Andrew Hodgson explains why next-day switching will be more than just a technical challenge for energy suppliers.
As part of its continuing focus on improving energy services for UK consumers, Ofgem is now aiming to make reliable next-day supplier switching a reality by 2019.
To achieve this, the proposal is to move registration data – which is currently held and managed in multiple systems and centralise it into a single system run by the Data and Communications Company (DCC). This approach would bring the UK in line with registration systems and processes operated elsewhere around the world.
How big is the technical challenge?
In the short term, the transition to a centralised system will create a technical challenge for suppliers, since many of their current data flow interactions will either be replaced or will need to be re-engineered to integrate with the new DCC registration system.
However, in terms of dataflows, the Target Operating Model will actually be simpler to build and maintain than the current model: instead of point-to-point integration between multiple participants , each supplier will just need to communicate with the DCC’s central hub. For suppliers who are already using a sophisticated dataflow management platform such as Affinity Marketflow, this should pose no real problems other than the need to consolidate a number of other processes.
But even if the technical aspects of the transformation should not be too much of a concern, there are business process, governance and architecture challenges that will need to be overcome.
For example, how will next-day switching co-exist with the cooling-off period that allows consumers to change their mind about switching suppliers? Currently, the cooling-off period expires before the switch actually occurs, so if the consumer decides to cancel the switch, there’s no problem. But with a next-day switch, there will have to be some provision for switching the customer back again – which will create new complexity in other areas such as billing.
Similarly, what will happen when a supplier exercises its right to object to a switch (because the consumer’s account is in arrears, for example)? New processes will need to be designed to handle these kinds of exceptions in a way that is fair and transparent to the consumer, and that also minimises the complexity and risk of error for the suppliers.
On the governance side, the regulation of registration is currently managed by a number of different organisations: Ofgem for licensing conditions, the SEC Panel / SECAS for the Smart Energy Code, ELEXON for electricity settlements, MRASCo for the Master Registration Agreement, and Xoserve who manage registration and settlement on behalf of all of the network operators in the Gas Market.
Centralisation of registration could be an excellent opportunity for the industry to simplify this complicated regulatory framework – but whether it persists or is rationalised, there will still be compliance and reporting issues that suppliers will need to address.
During the initial consultations around centralisation of registration, the areas of data aggregation and data processing were mentioned as part of the scope – but they aren’t included in the current version of the Target Operating Model.
If the new system doesn’t centralise all of the relevant metering and customer data, then the data that is outside its scope will still need to be stored elsewhere. This will reduce the ability to rationalise the current fragmented systems landscape, and will also limit the usefulness of the central system as a source for new data services in the future.
Taking a strategic view
If we view next-day switching as the sole objective of the centralisation of registration, then next-day switching is the only benefit we’ll get. But if we view it as the first step on a roadmap to a simpler, more streamlined way for energy companies to compete and collaborate, it has much greater potential.
At AMT-SYBEX, we want to see the industry seize the opportunities that this initiative offers, and we’re committed to leveraging both our technical expertise and our consulting experience to help our customers and the DCC make that happen.
Have a look at our Affinity Marketflow product page for more information.