On 28th February, we held a webinar with stakeholders to discuss our 2024-2025 Budget and provide a deep dive into one of our primary objectives for the coming year: delivering service excellence. The event outlined the funds necessary to deliver and improve the quality of REC Services for REC Users and effectively deliver our portfolio of programmes, which we outlined in our Draft Strategy and Forward Work Plan for 2024-2027.
Webinar highlights
Experts from our leadership team gave an overview of the role of RECCo before delving into how we will deliver service excellence this coming year. Elizabeth Lawlor, our Chief Operating Officer, discussed the improvements we want to make to the Code Manager, Enquiry Services, Theft, Metering and Switching services.
We were then joined by Brian O’Shea, our Chief Financial and Commercial Officer, who presented the budget. He went into detail about the finances required to support our work over the coming year, including costs for our operations, services, projects, change allowance and contingency.
Two Q&A sessions allowed participants to interact and ask questions to the RECCo team. We’ve included a write-up of the questions at the end of this article.
Watch the recording
If you missed the webinar, you can watch the recording in full below or download the presentation slides here. Please feel free to share with colleagues if they would find this helpful.
Next steps
We invite all comments and questions from interested parties via email before the close of the consultation period at 5pm on 6th March 2024 to: brian@retailenergycode.co.uk.
REC Parties have a right to appeal the decision of the REC Board to approve the budget. Any appeal must be specific to one or more individual cost items, not to the budget as a whole, and must be submitted within 10 Working Days of the Budget being published, no later than 06 March 2024.
We’ll provide quarterly updates on our progress against our Forward Work Plan and Budget throughout 2024-25.
Key questions from the webinar
Our webinar participants raised a number of valuable questions, which are summarised alongside responses from the RECCo presenters below:
Question: “You mentioned changing the COMCoP document and improving your targeting. Are you reviewing the process and communications for the audits as well?”
Elizabeth Lawlor, COO: “Yes. We’ve had feedback from parties through our annual stakeholder satisfaction survey, and some of the areas of the service didn’t score as highly as we would expect – such as communication and flexibility.
We’ll be working with the service provider to make improvements to the audit process to address these concerns. We’d welcome any further feedback about your experience of the metering audit service to feed into this exercise. Please email the team if you have any feedback: info@retailenergycode.co.uk.“
Question: “You mentioned that projects only get the go-ahead if there is a positive business case. Do parties get to see and challenge individual cases?”
Brian O’Shea, Director of Finance and Commercial: “This is dependent on the source of the expected expenditure. For example, suppose the change is being progressed via the REC Change Process. In that case, the Code Manager will conduct a full impact assessment review, seeking views from impacted stakeholders, REC Parties and the service providers providing the services and industry. So, in that case, the Code Manager will develop and consider a business case independently from RECCo. The full outcome of any REC Change Proposal is published on the REC Portal.
The Code Manager considers whether the project will further the REC Objectives, and if it does, it will be progressed. For industry-driven programmes, for example, market-wide half-hourly settlement, it has been written into the BSC that the project cannot be challenged on economic grounds, and we are compelled to go ahead with the project. We still challenge our service provider’s proposed costs if there will be an impact on our services.
We supplement our budget-setting financial control and scrutiny procedures for our internal projects with a standard, recognisable project management process. These ensure that each proposed project budget and any budget utilisation are subject to Portfolio Board and Steering Committee scrutiny.
The existence of the money in the budget does not mean an automatic right to spend by the project team. We don’t publish all our business cases because they are internal management documents and will also include certain commercial and confidential information. We would breach our obligations under the REC and our contracts by publishing this.
Rachael: We create supporting stakeholder engagement plans for all our programmes and projects within our annual Forward Work Plan. This ensures that we keep stakeholders engaged throughout the lifecycle of a project, and your input determines key decisions. Engagements are programme/project specific, and we use a multi-channel approach to help achieve maximum feedback, such as webinars, consultations, advisory groups and forums.”
Question: “How do you arrive at the change allowance, particularly the contingency figure? How do these compare against last year and the spending against them?”
Brian O’Shea, CFO: “The change allowance is used to fund changes to REC Services. In our current budget, we have included an allowance of £4 million, which is comparable to the current year’s allowance. To date, in 2023-24, we are committed to spending just over £2 million of the 2-23-24 allowance, and this reduced level is reflective of the issues experienced with the REC Change Process in 2023. Our working assumption is that once the changes we have made to the process are fully operative in 2024, there will be a more efficient change process and coupled with greater responsiveness from our service providers, we could have spent significantly more of that change allowance in the current financial year. The allowance will also be used to fund the backlog of change.
The role of the Contingency Allowance, which we have again maintained at the 2023-24 rate, is to guard against market instability and to fund any new regulatory initiatives required of us by Ofgem or DESNZ. For comparison purposes, we expect to spend between 75 to 80% of the current year’s allowance.”
Question: “I don’t understand the positive case for the £415k spend on the API gateway and £7 million on the Code Manager. Can you clarify?”
Brian O’Shea, Director of Finance and Commercial: “We have allocated a c£400k budget for the API Gateway. We have been developing this ongoing project over the last year. The API Gateway will be an essential component in our data and digitalisation strategy, which aims to transition to a microservices architecture. Introducing an API Gateway in front of our services can enhance overall efficiency, security, validation, and account management for multiple services and components.
Currently, we are in the process of evaluating various technologies available to us. T the recommended approach is to procure a technology product and a “service wrap” independently. Therefore, this project will assess the best technology available and determine how it aligns with our business goals to create a positive business case for its introduction.
It is important to note that having a budget allocation does not automatically guarantee project team spending. We have measures to support any spending decisions made, and we have a clear scheme of delegated authority that extends to Steering Committees.
We are currently assessing the Code Manager services and how they need to evolve to meet the needs of the REC stakeholders. This includes providing digital services that provide a positive user experience and facilitate an effective and efficient delivery of change, performance assurance, and party management, among other elements. In the coming year, we will conduct market testing activities to establish the appetite for the new look code manager services and engage with REC Parties as they will be the recipients and beneficiaries of the services. The costs shown in 2025-26 of £ 7 million are provided as early sight and for transparency. These are not committed costs. The total costs of re-packaging the Code Manager services will be validated through our project, especially as part of our market engagement work.”
