Open letter to domestic energy suppliers on the calculation of electricity base levelisation rates
Summary
Ofgem open letter to suppliers on calculating electricity base levelisation rates. Levelisation ensures that policy cost differences between suppliers (from FiT, RO, WHD obligations) are socialised across the market.
Why it matters
Technical but important for cost allocation fairness. Incorrect levelisation rates create cross-subsidies between suppliers and their customers.
Areas affected
Related programmes
Memo
Open letter to domestic energy suppliers on the calculation of electricity base levelisation rates | Ofgem Please enable JavaScript in your web browser to get the best experience. BETA This site is currently in BETA. Help us improve by giving us your feedback . Close alert: Open letter to domestic energy suppliers on the calculation of electricity base levelisation rates Publication type: Correspondence and other Publication date: 11 March 2024 Topic: Energy pricing rules, Energy codes Subtopic: Energy price cap, Retail energy code (REC) Print this page Share the page Share on Facebook Share on Twitter Share on LinkedIn This letter to industry sets out how the electricity base levelisation rates will be calculated and reconciled from 1 April 2024. It explains how the reconciliation system operated by RECCo which supports the levelisation policy, has initially been designed to accommodate only one set of levelisation rates per region and fuel type. It sets out our intention to derive a blended base electricity levelisation rate, and the methodology we will use to do this, whilst design updates are addressed in parallel to allow for single-rate and multi-rate metering arrangement differentiation. It also details retrospective true-up process that RECCo will undertake backdated to 1 April 2024 to settle any differences in the reconciliation payments made to/ from suppliers under the interim blended rate solution. The letter therefore requests that suppliers preserve data on the number of customers they have on single-rate and multi-rate tariffs for each payment type and each region on the 1st of each month, backdated to 1 April 2024, to enable this to take place. A second version of the letter was uploaded on 15th March 2024 to correct a typographical error in Annex C. We identified that the prepayment meter blended rate for the North West region at the top of the table in Annex C was inadvertently not included when transposing the data in the original version, and subsequently the values for the rest of the regions were shifted up one place. This table has now been corrected in the letter and republished on the Ofgem website. Main document Open letter to domestic energy suppliers on the calculation of electricity base levelisation rates [PDF, 314.23KB] Print this page Share the page Share on Facebook Share on Twitter Share on LinkedIn Close