Response to Forward Work Plan and Budget
In February RECCo published its 2024/25 Budget for REC Party consultation. One REC Party (Smart DCC) appealed a single budget line item (potential Central Registration Service (CRS) Transfer Project spend of £420K) to Ofgem; the latter are engaging with RECCo and DCC to determine its position on that Budget allowance and resolution is expected in May.
Following industry engagement through the Budget webinar in February, another REC Party submitted a letter of comments and suggestions on how RECCo could improve future Budget consultations. The REC Board welcomes this industry engagement and at the April Meeting determined the response be provided to the REC Party directly and then subsequently published to all REC Parties in a REC Newsletter.
In particular, the Board noted the budget setting proposals set out in the recent DESNZ Consultation on future Code Manager licencing. While several of the proposed arrangements already exist within the REC a number would be new obligations and the Board is committed to early adoption of those wherever it is appropriate and practical to do so.
Central Registration Service
In August 2023, Ofgem announced its intention to consult on whether responsibility for delivery of the CRS should remain within the DCC Licence or be transferred to RECCo. Ofgem identified three potential benefits of the transfer:
- RECCo would hold more scrutiny over the Service Providers;
- RECCo would realise synergies between the contracts for Switching and retail services; and,
- Decoupling Switching from the Smart Licence would promote more streamlined governance and decision-making processes under the REC.
In our 2024/25 Budget, RECCo included an allowance to prepare a consultation response which will give Ofgem and REC Parties confidence that transferring the CRS to RECCo is the optimum outcome, including how RECCo will:
- Transfer the service from DCC;
- Run the service once it has been transferred;
- Deliver a better value service and benefit enhancements post transfer; and,
- Minimise the risk to Ofgem and industry of transferring the service to RECCo.
As indicated above, DCC has appealed this Budget line, and we are currently awaiting Ofgem’s determination.
Stakeholder Advisory Group
As set out in our Strategy and Forward Work Plan 2024-27, and two years into live operations, we established our ‘Code Manager Evolution’ project, conducting a thorough assessment of the performance and effectiveness of our Code Manager services. This was to ensure alignment with industry needs and to inform our future re-procurement strategy. Whilst RECCo has initiated a continuous improvement programme across the Code Manager service over 2024/25, we are also considering the evolution of the service in the medium to long-term, based on feedback from our stakeholder.
We established a Stakeholder Advisory Group, made up of eight industry stakeholders to support the Code Manager evolution project in March, providing informal advice and guidance to the project team. Nominations from industry stakeholders were received from several Suppliers, Networks and MEMs. This Group of experienced users of the service, then, can offer guidance, perspectives, and insights through the various stages of the project lifecycle. The group has already met for two meetings and will run until at least the completion of any required procurement activity (c.9-10 months), at which point its future will be reviewed.
By establishing and engaging with stakeholders in this group, we will ensure that end-user views and needs are fully considered to inform any recommendations to the REC Board and integrated into our service evolution efforts. RECCo will also be engaging with wider stakeholders over the year on the project’s progress.
Net-Zero activity
The Board considered a paper produced at the request of the Remuneration Committee, setting out a proposal for the inclusion of a specific net-zero objective within the performance scorecard. The objective would be to develop a plan for RECCo, through its delivery of the REC and REC Services, to facilitate RECCo’s contribution to Net-Zero in addition to the deliverables recently published as part of the 2024-27 Forward Work Plan and Budget.
The Board agreed that the ‘Net-Zero Strategy’ would be guided by principles of Relevance, Remit and Results and led by a Net-Zero champion within the Extended Leadership Team, mirroring Board lead on this issue. The Board accepted the recommendation and the accompanying revisions to the 2024/25 performance scorecard.
Target Operating Model
RECCo has conducted a review of its Target Operating Model (TOM) to ensure it remains fit for purpose and able to support RECCo’s forward work programme and key upcoming industry developments such as Code Reform.
The analysis has identified the importance of providing clearer lines of responsibilities between internal/external resourcing and developing the capabilities required within RECCo. This will enable the continued efficient and effective delivery of services, support the increased accountabilities RECCo will have with Licence Reform, and address identified risks.
The Board will revisit this analysis at its Strategy Planning Day in Q2, 2024, by which time there should be greater certainty in strategic drivers including Code Manager service provider procurement, Code Reform Licence requirements, and the potential CRS Transfer from DCC to RECCo. There will be no changes to RECCo’s TOM or organisation before that time.
