The Board received a detailed report on a significant DCC data incident that impacted domestic and I&C customers.
On the 6th of July, the CSS failed to send the required industry messages to gas and electricity suppliers and other relevant market participants and this meant that many customers were not switched to their nominated supplier. The root cause of the incident has yet to be formally notified by DCC and their service providers Landmark and Microsoft.
The incident impacted many market participants in the domestic and I&C markets to varying degrees with the biggest impact related to two of the largest suppliers. DCC has now updated CSS with the required information and sent the 200,428 missing switch messages and new registration messages to market participants. This activity was completed by 8th August in line with DCC’s plan and they are now in a data reconciliation phase to confirm that all the required CSS updates have been made and all messages have been successfully sent to and processed by market participants. The expected completion date is 29th August, and a Post Incident Review (PIR) is scheduled to be released on 30th August.
RECCo continue to require DCC to have regular dialogue with market participants, through the established SOIF sessions and any required bilateral meetings, to ensure that any consequential impacts to industry arrangements have been identified, and to gain their agreement that full reconciliation of the incident has been achieved. RECCo also require DCC to report its PIR findings to the REC Performance Assurance Board, in line with the obligation set out in Schedule 26, clause 2.16 of the Code.
RECCo are working with DCC and drawing on support from the Code Manager and our other professional and legal advisers, and from impacted stakeholders, to deliver a wide-ranging incident review to the RECCo Board, industry and Ofgem. The review will ensure that all the relevant lessons are learned to prevent a repeat of this incident, and that the required changes and improvements are implemented. The review will also ensure that the appropriate actions and sanctions are allocated to the appropriate parties if performance levels are found to have been missed or there have been breaches to the REC. RECCo expects to present the preliminary findings of the review to the REC Performance Assurance Board in September and will publish those findings to inform market participants as soon as possible thereafter.
Financial Matters
The Finance and Audit Committee reported the successful conclusion of the annual financial audit, and a significant financial rebate to suppliers was confirmed.
RECCo is required by the REC to have its financial accounts audited and this work has now been completed for the financial year ending 31 March 2023. The Finance and Audit Committee, a sub-committee of the REC Board, met with the auditors in early July 2023 to review the 2023 Financial Statements, and the Letter of Representation required under International Accounting Standards, and to receive the Report of the Auditors.
RECCo is audited using a risk-based approach and no areas of concern were identified with the two key areas of audit risk: revenue recognition and cost recognition. The auditors identified one matter relating to accounting treatment of computer hardware, but this was deemed immaterial and did not require adjustment. No potential deficiencies in RECCo’s accounting and internal control systems were identified.
At the August Board it was resolved that in accordance with the provisions of Companies Act the annual financial statements for the financial year ended 31 March 2023 placed before the Board were approved. The Financial Statements will be published on the RECCo website.
On the successful completion of the audit, RECCo can now confirm that it will return c.£9.4m underspend against the 2022/23 Budget as a rebate against the 2023/24 charges; this rebate will be returned by a reduction against the invoices to be issued in October 2023. The size of the rebate is driven by careful financial management:
- ensuring no REC Parties are invoiced for access to REC data (c.£500k);
- a reduced level of spend on change to REC Services than originally anticipated (c.£1.4m);
- recovery of bad and doubtful debts (c.£750k);
- no utilisation of the contingency allowance included in the budget (£1.7m);
- a reduced spend on migration and support of the CSS Switching Programme (c.£1.1m);
- recovery of liquidated damages from service providers for non-performance against contract (c.£900k);
- actively engaging with HMRC to confirm the treatment of VAT on CSS programme support costs (£900k);
- and deferral of a number of non-time sensitive projects to later years (c.£1.7m).
Project Portfolio Progress
The Board heard that RECCo is currently tracking green and making good progress on most projects across the 5 key Programmes detailed in the Forward Work Plan.
Positive progress has been made on the Theft Programme with the ETREG (Energy Theft Reduction Expert Group) acting as an external steering group and the Energy Theft Reduction Forum being utilised to help prioritise activities within the programme based on industry feedback.
Work has commenced on development of two business cases to support the evolution of the REC Services (Code Manager and Enquiry Services) utilising feedback from the RECCo workshops to help build the requirements.
Strategy Day Planning
Work on the RECCo strategy, the Forward Work Programme, and the associated budget for 2024/25 operational year, has begun.
RECCo is entering its third year of operation and stakeholders will be expecting the organisation to ensure that services are not only well established but continually improving. It is important that the organisation has the right strategies to enable it to deliver against the mission statement. It is important that that whilst the core strategy remains stable, we need to keep pace with external programmes and other developments in the industry as it moves to deliver the UKs net zero targets.
The Board strategy day in September will provide an opportunity to test our thinking on the development of the core REC services and how best to prepare for the future. Amongst all this, we must also factor in RECCo’s increased profile which has led to both the regulator and government being keen to see if RECCo can help deliver new initiatives. This will be increasingly important as Ofgem ramps up its Code Reform work.
Stakeholders will have an opportunity to comment on the organisation’s strategy, the detailed Forward Work Programme, and the associated budget in the coming months.
Stakeholder Workshops
A summary of the outcomes from three successful stakeholder events was presented to the Board.
RECCo held three workshops in June and July, collaborating with our stakeholders to gain insight and contribute ideas to the REC Code Manager and Enquiry Services as part of the re-procurement project underway. Various topics were discussed during the workshops, including the Code Manager change processe, performance assurance, and technologies such as the Portal and EMAR, as well as the functional requirements of the Enquiry Services, such as real-time data, API’s, service availability, and data access.
The feedback from stakeholder’s has been very positive, acknowledging RECCo’s efforts to engage with industry on these matters, providing sessions that were helpful; stakeholders felt their opinions were valued. All the workshops highlighted the Code Manager service as a key area for the organisation to focus on improving. Workshop participants were largely happy with the current functioning of the Enquiry Services, although a key theme from all three events was that we should prioritize getting the fundamentals of each service right before we consider any expansion. RECCo will provide a detailed feedback report by early September outlining the key areas for improvement and our action plan to improve stakeholders’ experience in the short, medium, and long term.
Board’s heartfelt thanks to Tracey Pitcher
Tracey Pitcher attended her last RECCo Board meeting, and the Board expressed its thanks for all her hard work on behalf of the organisation and the wider community.
Tracey Pitcher has served on the RECCo Board since it was created in early 2019, most of the time as Designate Director and most recently as a Special Advisor (Networks). Along with the other industry Designate Directors – Kevin Woollard, Steve Mulinganie, Alex Travell, Rachael Anderson, and Richard Pomroy – Tracey played a very important role in setting up the organisation and steering it through its transition to go-live and beyond.
Tracey brought a wealth of knowledge and experience of the networks sector and wider industry to the Board, helping to inform its strategy and decision-making at every stage in its development. She participated in the work of the various Board Committees and provided valuable support and advice to the Executive Team. She was an excellent Director and Advisor, always available for discussion on issues that affected the well-being of the organisation and the community its serves.
The Board put on record their thanks and appreciation to Tracey for all her hard work over the years, and to Western Power Distribution for allowing her to participate in the RECCo project.
