmonise and speed up the processes in gas and electricity so that consumers can submit a request to a supplier to switch and be with that supplier by midnight the following working day in the B2C market and for a B2B consumer they would switch by the end of the second working day. The extra time for B2B  switches is to allow time for an objections process where a customer is bound by a fixed contract. The CSS will interact directly with suppliers for new registration flows, rejections, objections etc.  However, behind the scenes, the CSS will have to interface with other industry IT systems to exchange relevant data including UK link, MPAS, ECOES, Data Enquiry (DES), Metering Agents and the smart metering DCC system.  CSS will be a new central switching database with new interfaces but most of the existing supplier flows are likely to have to remain in place so that transportation invoicing is aligned and based on correct asset and read data. 

what will it MEAN FOR SUPPLIERS?

This will mean a significant IT project at industry level and suppliers will be expected to develop the new switching functionality in parallel with other industry stakeholders, as was the case under Project Nexus.  Consultancy firm PwC is providing the programme with assurance and suppliers will need to report progress through to them.  The industry may need to cleanse some standing data ahead of any data migrations from industry systems like it did for Project Nexus.  Suppliers will also have to operate new processes under the new rules; for example, they will have to object to customer transfers very quickly if switches are to happen within 2 days.  In summary this will be a large, complex industry wide programme of reform to the switching regime and the industry will need to manage the change effectively especially with respect to the storage and exchange of data.

OPINION

“This is another complex industry wide programme driven by the desire to speed up switching in the domestic market so customers can switch to cheaper deals earlier and is of questionable benefit to the B2B market.  However, suppliers can only operate one set of switching arrangements so B2B suppliers have no choice but to participate and develop their IT capability.  We will need to make the changes to be able to continue to operate in the market and need to do this as efficiently as possible.  It is a positive that PwC are providing programme assurance from the start.  This is a lesson learned from Project Nexus where things got on track when their expertise was brought in.  The new arrangements look more complex with new flows alongside existing and we are creating yet another repository for data.  I will be lobbying hard at the various industry groups to make things work for the B2B sector and minimise our costs to operate under the new regime.”

Andrew Green, Head of Regulation at Total Gas & Power