Industry settlements under strain as 13 companies attract ‘special focus’ over demand estimation accuracy

Balancing and settlement company Elexon has said that  13 domestic energy supply companies are under ‘special ficus’ to ensure their estimates of customer usage remain within accuracy limits.

Accuracy has been affected during Covid, for example because companies were unable to enter sites to take meter readings, or because user demand has not followed typical profiles.

Inaccurate estimates by individual companies are a risk across the market, because they can result in energy being misallocated. That means bills paid between energy companies are incorrect, and so are charges, like ‘use of network’ charges, that are allocated pro-rata according to the energy transmitted on the companies’ behalf. Other charges based on whether parties are ‘out of balance’ (ie supplying or using a different amount of power than contracted) may also be misallocated.

Generally, intra-industry payments are fine-tuned over 18 months as real data replaces estimates. But carrying the cost of inaccuracy, even temporarily, can be a significant financial challenge, especially for companies operating on thin margins. It can also result in increased customer billing problems and complaints.

Now Elexon and the Performance Assessment Board (the body with direct oversight) have concerns about how far companies’ accuracy has drifted. They have put 13 suppliers under ‘special focus’ – there are more suppliers that are affected but, mindful of capacity at Elexon and PAB, these have volumes high enough to have a significant effect. Those that do not improve are likely to enter a ‘Error and Failure Resolution’ process previously applied when companiesbreached tight accuracy requirements.


Further reading

Elexon acts on fears lack of access to read electricity meters could bog down settlements process

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