Consequential DCUSA changes for Switching SCR (REC 3.0)

Ofgem launched the Switching SCR in November 2015 in order to introduce the necessary changes required to the licence and code framework for the Switching Programme. The objective of the Switching Programme is to improve consumers’ experiences of switching, leading to greater engagement in the retail energy market by designing and implementing a new switching process that is reliable, fast and cost-effective. This will build consumer confidence and facilitate competition, delivering better outcomes for consumers.

The SCR mechanism allows Ofgem to holistically manage complex changes to multiple industry codes and licence conditions. Key to the process is effective working with industry and other stakeholders, including consumer representatives.

Alongside the Switching SCR, Ofgem launched the Retail Code Consolidation (RCC) SCR in November 2019. The purpose of that SCR was to rationalise retail energy codes by closing down the electricity Master Registration Agreement (MRA), gas Supply Point Administration Agreement (SPAA), the Smart Meter Installation Code of Practice (SMICOP), and Green Deal Arrangements Agreement (GDAA), and consolidating many of the requirements from these codes into the new Retail Energy Code (REC) or transferring them to another industry code as appropriate.

With the coming into effect of REC version 2.0 in September 2021, together with the implementation of consequential changes to other industry codes and the close-down processes for the MRA and SPAA in progress, Ofgem closed the RCC SCR. Ofgem then continued to progress the Switching Programme and related Switching SCR.

The Switching SCR will bring about significant changes to the REC as part of the Switching Programme, introducing REC version 3.0. These changes to the REC will require consequential changes to be made to other codes, including DCUSA, to reflect the new arrangements, leading to this DCUSA change proposal.

The proposed changes to the DCUSA support Ofgem’s Switching Programme, with the overall objective being to improve consumers’ experience of switching, leading to greater engagement in the retail energy market, by designing and implementing a new switching process that is reliable, fast and cost-effective. This will build consumer confidence and facilitate competition, delivering better outcomes for consumers.

Ofgem’s Full Business Case for the Switching Programme estimates the overall monetised benefit to consumers to be between £185m and £1,077m. Ofgem’s identified monetised benefits include the following factors relating to improved quality of service for consumers:

1. Direct benefits to consumers from faster switches and lower volumes of exceptions; and
2. Indirect benefits of higher switching volumes likely to result from easier and more reliable switching.

Ofgem’s Full Business Case also identifies non-monetised benefits of:

1. Benefits to consumers of encouraging and enabling greater competition and innovation in the market (i.e. from competitive pressure leading to bills being lower than would otherwise have been the case); and
2. Benefits of having a single switching system designed with future change in mind and that is better able to adapt to innovation.

As set out in the Full Business Case, Ofgem believes that the non-monetised benefits will outweigh monetised benefits.

• Section 1A: Clause 1 ‘Definitions and Interpretation’
• Section 1B: Clause 8 ‘Costs of the DCUSA’
• Section 1C: Clause 12 ‘Voting’
• Section 2A:
  • Clause 25 ‘Energisation, De-Energisation And Re-Energisation’
  • Clause 30 ‘Provision Of Information’
• Section 3: Clause 54 ‘Termination’
• Schedule 1 ‘Cover’
• Schedule 8 ‘Demand Control’
• Schedule 16 ‘Common Distribution Charging Methodology’
• Schedule 32 ‘Residual Charging Bands’
• Schedule 33: ‘Disconnections’