MSC Webinar Part 1
The scheme was designed to be effective as soon as practicable after the MSC came into effect (14 April 2022), and to mitigate the impact on incumbent suppliers’ finances that may be caused by large scale switching. It was not practicable to implement a scheme incorporating MPxN level data into invoices by the target effective date, and to the extent that this may involve many thousands of lines, may remain impracticable. However, we will continue to explore the possibility of corresponding reports being made available to suppliers on an ad hoc [and chargeable] basis.
The scheme is designed to achieve equitable treatment of all suppliers. The licence obligation is not limited to and does not prioritise those suppliers who may be at greatest risk of exiting the market, and RECCo would not have access to that commercially sensitive information.
We have extended the payment terms from 5 to 10 days in line with supplier feedback but must continue to balance the administrative impacts this has on suppliers, with the overriding objective of ensuring market-wide liquidity. We do not propose to further extend the payment terms at this time.
Failure to pay an MSC by the Payment Due Date will be treated as an Event of Default. The consequences of such a default are set out in the main body of the REC, and include a cessation of the supplier’s ability to register new customers and could ultimately result in termination from the REC. Those Events of Default will be communicated both to the Performance Assurance Board and may be escalated to Ofgem.
We will use the most recent AQ and/or EAC that is available to us.
Yes. RECCo will endeavour to resolve any queries that parties may raise ahead of the payment due date. In the event that RECCo agrees that there is an error in the invoice or the underlying data from which it was derived, we will seek to agree on an approach that would allow the error to be rectified without recourse to the dispute procedure. This may include the issuance of a replacement invoice and corresponding revision to relevant suppliers’ statements. If RECCo does not agree or cannot reasonably determine that there is an error, either RECCo or the party may raise a dispute and seek to resolve the matter through that process.
The MSC scheme utilises a pay now dispute later process. Any dispute is likely to have an equal and opposite effect on one or more suppliers who have lost customers to, or gained customers from, the disputing supplier. Therefore, if the dispute is raised sufficiently in advance of the date by which RECCo expect to pay credits to losing suppliers and we consider that the dispute has merit, we may seek to withhold such amount of credit as may be subject to dispute. However, if this is not practicable, we will seek to resolve any dispute and give effect to the determination of the PAB ahead of the following invoice cycle. This may require a reconciliation involving both the gaining and losing supplier(s).
The resolution of an erroneous transfer will be reported as a second switch, and the prevailing MSC value at the time of that second switch will be utilised. We recognise that this creates the potential for the second MSC charge to differ from rather than net-off the first. However, we will not have visibility of which switches are the result of an erroneous transfer, or the date on which the erroneous transfer occurred (and therefore the MSC charge that was originally applied).
Our understanding is that any MSC credits would be payable to the appointed administrators so long as the failed supplier does not have any outstanding MSC invoices.
Switches between MPIDs held within the same company group will be captured in the reports submitted to RECCo, but will not result in an MSC charge or credit.
Q11. Will a charge on SoLR be excluded?
Switches resulting from a SoLR will be captured in the reports submitted to RECCo, but to the extent that RECCo is made aware of the SoLR being appointed, it will treat the MPIDs as being part of the same company group and they will not result in an MSC charge or credit.
See answer Q8.
Q13. What data will be used to show SoLR is same supplier, is it MDD?
Yes, once the SoLR is announced by Ofgem we will associate the failed supplier’s MPID(s) with the appointed SoLR and treat any subsequent MSC invoices credits accordingly.
We will report on the aggregate costs of implementing the MSC in due course, but these may not finalised ahead of R0035 being submitted to the Change Panel and Ofgem. However, we currently expect the aggregate cost to be lower than the allowance for it made in the 2022/23 RECCo budget.
MSC Webinar Part 2
Q1. Is this a cost neutral scheme? What happens if Supplier A does not pay MSC within payment terms?
In the event that a supplier does not settle MSC charges within the prescribed payment terms, they will enter into an Event of Default. RECCo will use reasonable endeavours including escalation through the EoD process to secure the settlement of monies owed. Any money that cannot be recovered will result in a pro rata shortfall in credits to those suppliers who lost customers to any gaining supplier in the relevant period.
Q2. Where is the cost of the MSC system administration recovered?
The costs of administering the MSC scheme were included within the RECCo budget for 2022/23 and recovered in accordance with Clause 9 of the REC.
To the extent the migration is recognised as a switch in central systems it will form part of the reporting to Ofgem, but to the extent that the switch involves MPIDs within the same company group, it should not result in a debit or credit to the relevant supplier, as per other within portfolio transfers.