Under consultation UNC428 Ofgem have ruled that any gas meters which are currently aggregated at point of invoicing will be disaggregated after the project is implemented around Q4 of this year. Here’s our take on why this is happening and how you might be affected by these changes.
Take a look at your business gas invoice, do you see numerous meters detailed under one account? If so then it’s likely that at some point your meters were aggregated. One benefit to consumers in this is that is simplifies the process of procurement and reduces administration at the customers end. If you read our blog on P272 last month you will have learned how that particular consultation was influenced by the need for more competition in the market. Where this project is concerned it is not the shippers of gas but the transporters which have demanded a more transparent allocation of transportation costs to the meter in question.
Following the privatisation of the energy sector, operatives in the Gas Distribution Network (GDN) began to charge shippers (energy suppliers) based on the locality, consumption and required capacity of the meter in question. The cost of transporting gas from source to consumer is then re-charged to you the customer by the shipper (your energy supplier). It is here that operatives within the GDN claimed that aggregation had skewed this reconciliation process with some MPR (Meter Points) being charged unfairly. As such any aggregated supply will now be billed based on its independent consumption.
So how will this affect you? A basic aggregated meter setup will look like the diagram below. Where this is the current arrangement, both meters within the displayed boundary will be billed using one standing charge, for simplicity we will call this £100pcm. This standing charge will in fact be made up of two standing charges, which are the assumed cost of transportation for each individual meter. Following disaggregation the GDN, by way of the national database, will be able to determine the actual individual consumption of meter A & B and charge them accordingly. The effect will be more transparent and fair transportation costs for each meter.
Gas Meter Disaggregation Diagram
Suppliers are now in the process of disaggregating meters, meaning that the request to tender a aggregated meter will result in two or more quotes being returned.
One potential benefit we foresee with these changes is that a consumer may be able to separate their supplies between more than one supplier if market analysis proves this to be financially viable. There is also a savings opportunity created where by one supply has minimal or no usage, just about to save a client £6k PA because of these changes.
Follow us on Twitter for further updates on this and other industry changes, and don’t forget to see our earlier blogs on things to look out for in a number of cost areas over the coming months.