techUK welcomes the opportunity to respond to the Ofgem’s consultation regarding half hourly electricity consumption data for settlement purposes.
Using Half-Hourly (here onwards referred to as HH) data for settlement will place stronger incentives on suppliers to help customers move load to periods when electricity is cheapest. Using consumers’ HH data, in conjunction with a faster process, can also improve the efficiency of market arrangements and promote competition by reducing the risks of entering the market.
If Ofgem is satisfied that settlement reform brings new and significant consumer and efficiency benefits to the electricity system as a whole (which we and Ofgem each expect), then customer half hourly data should be made available to the settlement system as a regulated requirement. The principle which under-pins the Data Access & Privacy Framework 2013 (and reinforced at EU level) is that consumers should have a choice over use of their data except where this data is needed for a regulated purpose. If there is a legal obligation on the party responsible for settlement to process HH electricity consumption data for settlement purposes only, then the data should be readily available in full to be processed for those reasons. We also want to stress that in our understanding “the party” are the Suppliers and their agents and shall there be any change in the future, techUK retains the right to re-consider our position.
techUK also wishes to raise the issue of anonymisation and ‘hidden identity’ in terms of Ofgem providing more information on the business case and the operational and set-up cost of such services. Moreover, Ofgem’s Baringa report states that pseudonymisation is described by the ICO as carrying a “greater privacy risk (than anonymisation) but not necessarily an insurmountable one.
Of course, where cost effective, steps should be taken to minimise privacy impacts for customers, but, in our view, the proposed Option 2 for customer ‘opt-out’ puts at risk the longerterm potential benefits of settlement reform being fully realised for consumers at large and is likely to be at a high cost. As recognised by the consultation, an ‘opt-out’ approach arguably could lead to potential ‘gaming’ with some retailers (or customers) potentially taking unfair advantage of an electricity system only partly-settled against ‘actual’ energy usage.
In coming to its decision in favour of Option 2, Ofgem draws on focus group findings from its Consumer First Panel (~60 customers in total) – plus a short Omnibus survey of ~1500 respondents. However, in none of this sampling was the question raised as to how much those who wished to opt out would be willing to pay for not being settled using HH data, but an approximate estimate. Given the nature of the use of the data, it would be unreasonable to socialise the cost across other customers, making the vast majority pay both for a service they did not choose and through a reduction in the efficiency of the energy system as a whole. We are extremely mindful of the importance of privacy issues to consumers, but we nonetheless believe that the likely long-run benefits from successful settlement reform, including for consumers overall, will warrant a mandated approach to collecting customer half-hourly consumption data for settlement (Option 3), with a view that options 4a and 4b are just not economical nor fitting within the government’s aspiration to reduce energy costs. Simply implementing those options will be extremely costly and that cost most likely will be spread across all consumer groups. Ofgem should evaluate carefully if such options are even necessary as in our opinion not entirely. We would also like to question how much would a consumer have to pay not to be settled using HH data and how will their supplier communicate the information to them? Would then those consumers choose the option? How would that affect faster switching and costs for the Suppliers as there will be some customers who are not settled. We strongly recommend that costs are not socialised.
Absent other relevant evidence (on international experience, for example), such research can offer helpful insight into customer thinking, but customer data-privacy and electricity settlement reform are unquestionably complex topics for consumer research. In arriving at fundamental decisions about the future shape and desired outcomes for settlement reform, customer research should be treated as just one among several relevant inputs.
Mandation would also address the potential for gaming. A mandated approach to accessing customer data for settlement purposes may in the end prove fairer overall, subject to a good understanding of the likely distributional impacts for end-customers of greater cost-reflection in under-lying industry charges from settlement reform – especially for energy consumers in vulnerable circumstances. It will be important to explore this topic in the economic case in the half-hourly settlement Business case.
We recognise there are questions regarding consent arrangements for access to data for settlement purposes for the ~6 million customers who already have an electricity smart meter (i.e. foundation or SMETS 1 meters). Even so, Ofgem’s proposal for this customer group to retain the existing ‘opt in’ arrangements until they change either their tariff or their supplier seems out of step with achieving successful settlement reform and arguably disproportionate.
Furthermore, techUK encourages innovations and technological advances such as smart appliances, electric vehicles with smart charging, and batteries, which should enhance consumers’ ability to adapt their consumption in response to price signals. We have the view that data should be available for suppliers to be able to provide one service to all and innovate within their organisation appropriately with new offers and lower energy prices. We provide answers to the individual questions in the attached document.