Market Stabilisation Charge
16th November 2022 – The MSC has been triggered
For the first time, Ofgem has given notice that the Market Stabilisation Charge (MSC) has been triggered for gas and will be in effect from 16 November 2022.
What does this mean for Suppliers?
For the first time, Domestic gas Suppliers who gain customers during this time are required to pay a charge based on the estimated annual consumption of their new customers. This will be distributed amongst losing Suppliers. The REC Code Manager will carry out the calculation using the industry data and invoices will be issued by RECCo LTD.
The history of the MSC
The MSC and its administration were implemented through REC Change Proposals R0034 and R0035 in April 2022 and June 2022. This formalised licensed Suppliers’ obligations and introduced the necessary government arrangements to allow the REC Code Manager to operate the MSC on behalf of RECCo. More information on the governance and administration of the MSC can be found on the REC Portal.
What action should suppliers take?
Suppliers should ensure that RECCo has up-to-date billing and contact details to support the invoicing and billing process. If you believe that we do not have the correct invoicing details for your organisation, please provide the correct details through your Operational Account Manager (OAM).
Get in touch
If you have any questions relating to the policy or the MSC’s calculation, please refer to Ofgem’s website.
voicing If you have questions concerning the invoice you have received, including the calculations or underlying data, please contact the REC Code Manager Service Desk at enquiries@recmanager.co.uk
What is the Market Stabilisation Charge (MSC)?
From 15 December 2021 to 17 January 2022, Ofgem consulted on a range of potential temporary measures to enable domestic suppliers to better manage risks created by current wholesale market volatility, which could lead to higher costs for consumers in the event of further significant supplier exits from the market.
On 16th February 2022, Ofgem published a decision document to introduce two measures which they believe are in consumers’ interests. This includes a requirement for suppliers to pay a Market Stabilisation Charge (MSC) when acquiring new customers.
The MSC is a charge which is to be levied on suppliers who gain customers through switching. The MSC is a £ per kWh charge which Ofgem will determine on a weekly basis. When a customer switches to a new supplier, the MSC in effect at the time of the switch is multiplied by the customer’s annual consumption and the gaining supplier pays that amount into the scheme. The collected payments will be distributed amongst suppliers who lose customers and is intended to compensate a proportion of the economic loss and insulate the market from the destabilising effects of a significant change in the price of wholesale energy.
MSC Programme explained
In this session, Andy Grace our Business Analyst in the Operations and Transformation at RECCo, talks about the process and progress of the Market Stabilisation Charge, or MSC project.
https://youtu.be/OuZwKcROfa0
Who is affected by the MSC?
Energy Suppliers of Domestic customers will be subject to the charge when they gain customers and will receive a payment when they lose customers.
RECCo’s role
RECCo’s role was to introduce a robust and efficient process for managing the market stabilisation charge following its introduction by OFGEM. The Scheme was introduced to the REC via Change Proposal R0034, which outlined the vires for RECCo to operate the scheme and under R0035, which set out how the administration of the scheme should operate including supplier obligations. RECCo, with the assistance of its service providers, is responsible for collecting data, calculating and collecting the monies due, and making payments.
Invoice Schedule
The tables below show the total payments received into the scheme & the % payments out of the scheme for the current & previous invoice periods.
| Invoice Period | Effective From Date | Effective To Date | Invoices Produced | Payment Due to RECCo | Payments Due to Suppliers |
| 1 | 14/04/2022 | 10/05/2022 | 26/07/2022 | 09/08/2022 | 23/08/2022 |
| 2 | 11/05/2022 | 07/06/2022 | 26/07/2022 | 09/08/2022 | 23/08/2022 |
| 3 | 08/06/2022 | 05/07/2022 | 26/07/2022 | 09/08/2022 | 23/08/2022 |
| 4 | 06/07/2022 | 02/08/2022 | 23/08/2022 | 07/09/2022 | 21/09/2022 |
| 5 | 03/08/2022 | 31/08/2022 | 21/09/2022 | 05/10/2022 | 19/10/2022 |
| 6 | 01/09/2022 | 27/09/2022 | 18/10/2022 | 01/11/2022 | 15/11/2022 |
| Invoice Period | Effective From Date | Effective To Date | Invoices Produced | Payment Due to RECCo | Payments Due to Suppliers |
| 7 | 28/09/2022 | 25/10/2022 | 15/11/2022 | 29/11/2022 | 13/12/2022 |
| 8 | 26/10/2022 | 22/11/2022 | 13/12/2022 | 29/12/2022 | 13/01/2023 |
| 9 | 23/11/2022 | 20/12/2022 | 13/01/2023 | 27/01/2023 | 10/02/2023 |
| 10 | 21/12/2022 | 17/01/2023 | 07/02/2023 | 21/02/2023 | 07/03/2023 |
| 11 | 18/01/2023 | 14/02/2023 | 07/03/2023 | 21/03/2023 | 04/04/2023 |
| 12 | 15/02/2023 | 14/03/2023 | 04/04/2023 | 20/04/2023 | 05/05/2023 |
| 13 | 15/03/2023 | 31/03/2023 | 25/04/2023 | 10/05/2023 | 24/05/2023 |
MSC Payment Details
| Payments into scheme | Payments out of scheme | Total paid out | ||||||
| Invoice period | Payments due | Payments collected £ | Payments % | Period 1 | Period 2 | Period 3+ | % | £ |
| 1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 4 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 5 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 6 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 7 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
REC Change Proposals
Useful Links
Two change proposals were developed and put in place in the REC Portal to support the administration of the MSC by RECCo. You can find out more information on the two changes through the REC Portal:
R0034 – Market Stabilisation Charge
R0035 – Market Stabilisation Charge – Administration
See below useful links associated with the MSC:
Ofgem – Market Stabilisation Charge Dashboard
Ofgem – Retail Energy Code R0035 – Market Stabilisation Charge Administration Approval
Stakeholder Events
MSC Walkthrough Session
The Code Manager and RECCo invited REC Parties and Stakeholders to a walkthrough of the proposed Market Stabilisation Charge (MSC) arrangements on 22 April 2022, held virtually via Teams.
In this session, we explained the approach taken in developing the necessary legal drafting of two REC Change Proposals, R0034 and R0035, being progressed to introduce this scheme.
This event aimed to support REC Parties responding to the Initial Assessment and Consultation phases for R0035, and provided the opportunity to raise questions with the Code Manager, RECCo, and Ofgem. Watch the recording here. If you have any queries, please contact us.
https://www.youtube.com/watch?v=xNegLkOsqyU
MSC Change Proposal Progress
RECCo and the Code Manager hosted a second session on 23 May 2022 to provide an update on the progress of the Market Stabilisation Charge (MSC) Change Proposal and what has changed since the last session, held on 22 April 2022.
This session provided an opportunity to discuss the changes that have been made to the solution and legal text following the Impact Assessment window closure, and for REC parties to ask questions to our MSC experts, supporting the development of Consultation responses.
https://www.youtube.com/watch?v=eepdDTM3eKM
Q&A Log
Contact
For any questions you might have or queries send us an email at info@retailenergycode.co.uk