What’s the future of E-serve, Elexon and the Low Carbon Contracts Company? LCCC chair says organisations could be rationalised “tomorrow”

In the January issue of New Power Report, editor Janet Wood spoke with Regina Finn, the new chair of the Low Carbon Contracts Company, about the many changes facing the power industry. Finn has been regulator and participant in utilities across several sectors.

This is an extract from an interview in the January issue of New Power Report. Subscribers can read the full interview by clicking here and logging in. Not yet a subscriber? New Power is a specialist report for anyone with an interest in the UK energy industry. We look in-depth at all the issues that have to be addressed to rebuild our industry – moving from our centralised high-carbon power system to one that will provide heat and power securely, affordably and with minimal carbon dioxide emissions. Contact [email protected] to find out more.

The Low Carbon Contacts Company (LCCC) is just one of many organisations managing payments across the energy sector, together with Ofgem’s e-serve arm (managing the RO and feed-in tariffs) and Elexon (managing settlements). Do we need so many?

Finn says, “You could roll one of them into the other tomorrow… It’s a really complicated landscape and there is a lot of institutions there and yes I personally believe you could rationalise. Somebody has got to have the will to do that and it can’t just be the institutions because it needs some legislative change.”

I ask whether now is the time to unpick it, as we move out of the supplier hub and towards half hourly settlement for domestic customers. She says, “The first is we have to get really good at coordinating between these different organisations and different systems now. Already there are changes to half hourly settlement. It has implications for our systems and we have to know that we are ready and able to make those changes.”

That is equally true where another body has changes to make and LCCC is interdependent. “You have to do that now, there is no choice.”

As for seeing if there is a rationalisation, “I think that’s perfectly feasible thing to do.”  The caveat is, “One would need to look at it in a way that takes into account the impact of institutional change so it is a trade-off. You could step back and rationalise all these fragmented bodies and it would look much cleaner, but what amount of disruption is that going to bring to the day job.”

If you did, the value “would be in stepping back and thinking quite seriously about what is the right institution. What footing should it be on? Should it be a gov[ernment] co[mpany]? …that is where you would get the value. Just mashing organisations together doesn’t usually deliver value.”

A major complaint from industry participants is the ‘friction’ in providing different information for different instruments.

“What industry would like is streamlined data and effective coordination that reduces the burden on them. Whether putting everything into one institution would deliver that I would question.”

She recalls the same call in sectors she has regulated. The Financial Conduct Authority was one example where functions were brought together. It has 4500 staff, and Finn says, “people still complain that they get constant different requests from different bits of that organisation that are not co-ordinated properly.”

Click here to read Finn’s views on whether there is still justification for sector regulators.