1

DGCG TSG Workstream 4 (Micro-generation) Project P02b Metering – Legal, Regulatory and Commercial Requirements

Final Paper

19 May 2004

2

DGCG TSG Workstream 4 (Micro-generation) Project P02b Metering – Legal, Regulatory and Commercial Requirements

Final Paper - 19 May 2004

Executive Summary and Recommendations

• The processes in place for meter changes in today’s market are based around the supplier hub.

• In today’s market, the one-stop shop solution (meter change and micro-generator

installation at the same time) can only be achieved through the import supplier.

• In today’s market, a micro-generator installer who is not in some way affiliated to the existing import supplier is likely to find it difficult to achieve a one-stop shop installation.

• If a one-stop shop installation is not possible, the customer probably faces

additional complication in arranging suitable metering.

• Because suppliers have no obligations for offering export metering (or export contracts), the arrangements for installing appropriate meters appear to be unregulated.

• Unless simple arrangements are in place to allow the one-stop shop, many

customers may not benefit from the exports from their micro-generators.

• If today’s systems remain unchanged, there may be many installations of micro-generators for which the existing meters are inappropriate (and the supplier may not be aware of the installation).

3

Recommendations

These recommendations are the collective view of the P02b team, and may not reflect the individual views of team members, or the parties they represent.

1. Ofgem should review the obligations on electricity suppliers for exported energy. Reason: To give clarity on the required metering, and the arrangements for its installation and maintenance.

2. Ofgem should consider the need for service standards for the

installation of meters for micro-generation in response to a customer request. Reason: There are no specific standards that define how quickly a meter change for micro-generation must be effected by the supplier following a customer’s request.

3. Meter Operators should publish advice on which types of meters may

run backwards, and how many are installed. Reason: This will help suppliers and micro-generator installers to identify meters that are unsuitable if export may occur.

4. The parties to the BSC should consider changes to systems to allow

import and export registers to be associated with each other. Reason: This would help suppliers and meter operators to identify customers with both import and export, and act appropriately (for example on change of supplier).

5. Ofgem and the parties to the BSC consider a new type of party – who is

responsible for export only, but who does not carry the usual obligations that a conventional supplier does. Reason: ‘Export consolidators’ may generate economies of scale that allow a market for exported energy to develop.

6. Distribution Network Operators harmonise their requirements on meter

operators for small scale metering installations. Reason: Applying common requirements for meter operators, in different regional areas will allow development in the market for meter operator services. Note that this recommendation is not exclusive to the installation of meters for micro-generators, but would also affect the wider (import only) market. This would be achieved under the Meter Operator Code of Practice Agreement (MOCOPA).

The parties for whom these recommendations are targeted will need to consider this paper, and take forward recommendations as appropriate. Responses to these recommendations, and subsequent reporting of progress, should be made to the Technical Steering Group Workstream 4 (Micro-generation Solutions).

4

1. Purpose

This document provides an overview of the issues surrounding the installation and ongoing operation of electricity metering systems for micro-generators. It is intended to:

• outline how meter installations and ongoing operation is arranged today; • describe how these arrangements may work to support the introduction of

micro-generation; • identify options for change to support the introduction of micro-generation;

and • outline the parties responsible for (or affected by) change.

2. Introduction

A micro-generator customer will need an import-export electricity meter to be fitted in order to have their exports traded through the Settlement System1. Given that customers usually have import-only meters (and because some of these meters may run backwards under export conditions), the existing meter may need to be changed. The responsibilities and contractual arrangements of the various parties in the electricity industry may require change in order to ensure the cost effective, and customer friendly, installation of the new meter. The Project P02b, under Workstream 4 of the TSG, was set up to consider arrangements to deliver this. The first part of its work was the commissioning of a study by PB Power2 to identify the relevant legal, regulatory and commercial issues. This has been completed, and has formed the basis for the project team’s work, and the background to this paper. As a very simple representation of what needs to be achieved, Figure 1 shows a typical customer’s installation today, and what will need to change when a micro-generator is installed.

1 The BSC Change proposal P81 came into effect on 28 September 2003, requiring import-export metering where non-half hourly settlement of export energy is to be employed. 2 PB Power: Micro-generation Metering Solutions; Feb 2003; report for Future Energy Solutions. Available on www.distributed-generation.org.uk

5

Figure 1 – The meter change

3. Rationale

Micro-generators will be installed, almost exclusively, in domestic premises or in very small business premises. The consumers who purchase them are likely to be price sensitive, and will want to minimise disruption to their homes and lives. Given that a new meter must be installed, it is very important that the cost and inconvenience of this is minimised. One way to achieve this is for the micro-generator installer to fit the new meter in the same (single) visit.

Consumer Unit

Service Cable from distributor

IMP 56789 EXP 12345

House circuits

Meter

Consumer Unit

Service Cable from distributor

IMP 56789 EXP 12345

House circuits

Meter

Consumer Unit

Service Cable from distributor

IMP 56789 House circuits

Meter

Consumer Unit

Service Cable from distributor

IMP 56789 House circuits

Meter

On the wall – pre micro - generator On the wall – post micro - generator

And the additional work to inform relevant parties of the change:

• Supplier • Data Collector • Distribution Network Operator

And the need to: • Assign an MPAN number for export • Return the old meter to its owner

Micro-generator

Note that this diagram shows a combined import-export meter as an example. The important aspect in this project is how the meter change is made, not the meters themselves.

6

Workstream 4 (Micro-generation Solutions), under the DGCG3 and TSG4, has been tasked with:

• Removing the main regulatory and institutional barriers to the introduction of micro-generation in Great Britain; and

• Developing simple, standardised solutions for the connection of micro-generation to distribution systems;

Project P02b was set up, under Workstream 4 to deliver this objective:

• To bring about the required changes to relevant regulations, agreements, and technical standards to allow installers of micro-generators to perform any necessary metering work that may be required.

In addition, Ofgem has referred directly to the need for micro-generator installers to be able to install meters:

“Ofgem considers it important that installers of DCHP equipment should be suitably qualified to undertake necessary metering changes. It will require co-operation between DNOs, installers and meter operators to ensure that consumers can expect the convenience of a one-stop call to complete all the necessary work.”5 “There may be scope for reduction of the cost of meter installation – especially as a component of a single visit installation of [micro-generation] equipment.”6

The P02b Project Team have developed a set of principles, used in testing its proposals, with the aim of ensuring that any change delivers benefits and minimises costs. These principles are listed in Appendix A.

Prepayment metering raises significant additional issues. The team has concentrated effort on developing solutions for the larger credit meter market. Prepayment metering is not addressed in this paper.

Metering to record generation is not required for the non-half hourly settlement of micro-generation. Generation metering is therefore outside the scope of this project, though it is discussed in other projects under Workstream 4 (notably Projects P02a and P04).

3 DGCG: The Distributed Generation Coordinating Group (jointly chaired by Ofgem and DTI) 4 TSG: The Technical Steering Group (directs the workstreams delivering projects to meet the DGCG’s objectives) 5 Ofgem: Distributed Generation: price controls, incentives and connection charging (para 6.40); Mar 02 6 Ofgem: Distributed Generation: A review of progress (para 4.39); Jan 03

7

4. Legal and Regulatory Arrangements in today’s market The current legal and regulatory framework has the following key features:

• Supply Licence conditions only apply to the supply of energy to a customer (i.e. import of energy), and the supplier has no obligation under the licence to arrange metering of exported energy7.

• The supplier has no obligation to offer terms for the purchase of exported

energy.

• Import meters are type-approved by Ofgem, but there are no such requirements on Ofgem to approve the export registers of meters8.

• There is no obligation on any party to install an export meter, unless the

supplier wishes the export to be recognised in settlements.

These features mean that no party (including the customer) is obliged to have an export meter installed for micro-generation.

5. Meter changes - today

Today’s processes for meter changes have been designed for the metering of imports only. Suppliers are responsible, under their licences, for ensuring that energy supplied is metered, and for making the necessary arrangements for this to happen. The day-to-day responsibility for doing this is usually the responsibility of the Meter Operator (MO), who is appointed by the supplier. In today’s market, a new meter may be installed as a result of any of these actions:

a. A new connection; or b. The supplier instructs the MO to change the meter (for example, when the

customer requests a change to their tariff); or c. The MO changes the meter as part of a planned replacement programme,

usually when it reaches the ended of its certified life; or d. The MO changes the existing meter because it is faulty.

No person other than the appointed MO may change the meter (except in emergencies).

7 This is an interpretation of the Supply Licence responsibilities. 8 This is an interpretation of the Utilities Act 2000, as amended.

8

Under REMA, the customer may choose to provide the meter independently, but installation of the meter would still rest only with an accredited MO. In the domestic market to date, MOs are appointed by the Suppliers, but the customer does have the right to appoint a MO of their choice (provided the MO is accredited).

6. Who can change a meter in today’s market?

Suppliers, Meter Operators and the Registration Authority have agreed to be party to MOCOPA– the Meter Operator Code of Practice Agreement. This agreement sets out the required competencies to ensure:

• Safety; • Technical compliance; • Information flows to other industry parties are correct; • The requirements of DNOs are met.

The parties to MOCOPA have agreed that only ‘accredited Meter Operators’ are allowed to change and maintain meters.

Given its importance (particularly in ensuring safety), it is widely accepted that metering work for micro-generation should be covered by the MOCOPA.

Currently, either the meter change must be done by an accredited MO, or it could be done by a micro-generator who is:

a. also an accredited MO b. a sub-contractor to an accredited MO.

An MO business must not only manage the ‘physical’ business of removing and installing meters, but also has significant responsibilities for updating industry data to ensure all relevant parties are able to read the meter and/or bill suppliers and consumers. To do this he will have a gateway to the Data Transfer Network. Whilst not impossible, it may well be impractical and prohibitively expensive for a micro-generator to establish the systems required to perform all of the functions of an MO. Many MOs already employ sub-contractors to carry out the ‘physical’ work of changing meters, and it is reasonable to assume that micro-generator installers may be able to agree similar arrangements so that they can make the meter installations. This then leaves the MO responsible for the data flows and, most probably, for the ongoing operation and maintenance of the newly installed meter. The sub-contracting approach, and its variants, is explored in further detail in the next section. MOs may be required to operate to slightly different arrangements in different distribution network operator areas. Although all covered by MOCOPA, the variations in operating practices between regions have the potential to introduce further complexity for MOs.

9

7. Limitations of today’s processes The retail supply market, and the processes that support it, are based around the ‘supplier hub’. The supplier hub puts the supplier at the centre of these processes. Importantly (with a few exceptions), the customer sees only the relationship with their supplier. The only way in which a meter change can be initiated by the customer is through the customer requesting the change through their supplier, or by telling their supplier that they wish to have the meter changed by a MO of their choice. The latter has important limitations:

• The customer needs to request the change; • If the supplier and MO cannot arrange the installation of the meter on the

same day as that of the micro-generator, the customer may experience disruption. This may result in the customer deciding against installing a micro-generator.

• The customer would need to liase with the MO or Supplier, to arrange access for the meter change;

• Both the micro-generator installer, and a MO, must visit the site to perform work (unless of course these are performed by the same person, operating in both roles).

These limitations would seriously undermine the prospects for the expansion of micro-generation. Project P02b is tasked with developing the solutions to overcome these limitations.

8. Additional complications for export metering in today’s market The preceding sections describe the arrangements for any meter change. The provision of export metering introduces new issues and additional complication. In summary:

• It is possible to have one supplier for the import, and a different supplier for the export. Whilst this might be said to allow for increased choice, the responsibilities of each supplier, given that metering equipment for each supplier is in the same box (or connected boxes) are unclear.

• Similarly, the energisation of the connection, is unclear – the import supplier

may wish to de-energise the connection (if the customer has defaulted on bills, for example), whilst the export supplier wishes to continue purchasing electricity from the customer.

10

Given that there could be different suppliers for import and export, there could also be different MOs. This raises numerous contractual and practical difficulties for the MOs – who is responsible for what being principal among these difficulties.

9. Options for Change Recognising the characteristics of today’s market, and its limitations, a number of options to overcome or mitigate against the problems is presented here. In keeping with the principles of the P02b team’s work, more than one option is offered, recognising that the market and consumers will choose the one best suited to their requirements.

As noted previously, the meter change process is linked into the current industry arrangements, which are based around the supplier-hub principle. The options for change are likely to impact not only on meter operators and micro-generator installers, but also on the suppliers.

OPTION 1 – Micro-generator installer acts as subcontractor for the appointed Meter Operator for a site

If a micro-generator installer were to become the sub-contractor of the appointed MO, the MO could allow the installer to make the meter change, and to use the MO’s data capture and processing facilities to feed meter data into the normal channels. Advantages

• The micro-generator has full control over the customer interface. • There is no need for the meter change itself to be initiated by the Supplier,

because the MO has the task of ensuring that the metering is appropriate for the customer. However, the Supplier will need to be involved if it is expected to pay for export energy and required to register a new MPAN (note that a meter cannot be energised until an MPAN is assigned and a connection agreement completed.)

• It requires no change to industry data flows (note that the micro-generator and MO would need to agree data flow requirements between themselves). This assumes that the MO has an arrangement with the Supplier whereby the MO will ensure appropriate metering is in place. If meter changes must be initiated by the Supplier (or by the customer), then this may not apply.

• The model currently works regardless of who the Supplier is (but note limitation below).

Disadvantages

• The installer would need to know who the appointed MO was for a particular site and what that MO’s metering requirements were.

• Each micro-generator would need to agree contracts, and working arrangements, with each of the MOs with whom they wish to work.

11

Option 1 is open to micro-generators today. Note that micro-generators with electricity supplier partners may be best placed to take advantage of this option, because the electricity supplier can exert influence over its agent (the MO).

OPTION 2 – Supplier arranges the meter change

In today’s market, the supplier initiates the necessary meter change (for example for the installation of a pre-payment meter in place of a credit meter, or the installation of an Economy 7 set-up). These changes are driven by the change of tariff. A similar situation may arise when a customer has a micro-generator installed – i.e. the tariff arrangement may change. On receipt of notification from the customer, the Supplier could order the appointed MO to make the necessary meter system change. Advantages

• The supplier-hub principle, and arrangements remain unchanged. • The supplier remains in control of the arrangements.

Disadvantages

• This option works well if the micro-generator is being installed by (or on behalf of) an electricity supplier. For independent micro-generation installers, the initiation of the meter change could remain difficult.

• In essence, the one-stop shop meter change and micro-generation installation can only be achieved through a supplier. If a supplier does not wish to arrange the meter change (because for example they do not offer an export tariff, and anticipate losing the customer to a competitor), there is little chance of a one-stop shop meter change and micro-generation installation being achieved.

As a sub-option to this option, Suppliers might be compelled to ensure (or make best endeavours) for the one-stop shop installation to be achieved, regardless of the supplier’s relationship with a micro-generation installer, or their own support or otherwise for an export purchase offering. This could be done through some targets or obligations on suppliers. This would be dependent on the interpretation of a supplier’s obligations for export metering (see Appendix C).

12

OPTION 3 – Customer appoints new meter operator when installing micro-generator

A customer can appoint a MO of their choice9 (provided the MO is accredited). This could mean that a micro-generator installer, perhaps working under contract to an MO, would arrange for the necessary meter change to take place.

Advantages

• The micro-generator installer can achieve a one-stop shop installation • Existing industry processes remain unchanged (though these have yet to be

tested in this context). Disadvantages

• The customer needs a new contract for the MO service (and customers are unlikely to want this additional complication).

• The appointment of MOs by customers in this market (domestic) is unproven. • If suppliers’ billing systems do not take account of the supplier no longer

paying for MO (and MAP) services, the customer may pay twice – once to the supplier, and once to the MO he has appointed

• MOs may be unable to administer this service to individuals at a price that is acceptable to the customer.

• The new MO has an ongoing responsibility for future meter maintenance. • The type of meter to be installed requires the prior approval of the supplier

(note that blanket approval may be possible)

OPTION 4 – A new Supplier for exports

The customer (and import supplier) may not wish to contract with each other for export. The customer could choose a new supplier for the export, leaving the import supply arrangements unchanged.

Advantages

• The export supplier could allow for the one stop shop to be realised. • The import supplier needs take no action.

Disadvantages

• From the customer’s perspective, separate import and export suppliers may be too complex.

• If the import meter is unsuitable, the easy installation of export metering (without reference to the import arrangements) has still failed to deliver a suitable solution.

• The limitations described in section 8 remain. 9 The Electricity Act 1989 (as amended, Schedule 7 (1) (2) refers) - KS suggests GR checks this

13

As a sub-option to this, the creation of a new class of “export consolidators” may deliver the necessary services and economy of scale effectively, whilst being subject only to regulation of the export services (rather than the full range of services of a ‘conventional’ supplier).

14

10. Summary and Conclusions

• The processes in place for meter changes in today’s market are based around the supplier hub.

• In today’s market, the one-stop shop solution (meter change and micro-generator

installation at the same time) can only be achieved through the import supplier.

• In today’s market, a micro-generator installer who is not in some way affiliated to the existing import supplier is likely to find it difficult to achieve a one-stop shop installation.

• If a one-stop shop installation is not possible, the customer probably faces

additional complication in arranging suitable metering.

• Because suppliers have no obligations for offering export metering (or export contracts), the arrangements for installing appropriate meters appear to be unregulated.

• Unless simple arrangements are in place to allow the one-stop shop, many

customers may not benefit from the exports from their micro-generators.

• If today’s systems remain unchanged, there may be many installations of micro-generators for which the existing meters are inappropriate (and the supplier may not be aware of the installation).

15

11. Recommendations

These recommendations are the collective view of the P02b team, and may not reflect the individual views of team members, or the parties they represent.

1. Ofgem should review the obligations on electricity suppliers for exported energy. Reason: To give clarity on the required metering, and the arrangements for its installation and maintenance.

2. Ofgem should consider the need for service standards for the

installation of meters for micro-generation in response to a customer request. Reason: There are no specific standards that define how quickly a meter change for micro-generation must be effected by the supplier following a customer’s request.

3. Meter Operators should publish advice on which types of meters may

run backwards, and how many are installed. Reason: This will help suppliers and micro-generator installers to identify meters that are unsuitable if export may occur.

4. The parties to the BSC should consider changes to systems to allow

import and export registers to be associated with each other. Reason: This would help suppliers and meter operators to identify customers with both import and export, and act appropriately (for example on change of supplier).

5. Ofgem and the parties to the BSC consider a new type of party – who is

responsible for export only, but who does not carry the usual obligations that a conventional supplier does. Reason: ‘Export consolidators’ may generate economies of scale that allow a market for exported energy to develop.

6. Distribution Network Operators harmonise their requirements on meter

operators for small scale metering installations. Reason: Applying common requirements for meter operators, in different regional areas will allow development in the market for meter operator services. Note that this recommendation is not exclusive to the installation of meters for micro-generators, but would also affect the wider (import only) market. This would be achieved under the Meter Operator Code of Practice Agreement (MOCOPA).

The parties for whom these recommendations are targeted will need to consider this paper, and take forward recommendations as appropriate. Responses to these recommendations, and subsequent reporting of progress, should be made to the Technical Steering Group Workstream 4 (Micro-generation Solutions).

16

Appendix A: P02b Project - Statement of Principles Aim This project team has been established to fulfil the purpose and objectives, as set out in its project specification: “To bring about required changes to relevant regulations, agreements and technical standards to allow installers of Microgenerators legally to perform any necessary metering work that may be required.” Background The first meeting of the team agreed that the solutions should meet some basic principles. These principles will form a useful test for the ongoing work in the team, as well as its final deliverables. Principles � Safety

o Solutions must not compromise safety for customers, installers, or distribution companies. �

Integrity of data o Solutions must ensure continued data integrity for meter standing data and data used in

settlement. �The customer

o Ultimately, solutions must ensure benefits for the customer (the electricity consumer). Simplicity, low costs, and the absence of problems are likely to be key customer desires.

�Flexibility

o Maximum possible freedom for market solutions to develop will enhance competition and efficient provision of services

�Efficiency of implementation

o As far as is possible, solutions should make use of existing processes and regulations, or those that are known to be imminent (e.g. the changes to be introduced by REMA)

�Focus

o Solutions must address the project purpose, and not attempt to tackle issues which are being (or should be) addressed elsewhere. However, the team will need to consider whether changes for micro-generation may set expectations or precedents elsewhere.

�Timeliness

o The project has a timescale driven ultimately by the Distributed Generation Coordinating Group. Solutions must be sought to meet these timescales.

�Long life

o The solutions must be robust against changes in the commercial or regulatory environment, to avoid the need for revision only a short time after introduction.

17

Appendix B: P02b Project Specification

Technical Steering Group

PROJECT SPECIFICATION PROJECT TITLE:

Metering – Legal, Regulatory and Commercial requirements

Reference: WS 4-P02b Date of Issue:

20 May 04 (Supersedes all previous issues)

Parent Work Stream: Microgeneration Solutions

PROJECT MANAGER:

GRAHAM ROBERTS

Project Team: Project Manager: Graham Roberts Ofgem: John Stevens Elexon: Keith Campion Supplier: Bob Walker, npower Distribution Company: Tony Woods, LPN Installer / Manufacturer: Graham Roberts Meter Expert: Bob Loe, Horstmann Controls MRASCO (Gemserv): Jill Ashby Acknowledgement also to the contribution from outside the team from Keith Sullivan, Association of Meter Operators PROJECT START DATE:

1/7/02 PROJECT FINISH DATE:

END 2004

PURPOSE & OBJECTIVES: To bring about required changes to relevant regulations, agreements, and technical standards to allow installers of Microgenerators legally to perform any necessary metering work that may be required.

18

RESOURCE/FUNDING SOURCE: Phase 1 Initial consultancy project required to give an assessment of the relevant legal, regulatory, contractual and technical implications of allowing installers legally to carry out metering work. This would include identification of specific industry documents that would require changes, and an assessment of the commercial implications for each of the stakeholders (i.e. customer, supplier, distributor, settlements system) who currently have an interest in metering. Completed – PB Power report now available Phase 2 Once this initial assessment is complete, the cooperation of Ofgem and the DNOs, Meter Operators and Energy Suppliers is expected to be needed to bring about necessary documentation changes, including any public consultation requirements. Cooperation of the industry parties is necessary because any changes to arrangements for meter installation (or parties who may do this work) may need to be effected under the BSC or the Meter Operator Code of Practice Agreement, and may impact on Supplier Hub information flows. INTERACTIONS/INTERDEPENDENCIES WITH OTHER WORK STREAMS AND PROJECTS: Where a Supplier wishes to include exported energy in settlement, an import-export meter will need to be fitted. Ofgem review of electricity supply licence obligations on export Special IREG on import-export metering PROJECT RISK REGISTER: Reference

Risk

Pro

babi

lity

Impa

ct

Ove

rall

risk

le

vel

Mitigating actions

WS4-P02b-R01

External Parties’ cooperation 1 yr delay

Achieve early sign-on from relevant regulatory agencies and governance bodies that they will undertake necessary work to bring about necessary change to industry documents.

19

SCHEDULE OF DELIVERABLES: (DD = completed) Reference Description Delivery date WS4-P02b-D01 Specify Phase 1 Initial Consultancy Project Mid Jul 2002 � WS4-P02b-D02 Contract Award 31st Oct 2002 � WS4-P02b-D03 Interim Report 24th Dec 2002 � WS4-P02b-D04 Final Report from consultant 28th Feb 2003 � WS4-P02b-D0x Need to recognize steps in bringing together

views

WS4-P02b-D05 Change Proposals to Ofgem May 04 WS4-P02b-D06 Regulatory Agencies & Governing Bodies

Complete Initial Consultation July 04

WS4-P02b-D07 Regulatory Agencies & Governing Bodies Propose “in principle” changes

Oct 04

WS4-P02b-D08 Detailed Regulatory Change Proposals Made, inc. statutory consultation

Dec 2004

WS4-P02b-D09 Changes take effect End 2004 ADDITIONAL INFORMATION: Delivery dates restated to acknowledge the assessment made during and shortly after Phase 1 - that the initial assessment of the complexity of the changes required was insufficient.

20

Appendix C: Dependencies that may influence the content and recommendations presented in this paper This appendix provides a summary of the issues outside the immediate scope of the project, but having an important impact on how the aims of P02b may be achieved. Dependency 1 - Ofgem review of Supply Licence obligations

This review could be key to defining whether meter changes are required for micro-generators. Ofgem are carrying out a review to determine whether the supply licence obligations that apply for ‘normal’ import consumers also apply to export from customers with micro-generation. There are two possible outcomes (and possibly some area in between the two extremes):

1. The Supplier has the same obligations for export as for import; or 2. The Supplier has no obligation for exports

In the first case, the issue of how the import-export meter is installed remains very important. In the second case, there could still be a market for exports, but this would be outside the Supply Licence, and subject to bilateral agreement between Supplier and customer. Under this arrangement, it will be the Supplier and customer who would define the metering requirements. If Suppliers wanted to trade the export in Settlement, they would need to install import-export metering. If the Supplier did not want to trade the export, there would be no need for a new meter (providing the existing meter does not run backwards).

Dependency 2 – Issues and solutions developed by the Issues Resolution Expert Group (IREG)

Suppliers, distributors and other interested parties come together under the IREG to resolve issues between them that affect the processes and agreements under which electricity retail activities are administered. Recently, IREG has begun assessing how the introduction of micro-generation may affect the arrangements and processes. Among issues identified at IREG were:

• Will export come under the Supply Licence (see section above)?

• Will it be possible to have one supplier for import, and another for export?

21

• Who is responsible for an import-export meter system – the import supplier, or the export supplier?

• Can more than one Meter Operator be appointed to a site (e.g one for the

import meter, another for the export) – if yes, the question arises as to where responsibilities begin and end for each party.

• What happens when the Supplier changes? This is also dependent on the

questions above.

• How will MPANs be assigned (there will need to be an MPAN for import and for export)? This is relatively simple in a new-build scenario, but may be more difficult when installing a micro-generator at an existing (import-only) site.

Dependency 3 – Changes in the meter operator and DNO markets

The Review of Electricity Metering arrangements (REMA) has opened up new areas of competitive activity in the meter asset provider and meter operator roles. In the past, these roles were (in the non-half hourly market) provided exclusively by metering businesses with their origin in the local DNO. This meant that there were a limited number of meter operator businesses, and one could predict which one would be appointed to a particular site, simply by knowing in which DNO area the site is. The opening-up of these services to more competition is likely to have a number of effects:

• Services provided on a competitive basis to Suppliers could mean that the Meter Operator is defined not by geography, but by the Supplier. This is already happening in some areas with the British Gas agreements with OnStream, United Utilities and Siemens. A micro-generator installer may not know who the Supplier is (and hence the Meter Operator), and therefore be unable to perform the one-stop meter change.

• Competitive activity in the market for metering services may lead to more

(or fewer) Meter Operators. This will have an impact on the number, and overhead, of agreements if micro-generator installers are installing meters under sub-contract to a Meter Operator.

• New DNOs may enter the market – for example new entrants building and

operating an LV network for a new housing estate. At present, the detail of how this might affect meter installations, and the MOCOPA, is unclear.

• The current Distribution Price Control Review (and the new metering price

controls) from April 2005 may impact upon, or need to reflect, the import-export metering services.

END OF DOCUMENT