Elexon proposal would reduce industry codes to three

Industry body Elexon has put forward proposals to reduce the number of codes in the nergy sector.

Elexon manages the electricity Balancing and Settlement Code (BSC), which is one of 11 codes, or sets of rules, that across the energy sector. The codes provide the commercial contracts between companies so they can operate in the energy markets.

There is wide recognition that the codes structure should change – the issue was one raised by etc Competition and Markets Authority in its investigation into the energy industry. The complexity of codes presents a barrier to new entry and the slow change process stifles innovation. In addition the commitment required to sit on code management bodies means large incumbent companies are over-represented.

Elexon says it believes that the rules and arrangements for the codes need to be reformed to support a rapidly changing energy sector, which is attracting increasing numbers of new, innovative business models.

It has put forward options for a three-code model for the whole energy sector to Ofgem and the Department for Business Energy and Industrial Strategy, as they are reviewing the code arrangements and are expected to announce next steps this summer.

Elexon proposes three codes would be:

  • Retail Smart Energy Code covering all aspects of the energy retail markets, including codes which govern smart metering
  • Wholesale and Settlement Code combining the BSC with the management and operation functions of the existing Uniform Network Code (which governs the gas sector)
  • Network Use of System Code bringing together the current five electricity network codes governing connection and use of the networks

 

Angela Love, Elexon’s director of strategy and communications, said: “Over the past 20 years the energy codes have evolved in a piecemeal way and the arrangements are now very fragmented and inconsistent. The energy system is changing at an unprecedented pace with greater amounts of renewable generation and more smart technology available. We need a simpler set of code arrangements to support these changes and the increasing numbers of innovative new business models that are entering the market.”

See Elexon’s proposals here

Further reading

Ofgem calls on System Operator to be proactive in helping industry evolve

Industry code bodies – download our quick guide

The energy industry should have a one-stop code shop

Code adminstrators facing major industry change call on Ofgem for leadership

Industry governance: building a new model

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