Electricity market-wide settlement reform
Ofgem programme to deliver universal half-hourly electricity settlement
The electricity settlement process places incentives on suppliers to buy energy to meet their customers’ demand in each half-hour of the day. Accurate and timely half-hourly consumption data from smart metering could significantly improve the quality of settlement, which in turn could encourage innovation and efficient use of energy.
Ofgem considers it in consumers’ interests to be settled using half-hourly consumption data from smart meters and automated meter reading (AMR) and as such has launched a Significant Code Review (SCR) which sets out their timetable for delivery of market-wide half-hourly settlement. There are five options being considered (known as Target Operating Models). The main objective of the TOMs is to create an enduring Settlement process that is simple, more accurate and facilitates innovation based on the Design Principles set out by Ofgem.
This will be a major industry programme that will deliver a modernised settlement regime designed for the smarter energy market.
More information can be found on this page of Ofgem’s website: https://www.ofgem.gov.uk.
A recent presentation from Ofgem outlining the status and way forward is attached.
The timetable for reaching a decision on the target operating model is as follows: