Appendix 7 - Detailed Gas Supply SLC Proposals and ...€¦ · Office of Gas and Electricity...

Office of Gas and Electricity Markets 1

Supply Licence Review - Further Policy Proposals December 2006

Appendix 7 - Detailed Gas Supply SLC Proposals and Consultation Responses

Overview

7.1 This appendix summarises the views of respondents to our initial proposals in the July consultation. In total 39 responses were received. Non-confidential responses can be found on the Ofgem website1. 7.2 This appendix also discusses, in detail, our proposals to modify the gas supply licence. Some of our proposals have changed since the July consultation as a result of the responses received and our further consideration. Modified proposals are denoted in this appendix by using bold formatting on the terms “RETAIN”, “REDRAFT”, “REMOVE” and “EXTEND” for each of the relevant obligations in the left-hand column.

7.3 For each current obligation that has been retained, redrafted, extended or that is new, we have included a reference to it in the proposed modified standard conditions. This can be found in the left-hand column. 7.4 A significant number of the provisions in the standard conditions of the gas supply licence are materially the same as provisions in the standards conditions of the electricity supply licence. Where this is the case, we note that the provisions are "matched" in the left-hand column. Where this is not the case, we note that the provisions are “not matched" in the left- hand column. 7.5 In many cases we have summarised the current provisions of the standard conditions. Respondents should refer to the standard conditions for their precise wording, they are available on Ofgem’s website. 7.6 In general, we have proposed to redraft many of the provisions of the standard conditions so that they are simpler, clearer and easier to understand. We have not mentioned or discussed this in each case, particularly where the principle of an obligation remains the same. 7.7 A general change we have made is to align the time periods in the standard conditions, in appropriate cases, to working days. The current standard conditions contain a mixture of references to both working days and calendar days. We have maintained a reference to calendar days in particular cases, for example, in standard condition 4 (Licensee’s payments to Authority) to ensure consistency with the equivalent requirement in other gas and electricity licences. Responses requested 7.8 As noted in the body of the consultation document, we are asking respondents to provide views on the detailed proposals for the standard conditions set out in Appendices 6 and 7 and in the draft text of the conditions in Appendix 8 and 9.

1 http://www.ofgem.gov.uk/ofgem/work/index.jsp?section=/areasofwork/supplylr&levelids=,1_14581#top14581


Supply Licence Review – Further Policy Proposals (Appendix 7) December 2006

SECTION A: INTERPRETATION, APPLICATION AND PAYMENTS SLC 1: Definitions and interpretation

SLC: 1(1) Obligation: This provision sets out the definitions used in the licence.

REDRAFT

Matched

Respondents’ Views: Respondents were not asked to comment directly on this paragraph.

Proposal: We propose to amend, remove and retain specific definitions in SLC 1 of the gas supply licence, as appropriate for the standard conditions of that licence. We propose to include the following new definitions and terms. These terms and definitions complement the obligations and provisions that we propose to retain in the licence.

• Amount Distinguishes the amount of energy supplied (in kWhs) from the volume (or quantity) of gas supplied.

• Applicable Customer

The definition substantially reflects the wording in existing SLC 22A(2). This has simplified the drafting for the modified SLC 10.

• Competition Commission

Used in Chapter 4 in relation to costs attributable to either the Authority or the licensee in accordance with any direction issued by the Competition Commission. The definition states what the Competition Commission is and how it has been established.

• Consequential change

Used in relation to industry codes and agreements to ensure they are aligned.

• Directly Connected

Distinguishes the gas transporter that is responsible for the network to which premises are connected from other Gas Transporters who may be involved in transporting gas to the premises, such as the Gas Transporter responsible for the national gas transmission system.

• Disconnect Definition is used to avoid ambiguity with related terms such as capping.

• Gas Meter Removes ambiguity about use of the term ‘meter’ • Electronic Communication

Allows for the means by which written information may be sent or received if a person has expressed a willingness to receive the information by that means.

• Gas Shipper Basic definition to simplify the drafting of the conditions.

• Gas Shipper Licence

Basic definition to simplify the drafting of the conditions.



• Gas Supplier Basic definition to simplify the drafting of the conditions.

• Gas Supply Licence


• Gas Transporter Basic definition to simplify the drafting of the conditions.

• Gas Transporter Licence


• Industry Documents

Collective term for documents related to the SPAA for managing change control.

• Last Resort Supply Payment

Basic definition to simplify drafting for the SoLR conditions that draws upon information in the existing SLC 29A.

• Relevant GT’s Enquiry Service

A definition to simplify the drafting by describing the enquiry service required to be provided by the Gas Transporter under its licence.

• Meter Installer Clarifies the role that Ofgem approves and simplifies the drafting.

• Non-Domestic Premises

We have clarified the definition of domestic and non-domestic premises based on guidance previously issued by Ofgem.

• Non-Domestic Supply Contract


• Notice A definition to require that notice be given in writing, which may be sent or received by “Electronic Communication” (see above).

• Pensionable Age For clarity we have incorporated the Gas Act definition of pensionable age into both gas and electricity licences.

• Protocol A definition to simplify the drafting and used in relation to the arrangements in the MRA for debt assignment for PPM customers.

• Public Electronic Communications Network

The network over which an “Electronic Communication” (see above) must be sent.

• Section B A basic definition to describe the suite of conditions relevant to suppliers supplying to domestic customers. It has replaced Section C.

• Security Deposit Basic definition to simplify the drafting of the conditions and clarifying that it is a deposit of money for a particular purpose.

• Website A definition to clarify that a relevant website is one used by a licensee to communicate with a customer for reasons relating to the supply of gas only.

• Winter Simplifies the drafting of the conditions. Currently defined in the body of the licence.



• Working Day We have been consistent, where appropriate, to determine all periods in terms of working days and not calendar days.

• Writing Provides clarity that written information may be sent or received by “Electronic Communication”.

We propose to remove the following definitions and terms. These terms are not used in our proposed modified standard conditions of the gas supply licence and can therefore be removed:

• Additional conditions • Affiliate • Alternative accounting rules • Approved meter installer • Auditors • Authorised • Changed specified terms • Charges in question • Chronically sick person • Comparable premises • The court • Current cost assets • Daily • Date of the domestic supply contract • Deemed contract scheme • Deposit • Disabled person • Domestic supply security standards • Excepted charges • Excluded premises • Fixed term period • The Gas Meter Reading and Inspection Code • Goods or services • The handbook • Inspection • Inspection Request • Meter inspection agent • The meter reading code of practice • Owned • Primary sub-deduct premises • Regulatory accounts • Related undertaking • Relevant customer • Relevant customers with payment difficulties • Relevant licensed distributor • Relevant metering equipment • Relevant parties • Relevant premises



• Relevant provisions • Relevant gas shipper • Relevant system • Relevant transportation charges • Relevant transporter • A relative undertaking • Relevant year • Request • Requisite expertise • Security arrangements • Security standards • Separate business • Specified terms • Statutory accounts • Supply business • Supply business transferee • Supply gas • Supply services area • Supply services direction • Transco plc • Transferee • Transferor • Transferred business • Transferred customers • Transporter’s relevant premises • Valid notice of termination • Year

We propose to materially amend the definition of the following terms. In many cases we are proposing to redraft the definition associated with a term to ensure that it is simpler, clearer and easier to understand. Where we are not proposing a material change to a definition, we have not included them in this list below: • Bill – we have clarified the drafting so that it refers to an ”invoice or

demand for payment or any other instrument of the same or similar character and purpose” rather than an “invoice, account, statement or other instrument of the like character”.

• Financial Year – the definition is no longer subject to SLC 52A (Change of Financial Year), which proposed a different definition for the purpose of the licensee’s statutory accounts only, as that condition is proposed for removal. The term now only means a period of 12 months from 1 April to 31 March of the next year.

• Information – The definition of “Information” is only used in a limited number of cases. It has been amended to remove the reference to the Consumer Council as we do not consider that reference to be appropriate in the context in which the definition is used

• Representative – We propose to broaden the application of this term from the Marketing licence condition to cover all instances where a supplier



directly or indirectly authorises a person to represent the supplier in its dealings with the customer. This broadens the application of the term so it can be applied to other SLCs, for example SLC 13 (Arrangements for site access).

SLC: 1(2) Obligation: In these standard conditions, except where the context otherwise requires -

(a) any reference to “the relevant primary sub-deduct premises”, in relation to any secondary sub-deduct premises, is a reference to the primary sub-deduct premises to which gas was conveyed before its conveyance to those secondary sub-deduct premises; (b) any reference to “sub-deduct arrangements”, in relation to any secondary sub-deduct premises, is a reference to arrangements which a gas shipper makes with a gas transporter in pursuance of which gas is taken out of the pipe-line system of that transporter at the relevant primary sub-deduct premises with a view to its conveyance to those secondary sub-deduct premises; (c) any reference to “consumer” shall, notwithstanding paragraph 4, include a person who is supplied with gas at secondary sub-deduct premises; (d) the definition of “supply gas” in this condition shall have effect as if the person who conveys gas from primary sub-deduct premises to secondary sub-deduct premises were a gas transporter.

REMOVE

Not matched


Proposal: We propose to remove these definitions • SLC 1(2)(a) – this condition is covered by the definition of Relevant

Primary Premises in the Modified SLCs; • SLC1(2)(b) – “sub-deduct arrangements” are referred to in current SLCs

22B, 32 and 32A. The wording in the Modified SLCs (see Modified SLCs 18(6), 22(6)(b) and 19(2)(b) deals with the relevant circumstances without requiring definition of this term.

• SLC 1(2)(c) The provisions of SLC 1(2)(c) are covered by the definition of “Customer” in the Modified SLCs.

• SLC 12(2)(d) – This ensures that the definition of “supply gas” in the current SLCs applies to secondary sub-deduct premises. The Modified SLCs do not include a definition of “supply gas”. There is, therefore, nothing to prevent the current conditions from applying to Secondary Premises and therefore, we do not need to retain the SLC 12(2)(d) wording).

SLC: 1(3) Obligation: Without prejudice to the provisions of paragraph 1 defining the expression “supply gas” and providing for the construction of cognate

expressions, these standard conditions shall not apply in, or in connection with, a case in which the licensee supplies to any premises gas which - (a) has been conveyed by it to those premises, by means of a pipe-line system, in pursuance of an exemption from section 5(1)(a) of the Act granted under section 6A thereof, and (b) has not been conveyed by a gas transporter, except that where the pipe-line system mentioned in sub-paragraph (a) was used as there mentioned on 1 March 1996, standard conditions 24 to 27 and 35 to 39 shall apply.

REMOVE

Not matched


Proposal: SLC 1(3) – This condition aims to ensure that: • the current licence conditions apply to secondary sub-deduct premises in

existence prior to 1 March 1996; but • (with certain exceptions – conditions 24-27 and 35-39 i.e. site access,

codes of practice and vulnerable customer issues) the conditions do not apply to “new” secondary sub-deduct premises (i.e. built after 1 March 1996).



As mentioned above, our conditions apply to all Secondary Premises. Given that it is unlikely that any new secondary sub-deduct premises will be built, this provision is not needed going forward. However, we would welcome views on this point.

SLC: 1(4) Obligation: Any words or expressions used in the Utilities Act 2000, Part I of the Act or the Energy Act 2004 shall, unless the contrary intention

appears, have the same meaning when used in the standard conditions.

EXTEND

Modified SLC 2.1

Matched


Proposal: The existing paragraph refers to “Part 1 of the Act”. We propose to amend it to refer to “the Act”. The consequence of which is that any term defined in the Gas Act 1986 will have the same meaning in the licence, unless a contrary intention appears. The reason for this proposal is that, in our view, it is appropriate that any term defined in the Gas Act 1986 should have the same meaning in the licence, unless the contrary intention appears.

SLC: 1(5) Obligation: Except where the context otherwise requires, any reference to a numbered standard condition (with or without a letter) or Schedule is a

reference to the standard condition (with or without a letter) or Schedule bearing that number in this licence, and any reference to a numbered paragraph (with or without a letter) is a reference to the paragraph bearing that number in the standard condition or Schedule in which the reference occurs, and reference to a Section is a reference to that Section in these standard conditions.

REDRAFT Modified SLC 2.4(a) and (b)

Matched


Proposal: We propose a combination of SLC 1(3) and 1(5) to provide that, unless the context otherwise requires, references in the standard conditions to, for example, sections, standard conditions, schedules, paragraphs and sub-paragraphs are references to those parts of the standard conditions of the supply licence. Also, a reference in a standard condition to a paragraph or sub-paragraph is a reference to it in such standard conditions. In our view, it is a clearer, more comprehensive and appropriate statement of the existing interpretation provision.

SLC: 1(6) Obligation: These standard conditions shall have effect as if, in relation to a licence holder who is a natural person, for the words “it”, “its” and “which”

there were substituted the words “he”, “him”, "his”, “who” and “whom”, and cognate expressions shall be construed accordingly.

REMOVE

Matched


Proposal: We propose to remove this paragraph. In our view, it is not necessary to include it in the interpretation condition. We have used words such as “it” to refer to the licensee. The obligations in which such words are used will continue to apply to a licensee even if it is a natural person.

SLC: 1(7) Obligation: Except where the context otherwise requires, a reference in a standard condition to a paragraph is a reference to a paragraph of that

standard condition and a reference in a paragraph to a sub-paragraph is a reference to a sub-paragraph of that paragraph REDRAFT

Modified SLC 2.4(b)

Matched


Proposal: See comment for SLC 1(3).



SLC: 1(8) Obligation: Any reference in these standard conditions to – (a) a provision thereof; (b) a provision of the standard conditions of gas shipper licences, or (c) a provision of the standard conditions of gas transporter licences, shall, if these standard conditions or the standard conditions in question come to be modified, be construed, so far as the context permits, as a reference to the corresponding provision of these standard conditions or the other standard conditions in question as modified

RETAIN Modified SLC 2.5

Matched


Proposal: We propose changes that maintain the substance of the existing provision and clarify its wording.

SLC: 1(9) Obligation: In construing these standard conditions, the heading or title of any standard condition or paragraph shall be disregarded

REDRAFT Modified SLC 2.3

Matched



SLC: 1(10) Obligation: Any reference in a standard condition to the purposes of that condition generally is a reference to the purposes of that standard condition

as incorporated in this licence and as incorporated in each other licence under section 6(1)(d) of the Act (whenever granted) which incorporates it REMOVE

Matched


Proposal: We propose to remove this paragraph. In our view, the removal of the paragraph is unlikely to affect the interpretation of the purposes of a condition. It is therefore unnecessary.

SLC: 1(11) Obligation: Where any obligation in the licence is required to be performed by a specified date or time or within a specified period, and where the

licensee has failed so to perform, such obligation shall continue to be binding and enforceable after the specified date or time or after the expiry of the specified period (but without prejudice to all rights and remedies available against the licensee by reason of the licensee’s failure to perform by that date or time or within that period).


Matched



SLC: 1(12) Obligation: Anything required by or under these standard conditions to be done in writing may be done by facsimile transmission of the instrument in

question or by other electronic means and, in such case – (a) the original instrument or other confirmation in writing shall be delivered or sent by pre-paid first-class post as soon as is reasonably practicable, and (b) where the means of transmission had been agreed in advance between the parties concerned, in the absence of and pending such confirmation, there shall be a rebuttable presumption that what was received duly represented the original instrument.

REMOVE Respondents’ Views: Respondents supported the proposal to remove

this obligation. ScottishPower said that it created a significant Proposal: We propose that, subject to the drafting of the modified conditions, SLC 1(10) is removed. We have proposed to allow persons to use a number of



Matched

administrative burden for suppliers. forms of written communication including email and SMS message if the recipient of that communication has expressed a willingness to receive it in that form and for a particular purpose.

SLC: 1(13) Obligation: The definitions referred to in this condition may include some definitions which are not used or not used exclusively in Sections A and B

(which Sections are incorporated in all gas suppliers licences). Where: (a) any definition is not used in Sections A and B, that definition shall, for the purposes of this licence, be treated: (i) as part of the standard condition or conditions (and the Section) in which it is used; (ii) as not having effect in the licence until such time as the standard condition in which the definition is used has effect within the licence in pursuance of standard condition 2 (Application of Section C (Domestic Supply Obligations)) or standard condition 3 (Application of Section D (Supply Services Obligations)); (b) any definition which is used in Sections A and B is also used in one or more other Sections: (i) that definition shall only be modifiable in accordance with the modification process applicable to each of the standard conditions in which it is used; and (ii) if any such standard condition is modified so as to omit that definition, then the reference to that definition in this condition shall automatically cease to have effect.

REMOVE

Matched


Proposal: We propose to include most of the defined words and expressions in SLC 1. The main exceptions to that are two self-contained conditions which were introduced into the SLCs by the DTI. In our view, the existing provision does not affect the general rules relating to interpretation and is unnecessary.

New obligation Obligation:

EXTEND

Modified SLC 2.2

Matched


Proposal: We propose to include a provision stating that, unless the context otherwise requires, any reference in the standard conditions of this licence to an industry code, an agreement or a statement is a reference to that code, agreement or statement as modified, supplemented, transferred, novated or replaced from time to time. The intention is to clarify that the position in relation to these documents is similar to that for legislation under the Interpretation Act 1978.


EXTEND Modified SLC 2.7-2.8

Matched


Proposal: We propose to include provisions that clarify the Authority’s ability to give instruments such as directions and consents and to make determinations and decisions. We also propose to require that particular instruments must always be given in writing.


EXTEND Modified SLC 2.9


Proposal: In circumstances where the Authority may specify a date, we propose to include a provision allowing it to specify either a particular date or how that date may be determined. In our view, this would allow the Authority



Matched

appropriate flexibility to link the date to another relevant date or event. This may be useful in cases, for example, where the date of the relevant event is not known.


EXTEND

Modified SLC 2.10 and 2.11

Matched


Proposal: Given the modifications we are proposing as part of the supply licence review and the modifications that may be made in future, we propose to include provisions clarifying that anything done under a standard condition will continue to have effect for so long as it is permitted or required by the modified standard condition. In our view, such a provision is a useful and appropriate inclusion in an interpretation condition.

SLC 2: Application of Section C (Domestic Supply Obligations)

SLC: 2(1) Obligation: Where the Secretary of State provides, by a scheme made under Schedule 7 to the Utilities Act 2000, for Section C to have effect within this licence: (a) the licensee may supply or offer to supply gas to domestic premises; (b) paragraphs 4 to 10 shall cease to be suspended and shall have effect in the licensee’s licence; and (c) the licensee shall be obliged to comply with the requirements of Section C of this licence, from the date the said scheme takes effect.

REDRAFT

Modified SLC 3.1 (part)

Matched

Respondents’ Views: Respondents were not asked to comment directly on this paragraph. Note that, as previous sections A and B have been combined, the previous section C will now be referred to as Section B.

Proposal: We propose to simplify the existing condition while not changing its core substance. In particular, we propose the removal of the references to the suspension of paragraphs of the condition relating to the issuing of a domestic supply direction by the Authority. The effect of which continues to be that the obligations relating to supply to domestic premises (in section B) will have effect either if a scheme has been made by the Secretary of State or if the Authority issues a domestic supply direction.

SLC: 2(2) Obligation: Until -

(a) the Secretary of State provides, by a scheme made under Schedule 7 to the Utilities Act 2000, for Section C to have effect within this licence; or (b) the Authority has issued to the licensee a direction pursuant to paragraph 4, the licensee shall not supply or offer to supply gas to any domestic premises; the standard conditions in Section C shall not have effect within this licence; and the licensee shall not be obliged to comply with any of the requirements of Section C of this licence.


Matched


Proposal: We have proposed changes that maintain the substance of the existing provision and clarify its wording.

SLC: 2(3) Obligation: Except where paragraph 1 applies to the licensee, paragraphs 4 to 10 of this standard condition shall be suspended and shall have no

effect in this licence until such time as the Authority issues to the licensee a notice in writing ending the suspension and providing for those paragraphs to have effect in this licence with effect from the date specified in the notice.



REDRAFT Modified SLC 3.1 (part)

Matched



SLC: 2(4) Obligation: The Authority may, following an application made by the licensee in accordance with paragraphs 5 to 7, issue a direction (a “Domestic

Supply Direction”). Where the Authority has issued to the licensee a Domestic Supply Direction the standard conditions in Section C shall have effect within this licence from the date specified in the direction; and the licensee shall be obliged to comply with the requirements of Section C to the extent and subject to the terms specified in such direction.


Matched


Proposal: We propose changes that maintain the substance of the existing provision and clarify its wording. We propose to remove the reference to the requirement to comply with section B, which contains the obligations relating to supply to domestic premises. The reason for this is that the Authority may take enforcement action under the Gas Act 1986 against a supplier that breaches those obligations.

SLC: 2(5) Obligation: An application by the licensee for a Domestic Supply Direction shall be:

(a) made in writing, addressed to the Authority and delivered or sent by pre-paid post to the Authority at its principal office; and signed and dated by or on behalf of the applicant, stating, where signed on behalf of the applicant, the capacity of the signatory; (b) in the form specified in Schedule 1 to the Application Regulations or a form to the like effect and shall contain the information specified in that schedule; and be accompanied by the information and documents specified in Schedule 2 to the Application Regulations; (c) accompanied by the information and documents specified in paragraphs 1 to 4 inclusive of Part IV of Schedule 3 to the Application Regulations; and (d) accompanied by a fee equivalent to the fee specified in the Application Regulations for applications for extensions to gas supply licence including authorisation to supply gas to domestic premises.


Matched


Proposal: We propose to simplify this requirement by requiring that the application be in accordance with the Application Regulations only. Those regulations provide for the form in which an application must be made, the information required to support that application and the fee payable.

SLC: 2(6) Obligation: A notice of an application made by the licensee for a Domestic Supply Direction must be published by the licensee within 7 days of making

such application: (a) in the London Gazette and the Edinburgh Gazette; and (b) in such newspapers as are calculated to ensure that the notice is circulated; (i) where the application relates to premises of a specified description and is not limited to premises situated in a specified area, throughout Great Britain; (ii)where the application relates to a specified area, throughout that area; and (iii) where the application relates to particular premises, throughout the area or areas in which those premises are situated.

REMOVE

Matched


Proposal: We propose to remove this obligation as the Application Regulations contain requirements about notice of an application. For example, they require that the applicant publish a notice of application on its own website and ask the Authority to place notice of the application on its website. The



applicant must also ask the Authority to publish a link to the applicant’s website address on the Authority’s website address.

SLC: 2(7) Obligation: The applicant shall deliver, or send by pre-paid post a copy of the London and Edinburgh Gazettes, and of each newspaper in which notice

of the application is published in accordance with this regulation to the Authority at its principal office. REMOVE

Matched



SLC: 2(8) Obligation: The Authority may, with the consent of the licensee:

(a) vary the terms (as set out in the Domestic Supply Direction or elsewhere) under which Section C has effect in this licence; or (b) provide for Section C to cease to have effect in this licence.


Matched



SLC: 2(9) Obligation: The variation or cessation provided for in paragraph 8 shall take effect from the date specified in the variation or cessation notice given to

the licensee by the Authority. REDRAFT Modified SLC 3.4 (part)

Matched



SLC: 2(10) Obligation: With effect from the date of cessation referred to in paragraph 9, paragraphs 4 to 9 of this condition shall be suspended and shall cease to

have effect in this licence, but the Authority may at any time thereafter give to the licensee a notice ending the suspension and providing for those paragraphs to have effect again in this licence with effect from the date specified in the notice.

REMOVE

Matched



SLC 3: Application of Section D (Supply Services Obligations)

SLC: 3(1) to (8)

Obligation: The licensee is required to comply with Section D of the supply licence in a supplier’s licence where either: 1) the Secretary of State has provided by a scheme under Schedule 7 to the Utilities Act 2000 for Section D to have effect for that licensee, or 2) the Authority (with the consent of the licensee) has issued a “Supply Services Direction” directing that Section D (in whole or in part) shall have effect. SLC 3 further provides that the Authority may with the licensee’s consent vary the terms under which Section D has effect in the licence or provide for Section D to cease to have effect.



REMOVE

Matched

Respondents’ Views: No respondents commented specifically on SLC 3.

Proposal: We propose to remove the standard conditions currently contained in section D of the supply SLCs. We therefore propose to remove this condition which enables Section D to have effect in the licence of a licensed supplier.

SLC 4: Payments by the Licensee to the Authority

SLC: 4(1) Obligation: The licensee shall, at the times stated, pay to the Authority such amounts as are determined by or under this condition.

REDRAFT


Matched



SLC: 4(2) Obligation: In respect of each relevant year at the beginning of which the licensee holds this licence, the licensee shall pay to the Authority the

aggregate of: (a) an amount which is the relevant proportion of the estimated costs incurred by the Competition Commission in the previous relevant year in connection with any reference made to it with respect to the licence or any other gas supply licence; and (b) an amount which is the relevant proportion of the difference (being a positive or negative amount), if any, between: (aa) any costs estimated by the Authority in the previous relevant year under sub-paragraph 2(a); and (bb) the actual costs of the Competition Commission (in connection with that reference) for the relevant year prior to the previous relevant year.


Matched



SLC: 4(3) Obligation: The amounts determined in accordance with paragraph 2 shall be paid by the licensee to the Authority in one instalment being due for

payment by 31 October in each year, provided that if the Authority has not given notice of the amount of the instalment at least 30 days before the payment date stated above, the licensee shall pay the amount due within 30 days from the actual giving of notice by the Authority to the licensee (whenever notice is given).

REDRAFT

Modified SLC 4.2

Matched



SLC: 4(4) Obligation: When the licensee fails to pay the amount determined in accordance with paragraph 2 within 30 days of the due date set out in paragraph

3, it shall pay simple interest on the amount at the rate which is from time to time equivalent to the base rate of NatWest Bank plc or, if there is no such base rate, such base rate as the Authority may designate for the purposes hereof.

REDRAFT Respondents’ Views: Respondents were not asked to comment

directly on this paragraph. Proposal: Generally, we have proposed changes that maintain the substance of the existing provision and clarify its wording. We have also proposed to



Modified SLC 4.3

Matched

replace the reference to “such base rate as the Authority may designate” with “the base rate of an equivalent institution to NatWest Bank plc designated by the Authority” to provide more certainty about what the base rate is likely to be.

SLC: 4(5) Obligation: This paragraph sets out the definition of the terms “estimated costs”, “relevant proportion” and “relevant year”.

REDRAFT/ REMOVE Modified SLC 1.3 (part)

Matched


Proposal: The terms are defined in the modified SLC 1.3.

SECTION B: GENERAL SLC 5: Not used

SLC 6: Not used

SLC 7: Not used

SLC 7A: Code of Practice for Meter Reading etc

SLC: 7A(1) Obligation: SLC 7A(1)(a) states that SLC 7A(2) shall only have effect where the Authority has designated a code of practice for meter reading.

REMOVE

Not matched

Respondents’ Views: Those that responded were in favour of removing this obligation.

Proposal: This obligation has never been activated as the Authority has not seen the need to designate a Meter Reading Code of Practice. We propose to remove SLC 7A(1) as we see no reason to designate a code of practice for meter reading. It is noted that proposed modified SLC 13 provides protection for consumers as regards suppliers’ representatives entering their premises, for example, representatives must possess the necessary skills and be fit and proper persons.

SLC: 7A(2) Obligation: SLC 7A(2) requires the supplier to tell any person:

(a) whether it has notified the Authority that it intends to comply with the CoP; (b) whether the Authority has commented on the supplier’s compliance with the CoP; (c) whether the licensee has instructed its officers to comply with the CoP, and (d) whether it has required any relevant undertakings to comply with the CoP.

REMOVE Respondents’ Views: We received minimal responses to this proposal although the small number of parties that did respond were

Proposal: SLC 7A (2) sets out requirements for the CoP introduced in SLC 7A (1). This obligation has never been activated as the Authority has not seen the



Not matched

in favour of the removing the obligation. need to designate a Meter Reading Code of Practice. We propose to remove SLC 7A(2) as we see no reason to designate a code of practice for meter reading.

SLC: 7A(3) and (4)

Obligation: SLC 7A(3) provides that where, in relation to non-domestic premises: (a) in pursuance of metering arrangements made by the supplier any meter is connected with a service pipe through which gas is conveyed to premises in relation to which the licensee is, or is about to become, a relevant supplier and the person making the connection is not an approved meter installer; or (b) the licensee receives: (i) such a notice of a proposed connection as is mentioned in sub-paragraph (1) of paragraph 12 of Schedule 2B to the Act, whether or not it is followed by such information as is mentioned in sub-paragraph (3) of that paragraph; or (ii) a copy of such a notice or of any such information which has been received by the relevant transporter, and it is not stated in the notice or information that the connection will be, or has been, made by an approved meter installer, the licensee shall use its reasonable endeavours to secure that, within the required period, an approved meter installer inspects the connection and, if he finds it unsatisfactory, carries out any appropriate remedial work. SLC 7A(4) defines the terms 'approver meter installer' and 'required period'.

RETAIN

Modified SLC 12.1 to 12.4

Not matched

Respondents’ Views: Most respondents supported the retention of these obligations. In July we also asked for views on combining these obligations with SLC 34(5) and (6) which provide an equivalent function in the domestic market. HSE supported the retention saying that it ensured that non-domestic meter installations were safe and it was a required link to the OAMI scheme. Total Gas Power said that it was appropriate to maintain the current regime as it granted flexibility to suppliers in relation to the procurement of metering contractors, whilst ensuring metering installations conform to minimum standards. They agreed that the relevant provisions could be combined with SLC 34(5) and (6). SSE supported the retention of this obligation due to the safety related nature of these obligations. They also agreed that these obligations could be combined with SLC 34(5) and (6). However, Centrica argued against retaining this obligation. They said that it was not clear why safety protection of this nature needed to be ensured through the licence when it should be covered by safety regulations/legislation. They suggested that this anomaly should be addressed via the existing HSE review of the gas safety arrangements if such protection is required and not in the licence. It was Centrica’s understanding that the HSE review was not likely to recommend the necessary changes which suggested to them that the provisions in the supply licence are unnecessary.

Proposal: This obligation is the hook by which the Ofgem Approved Meter Installer (OAMI) approval scheme operates. The obligation should be retained in the licence as a means to ensure that installations are safe and appropriate. OAMI’s are CORGI registered gas meter fitters with a specific Meter Installation Qualification. OAMI’s sign up to the Ofgem Codes of Practice 1/a, 1/b and 1/c depending on what work they intend to do. The codes set out the processes that the meter fitter must undertake to install a meter. The OAMI scheme (run by Corgi) ensures that the meter fitter is trained to the relevant CoP standard to undertake a meter installation. We propose to retain SLC 7A(3) and (4) given the safety related nature of the obligations. We have redrafted these obligations to combine them with the obligations currently set out in SLC 34(5) and (6). We note the point put forward that the provisions could be removed because of the wider review of gas safety legislation but this work is not yet completed and such an amendment now would be premature. Note that proposed modified SLC 12 provides that any inspection of a connection must be carried out no later than 20 days after the date on which the connection is made or the date of connection specified in any relevant Notice or Information.

SLC 8: Not used

SLC 9: Not used



SLC 10: Not used

SLC 11: Not used

SLC 12: Not Used

SLC 13: Change Co-ordination for the Utilities Act 2000

SLC: 13(1) to (5)

Obligation: The licensee shall take all reasonable measures to secure and implement, and shall not take any steps to prevent or unduly delay, such changes to the industry framework documents as are necessary or expedient to give full and timely effect to the provisions of the Utilities Act 2000. This condition shall cease to have effect on 30 June 2002 or such earlier date as the Authority may specify in a direction given for the purposes of this condition generally.

REMOVE

Matched

Respondents’ Views: Respondents supported the proposal to remove this obligation

Proposal: We propose to remove SLC 13 as it has expired.

SLC 14: Security Arrangements

SLC: 14(1) and (2)

Obligation: In the case of an escape, or suspected escape, of gas, or in the case of a pipe-line system emergency, that is to say, where the circumstances are such that, in the opinion of the relevant transporter: (i) the safety of its pipe-line system is significantly at risk; (ii) the safe conveyance of gas by that system is significantly at risk; or (iii) gas conveyed by that system is at such a pressure, or of such a quality, as to constitute, when supplied to premises, a danger to life or property, and that opinion is not manifestly unreasonable, the licensee shall use its best endeavours to comply with all requests made by the relevant transporter (save any which are manifestly unreasonable) for the purpose of, as may be appropriate - (a) averting or reducing danger to life or property; or (b) securing the safety of the pipe-line system or the safe conveyance of gas thereby or reducing the risk thereto.

RETAIN Modified SLC 16.1 and 16.2

Not matched

Respondents’ Views: Most respondents supported the retention of this obligation. HSE argued that any condition that imposed a measure of safety should be retained. This obligation ensured that any incident related to gas that constituted a danger was averted, reduced or secured. Any such condition that reduced the danger of an incident should be welcomed in managing the risks related to the supply and use of gas. However, Centrica said that safety arrangements were adequately covered by existing safety regulations. Non-compliance with such arrangements could constitute a criminal offence. In light of the

Proposal: Given the potential severity of the issue and the commercial incentives that suppliers may have not to comply with the request, we propose to retain this obligation. We note that there is overlap between this requirement and legislation, particularly the Gas Safety (Management) Regulations 1996. For example, those Regulations provide that a person conveying gas in a network may direct a person, including a supplier, not to consume gas for the period specified in the direction. A direction may only be given where it is necessary to prevent a supply emergency or to prevent danger arising from the use of gas not conforming with particular requirements and may be given orally or in writing and may be withdrawn at any time. A person in breach of a direction may be subject to criminal proceedings.



safety enforcement regime, Centrica argued that the inclusion of similar provisions in the supply licence was wholly unwarranted and was not in line with the principles of good regulatory practice.

SLC: 14(3) Obligation: The supplier shall include in its contracts for the supply of gas to non-domestic customers, a term to the effect that, for the duration of a

pipe-line system emergency, within the meaning of SLC 14(1)(b): (a) the licensee is entitled at the request of the relevant transporter or shipper to discontinue the supply of gas to the premises; and (b) the customer shall use his best endeavours to refrain from using gas immediately upon being told by the licensee or relevant transporter that he should do so.


Not matched

Respondents’ Views: All respondents supported the retention of this proposal. HSE said that it was essential in ensuring that customers were aware of the consequences in a pipe line emergency and how this may affect them.

Proposal: We propose to retain this obligation. It seeks to ensure that non-domestic customers are aware, through their contracts, of the potential consequences of a pipe-line system emergency. It may also help to prevent particular contractual disputes between the supplier and customer following disconnection in these circumstances.

SLC: 14(4) Obligation: The supplier shall include in its contracts for the supply of gas to all customers, a term to the effect that, if it is given a direction under

section 2(1)(b) of the Energy Act 1976 prohibiting or restricting the supply of gas to specified persons, then, for so long as the direction is in force and so far as is necessary or expedient for the purposes of, or in connection with, the direction: (a) the licensee is entitled to discontinue or restrict the supply of gas to the customer; and (b) the customer shall refrain from using, or restrict his use, of gas, on being told by the licensee that he should do so.


Not matched

Respondents’ Views: All respondents supported the retention of this proposal.

Proposal: We propose to retain this obligation. It seeks to ensure that customers are aware, through their contracts, of the potential consequences of a direction under the Energy Act 1976 prohibiting or restricting the supply of gas. It may also help to prevent contractual disputes between the supplier and customer following such a disconnection.

SLC: 14(5) to (8)

Obligation: SLC 14(5) of the gas supply licence allows that, where the supplier has a contract with their shipper which was executed prior to 2 March 1995 and it is empowered thereby to secure rights to use the GT’s network for the conveyance of gas, the supplier shall exercise that power in conformity with security standards. SLC 14(6), (7) and (8) provide for the definition of security standards and other related terms.

REMOVE

Not matched

Respondents’ Views: The small number of parties that responded were not aware of any contracts being in existence that would be caught by this obligation. All those that responded agreed that the obligation could therefore be removed.

Proposal: In July we asked for information on whether the arrangements envisaged by these licence obligations still existed. It was our view that they did not. Given the views of respondents, that such contracts do not exist we propose to remove this obligation in the likely event that the relevant arrangements have expired.

SLC 15: Safety of Supplies



SLC: 15(1) and (2)

Obligation: Under SLC 15(1) the licensee shall keep each of its customers informed - (a) that an escape, or suspected escape, of gas should be reported immediately; and (b) of a telephone number which should be used for that purpose. Under SLC 15(2) the licensee may discharge the duty imposed by SLC 15(1) by providing the requisite information to each of its customers: (a) in respect of any customer supplied pursuant to a contract, when that customer commenced taking a supply from the licensee; and (b) where bills or statements are given to the customer, on a quarterly basis or where no bills or statements are given to the customer, on an annual basis. That information must also be published in such manner as will secure adequate publicity for it.

RETAIN/ REDRAFT EXTEND Modified SLC 20.1 and 20.2

Not matched

Respondents’ Views: Respondents agreed with Ofgem’s proposal to retain this obligation with the minor amendment to remove the reference to “quarterly” bills or statements. HSE said that this was an essential obligation. Without it, gas escapes may not be reported or be reported too late and lead to a rise in incidents. Consumers need the safety and security of knowing what to do and the help available if a gas leak is suspected.

Proposal: The effect of the Gas Safety (Management) Regulations 1996 is to require gas transporters to provide a continuously manned telephone service (which must be contactable within Great Britain by using one telephone number) to enable people to report gas escapes. The importance of this information means that it should be provided at the start of the relationship between the supplier and the customer and with bills/ statements or otherwise once a year. The current drafting does not set a specific requirement for customers on deemed contracts. Given the importance of this information we have proposed an extension to the licence so that suppliers are required to provide it to such customers when the supplier first becomes aware that they are supplying the customer on a deemed contract. We have set the obligation in this way as suppliers may not always know when they are supplying a customer under a deemed contract, for example where there has been a change of tenancy. It is not clear why SLC 15(2) refers to quarterly bills. Bills and statements may be sent at different frequencies. We propose to retain these obligations but remove the reference to "quarterly" in relation to bills and statements.

SLC: 15(3) Obligation: The supplier shall inform the customer of the telephone number referred to in SLC 15(1)(b) if so requested.

RETAIN Modified SLC 20.3 (part) Not matched

Respondents’ Views: The retention of this obligation was supported by respondents.

Proposal: We propose to retain this obligation so that customers will be provided with information to allow them to contact the GT to report concerns about safety in the gas market.

SLC: 15(4) Obligation: The supplier shall, in so far as is practicable, take steps to inform each of its customers of any change to the telephone number of the

service referred to at SLC 15(1)(b) prior to such change becoming effective.

RETAIN

Modified SLC 20.4

Respondents’ Views: Respondents considered that this obligation should be retained. ScottishPower argued that the drafting should be changed to require notification to customers “within a reasonable period of becoming notified of the change.” In the majority of cases suppliers they said that they would receive notification of the change after the effective date of the change and the current drafting does not fully reflect this. They did agree that this was covered, at least in part, by the

Proposal: This obligation requires customers to be provided with up-to-date information to allow them to contact the GT to report concerns about safety in the gas market. We propose to retain this important obligation to help maintain the safety of customers. We do not agree with the view expressed by ScottishPower that suppliers are typically notified of changes to the emergency number after the event. GTs have a licence requirement (SLC 6(7)) to inform the supplier of any change to the telephone number as soon as possible prior to the change. An equivalent



Not matched phrase “in so far as is practicable”. phrase to “in so far as is practicable” should be sufficient to cover any particular concerns that supplier may have.

SLC 16: Exchange of Information Between Licensee and Relevant Transporter or Shipper for Operation, Development or Maintenance of Pipe-line System and Detection

and Prevention of Theft

SLC: 16(1) to (5)

Obligation: These provisions place obligations on suppliers to provide information to the relevant transporter in relation to gas illegally taken and to allow the transporter to draw up plans for the safe operation, development or maintenance of its pipeline system. Circumstances are clearly set out in the licence when the supplier does not need to provide such information.

RETAIN/ EXTEND Modified SLC 17.1, 17.2, 17.3, 17.4, 17.12 and 17.13 (part)

Not matched

Respondents’ Views: In the July consultation Ofgem said that these obligations were outside the scope of the SLR. We noted that there was a separate industry project to review the current industry theft arrangements. No comments were therefore received of these obligations.

Proposal: We propose to retain the principles currently set out SLC 16(1) to (5) subject to the outcome of the industry’s review of the theft arrangements. We have however amended the drafting to make it more in keeping with the improved drafting style proposed for the rest of the modified SLCs. We have proposed a minor change to the current obligations to include “as soon as reasonably practicable” on the obligation to provide information to the relevant transporter (in modified SLCs 17.1 and 17.3). No timescale was previously included.

SLC: 16(6) Obligation: Unless they are also a shipper, where the supplier receives, in connection with a proposed connection or disconnection of a meter, such a

notice as is mentioned in sub-paragraph (1) of paragraph 12 of Schedule 2B to the Act or receives information in pursuance of sub-paragraph (3) of that paragraph, it shall promptly give the relevant shipper a copy thereof and furnish it with any further information relating to the meter which is requested by that shipper and which the licensee either has or may readily obtain.

RETAIN

Modified SLC 17.5

Not matched

Respondents’ Views: Respondents generally agreed that these obligations should be retained. This was supported by National Grid. However, Centrica disagreed. They said that the arrangements could be included in the Unified Network Code and shippers would be expected to back off their obligations via contractual arrangements with their suppliers.

Proposal: We propose to retain this obligation. It is important for suppliers to be required to provide GTs with this information. It is not currently possible to place this obligation in other industry agreements as SPAA arrangements do not cover all non-domestic suppliers, and suppliers are not bound by Network Codes. Because of the importance of this information, including in relation to safety, we do not consider that it would be sufficient to expect shippers to require suppliers to provide this information to the GT as a feature of contract.

SLC: 16(7) and (8)

Obligation: Under SLC 16(7) unless they are also a shipper, where the supplier intends to connect, or has connected any meter with a service pipe through which gas is conveyed to any premises by a gas transporter or intends to disconnect, or has disconnected any meter from any such pipe, it shall give to the relevant shipper the like notice and information as would, by paragraph 12 of Schedule 2B to the Act, have been required to be given to the licensee or the relevant transporter had the connection or disconnection been by a person other than the licensee, and the licensee shall give such notice and information at the like times. SLC 16(8) requires that SLC 16(7) applies in relation to any secondary sub-deduct premises as if gas were conveyed to those premises by a gas transporter.

RETAIN Modified SLC 17.6 to 17.8

Not matched

Respondents’ Views: National Grid, ScottishPower, E.ON and Total Gas Power supported the retention of these obligations. SSE and Centrica considered that it should be removed as it could be placed in other industry governance such as the Unified Network Code and shippers would be expected to back off their obligations via

Proposal: It is important for suppliers to be required to provide GTs with this information. It is not currently possible to place this obligation in other industry agreements as SPAA arrangements do not cover all non-domestic suppliers, and suppliers are not bound by Network Codes. We propose to retain these obligations. Because of the importance of this information,



contractual arrangements with their suppliers. including in relation to safety, we do not consider that it would be sufficient to expect shippers to require suppliers to provide this information to the GT as a feature of contract.

SLC: 16(9) Obligation: Unless they are also a shipper, the supplier shall promptly furnish the relevant shipper with such information as it may from time to time

obtain as to the quantities or amounts of gas conveyed to premises to which it supplies gas.

REMOVE

Not matched

Respondents’ Views: Those parties that responded supported the removal of this obligation. Total Gas Power said that there was a commercial imperative on a shipper to procure this information and any contract between a shipper and supplier would reflect this, so duplication within the licence was unnecessary.

Proposal: We propose to remove this obligation. Shippers require this information from suppliers for business purposes and would be expected to clearly set out their requirements in a contract rather than to rely on a licence obligation. Shipper obligations to provide information to the GT are set out in the gas shipper’s standard licence conditions (SLC 8(2)(c)) and Network Codes.

SLC: 16(10) Obligation: Supplier shall promptly furnish the relevant shipper, for transmission to the relevant transporter, (or, if the holder of this licence is that

shipper and the relevant transporter requests the information in question, shall furnish the relevant transporter direct) with particulars of each inspection of a gas meter in pursuance of SLC 17 (Reading, Inspection and Testing of Meters), including the date on which the inspection was carried out, the reading of the register of the meter and what, if anything, was found.

RETAIN (conditional)

Drafting not shown in modified SLCs

Not matched

Respondents’ Views: HSE, ScottishPower, Total Gas Power and SSE agreed that this obligation should be retained. This view was not supported by Centrica and E.ON. They said that, if the obligations under SLC 17 were removed then this obligation should also be removed.

Proposal: This obligation is strongly linked to SLC 17 which we propose to remove conditional on a number of other factors (see discussion on SLC 17). In the July consultation we indicated that, regardless of whether the meter inspection requirement is retained, it is likely that GTs would require information about a meter inspection after an inspection has occurred and therefore proposed to retain the obligation. Having considered the issue further and in light of the responses received we propose to retain this obligation subject to the outcome of the impact assessment on meter inspection requirements. In Chapter 6 we set out our view that the obligation for the two year inspection of meters should be removed from the licence. To support this we intend to publish an impact assessment in relation to our proposal. We will publish the impact assessment once we have received the HSE's advice on the ERA risk assessment. Our proposal to remove the obligation is subject to this safety advice.

SLC: 16(11) Obligation: Where, in pursuance of a request for the purposes SLC 31(2)(d) (The Supply Point Information Service) of a GT's licence, that GT has

provided the licensee with the information contained in the record of meter point numbers kept by the GT in pursuance of SLC 31, the supplier shall restrict the use or disclosure it makes of the copy or information furnished in such manner, and to such extent, as may be designated for the purposes of this condition generally by the Authority so, however, that such designation may make different provision in relation to copies of part of the record, or information, furnished by different GTs.

REMOVE

Not matched

Respondents’ Views: Respondents agreed that this obligation should be removed

Proposal: We propose to remove this obligation. There is no requirement under SLC 31(2)(d) of the GT licence for the GT to provide data to the supplier on request. SLC 16(11) is therefore not required and can be removed.



SLC: 16(12) to (15)

Obligation: SLC 16(12) requires the supplier to provide information to the shipper (or the transporter if they are also the shipper) on whether a particular premises is domestic or non-domestic. SLC 16(13) requires the supplier to provide this information within 3 working days of them taking over a site or as soon as reasonably practicable after they become aware of a change to the nature of the premises (for example, domestic to non-domestic) unless the Authority has provided consent by 1 January 2002. SLC (14) sets out the date from which these obligations took effect and SLC (15) provides that the Authority consent may only be provided once.

RETAIN/ REMOVE Modified SLC 17.9 to 17.11

Not matched

Respondents’ Views: Respondents generally supported Ofgem’s proposal to retain the obligations set out in SLC (12) and (13) but remove those set out in SLC 16(14) and 16(15). However, this position was not supported by Centrica. They said that this obligation could be included in the Unified Network Code and shippers would be expected to back off their obligations via contractual arrangements with their suppliers.

Proposal: We have sympathy with the Centrica’s view that it would be preferable for the obligations under SLC 16(12) and (13) not to be included in the licence but to be set out elsewhere, for example in SPAA or under the Network Code. However, as not all non-domestic suppliers are bound by the SPAA and no suppliers are bound by the Network Code, this is not possible to do so with the same effect for suppliers. It is important for GTs to receive this information so that they can determine site load shedding priorities and SoLR-related matters. SLC 16(14) and (15) are no longer required as they expired on 1 January 2002 except where consent has been given by the Authority. Such consent was not given by the Authority. We therefore propose to retain the obligations set out in SLC (12) and (13) but remove those set out in SLC 16(14) and 16(15).

SLC: 16(16) Obligation: Where any gas meter owned by the supplier is disconnected by, or returned to the supplier it shall promptly make an appropriate record of

the details displayed on the register of the meter at the time of the disconnection or return and of such other information in its possession as shall subsequently enable the identity of, and the date of disconnection or return of, the meter and the premises from which it was disconnected to be ascertained, and shall keep such a record for a period of not less than 2 years from the date of the disconnection or return, whichever is the later.

REMOVE

Not matched

Respondents’ Views: Respondents supported the removal of this obligation. energywatch commented that, while suppliers may be inclined to retain such data in case of a dispute with a consumer, without any obligation consumers would need to be assured that this data was accessible in case they wished to query it. They considered that this would also be an issue for the Energy Supply Ombudsman if it were to become involved in a case.

Proposal: This is not an obligation that is set out in the electricity supply licence. We propose to remove it from the gas supply licence. Suppliers are required, through their shippers, to provide the GT with an opening and closing read when a meter is exchanged. Further, a supplier would be expected to retain sufficient data to help determine disputes over charges with customers. The extent to which suppliers do or do not retain this data will impact on their ability to enforce charges where a meter exchange has taken place. Were a case to be heard by the Energy Supply Ombudsman Scheme, then this is an issue that they are likely to take into account.

SLC 17: Reading and Inspection and Testing of Meters

SLC: 17(1) Obligation: The supplier shall use all reasonable endeavours (including, in particular, the seeking of a warrant under the Rights of Entry (Gas and Electricity Boards) Act 1954 (other than where the premises in question are secondary sub-deduct premises) where it is necessary to do so) to ensure that at intervals of not more than 2 years (which shall be deemed to expire on a date specified in a notice given by the relevant transporter which has been transmitted to the licensee by the relevant shipper (or, which the holder of this licence has, where it is the relevant shipper, received direct from the relevant transporter), no less than 4 months in advance, in any case where a gas supplier has supplied premises for less than 2 years) an inspection of the meter and associated installation shall take place in accordance with SLC 17(2).

REMOVE

Not matched

Respondents’ Views: HSE said that the current obligations were currently regarded by some in HSE as a key check regarding the on-going safety of a meter installation. Although HSE is not against change to the status quo, such changes should be risk and evidence based and should not result in any reduction in existing levels of

Proposal: In Chapter 6 we set out our view that the obligation for the two year inspection of meters should be removed from the licence. To support this we intend to publish an impact assessment in relation to our proposal. We will publish the impact assessment once we have received the HSE's advice on the ERA risk assessment. Our proposal to remove the obligation is subject to this



safety. In relation to the ERA commissioned risk assessment they said that this would need to include the gas fittings associated with the meter installation alongside aspects of the current inspection i.e. safety and theft and the possibility of risks associated with any increase in the replacement of meters. The key concern of HSE was that none of the suggested changes to the licence conditions should lead to deterioration in safety standards and should preferably improve them. Suppliers generally held that this condition should be removed. EDF Energy sad that the Ombudsman scheme and new back-billing arrangements meant that there was no strong case to retain the current meter reading requirement. Competition, rather than regulation, should determine performance. For safety and theft-related concerns EDF Energy strongly supported Ofgem’s initial proposal to remove the obligation to inspect meters visually at least once every two years, if those concerns can be resolved. They argued that the ERA risk assessment exercise will be able to demonstrate that existing levels of public and consumer safety will not be impaired by the removal of the SLC 17 inspection requirement. EDF Energy believed that it would be possible to devise a more proportionate approach to this issue even without the benefit of the risk assessment conclusions. They said that suppliers gave effect to the licence obligation with their normal cyclical meter reading programmes. It could therefore be possible to place suppliers under a duty to ensure that all visits to consumers’ premises for any purpose connected with metering must include a visual inspection of the meter to a prescribed standard. These views were generally supported by suppliers. Centrica added that the obligation imposed an unnecessary cost and it was a barrier to the introduction of smart metering technologies. They said that billing and safety concerns had less resonance in the non domestic market and obligations should at least be removed from this sector. Bizz Energy said that it was in suppliers own interests to read meters regularly, and could not imagine a supplier who would be happy to leave a meter unread for 2 years. Good Energy said that modern work patterns mean that access to homes to take meter readings and inspect is often difficult. Meters were also safer and harder to tamper. Combined with advances in metering, this means that the need for a visit to obtain a reading is no longer always the best option for either the supplier or the consumer. ScottishPower said that meter reading and inspection frequency could be detailed in a self regulatory code such as the recently launched ERA Billing Code allowing Ofgem to withdraw from formal regulation. Total Gas Power agreed and suggested that the MAMCoP was an appropriate vehicle. Two suppliers, SmartestEnergy and British Energy, said that the obligation should be retained to address data quality issues around

safety advice. The Government has issued a consultation on metering requirements in the energy industry in line with the Energy End-Use Efficiency and Energy Services Directive. We will monitor the development of this consultation but note that obligations on the collection of meter reads could be required by Government, potentially through a licence obligation. However this proposal does not contemplate a site visit or a meter inspection.



energy settlement. Two GTs responded on this issue. National Grid supported Ofgem’s proposal not to change SLC 17 until suitable arrangements are put in place with regard to safety, theft of energy and energy settlement. They were hopeful that a solution could be found that was acceptable to all parties, including the HSE. In particular they were supportive of this in relation to the benefits of smart meters. However they expressed reservations that the Energy Supply Ombudsman did not cover all suppliers and, if significant concerns remained on safety and theft, the existing obligations should remain as public safety was paramount. Wales and West Utilities said that obligation should be retained. They said that the discussion should also consider the impact on transporters and not focus only on the impact on suppliers, including theft, safety and obtaining a meter read. WWU considered that whereas a case may be made for removal of the inspection and moving the obligation into the MAM Code of Practice, there may still be a requirement to read the meter to support shipper UNC obligations. CAB said that the failure to take actual readings lay at heart of customer problems and strongly disagreed with the proposal to remove requirements to read meters at least every 2 years. energywatch generally considered that customers should always be provided with meters that were safe and accurate. They argued that customer meters should be read more frequently. Most respondents considered that smart metering would improve customer billing and would reduce the need for a physical meter read and inspection.

SLC: 17(2) and (3)

Obligation: An inspection under paragraph 1 shall be carried out by a person possessing appropriate expertise and shall include the following tasks: (a) reading the meter; (b) inspecting the meter and associated installation for evidence of tampering; (c) inspecting the meter and that installation for any evidence that the meter has not continuously been in position for the purpose of registering the quantity of gas supplied; (d) arranging for information in respect of any gas leakage identified in the vicinity of the meter to be passed on in accordance with the Gas Safety (Management) Regulations 1996 as if the licensee had been informed thereof; (e) inspecting the meter for any evidence of deterioration which might affect its due functioning or safety; and (f) where necessary and subject to the consent of the owner of the meter, changing any batteries in the meter. Nothing in paragraphs (a) to (e) shall require the dis-assembling of any part of the meter.

REMOVE

Not matched

Respondents’ Views: See general responses to SLC 17(1) above. In addition, following comment was made. HSE's said that the licence should place the responsibility on the supplier to ensure that any meter work is done by an OAMI. If not, there is a risk of increasing the work done by incompetent installers and increasing the chances of incidents associated with meter installations. The risk assessment should not concentrate solely on

Proposal: See proposal for SLC 17.1. Where a supplier makes arrangements to inspect a meter they should ensure that it is carried out by a person possessing appropriate expertise. Whether this should be set out as a requirement of the licence will be discussed in the impact assessment that we intend to publish on the 2 yearly inspection issue and the use of MAMs (see Chapter 6).



the meter but should also include the gas fittings associated with the meter installation.

SLC: 17(4) and (5)

Obligation: It is sufficient compliance with SLC 17(1) if a meter inspection agent appointed by the customer reports that they have conducted the inspection in accordance with SLC 17(2) (subject to certain caveats).

REMOVE

Not matched

Respondents’ Views: See general responses to SLC 17(1) above. Proposal: See proposal for SLC 17.1.

SLC: 17(6) to (8)

Obligation: The supplier shall comply with a request made by any of its customers for the removal of the meter by which the quantity of gas supplied to that customer is registered for the purpose of its being examined by a meter examiner in accordance with section 17 of the Gas Act. Where such a request is in respect of a meter which registers the supply of gas to secondary sub-deduct premises, the supplier shall only be obliged to comply with the request if the person making the request agrees that, if the meter is found in proper order (as mentioned in paragraph 3(7) of Schedule 2B to the Act), that person will bear the expenses incurred in removing, examining and re-installing the meter, and fixing a substitute meter. The supplier shall, while any meter which registers the supply of gas to secondary sub-deduct premises is removed, fix a substitute meter on the premises.


Not matched

Respondents’ Views: The retention of this obligation was broadly supported by respondents apart from SSE. SSE argued that this obligation was already covered under the Gas Act so that there was no need to duplicate it in the licence.

Proposal: The specific arrangements for testing gas meters mean that, where requested by a customer, a meter must be removed and sent for testing. SLC 17(8) deals with the particular circumstances of secondary sub-deduct metering. These obligations should be retained to provide protection to consumers to ensure that their meter is in proper order. We do not agree that these arrangements are already covered by the Gas Act.

SLC: 17(9) Obligation: Where, for a continuous period beginning with 1 March 1996, the relevant transporter does not record separately -

(a) inspections of meters and associated installations in accordance with SLC 17(2); and (b) meter readings made by authorised officers of the licensee, then, without prejudice to the supplier's duty under SLC 17(1), if that transporter has secured that the licensee be so informed, the licensee shall, for that period, ensure that such an inspection of a meter and associated installation takes place on each occasion on which the meter is read by one of its authorised officers.

REMOVE

Not matched

Respondents’ Views: See general responses to SLC 17(1) above. Proposal: See response to SLC 17(1).



SLC: 17(10) to (14)

Obligation: SLC 17(10) sets out the right of the customer to request an inspection to be carried out by a meter inspection agent. Where received the supplier must- (a) inform the transporter, and (b) refrain from agreeing to the inspection request within 15 days of informing the transporter. Under SLC 17(11) the supplier shall not agree to the inspection request - (a) unless there are reasonable grounds for believing that - (i) the meter inspection agent possesses the appropriate expertise; and (ii) they would accurately and efficiently carry out the tasks specified in SLC 17(2), (b) subject to SLC 17(12), if the transporter is of the opinion that there are not reasonable grounds for so believing; SLC 17(12) provides for the supplier to disagree with the transporter's opinion and refer the matter to the Authority for determination. Under SLC 17(13) the supplier shall (subject to certain exceptions) inspection request if it has reasonable cause to be satisfied that the meter inspection agent would comply with obligations relating to meter inspections set out in the Gas Meter Reading and Inspection Code. Under SLC 17(14) the supplier can withdraw the agreement if in defined circumstances.

REMOVE

Not matched

Respondents’ Views: Respondents generally considered that this obligation should be removed from the licence. However, the HSE said that it was important to have a requirement in the supplier’s licence on the supplier for both installing and maintaining the meter on behalf of the consumer. They argued that otherwise, there would be no guarantee that meters are maintained in safe working order and the risk to people’s health and safety will be increased unnecessarily. Industry has indicated that this would not occur in practice, but it is preferable that this possibility be disallowed legally.

Proposal: If a customer wants to appoint a meter inspection agent then they could negotiate this as a feature of their contracts. We propose that this obligation may be removed subject to satisfactory arrangements being identified in the proposed risk assessment. We agree that it is important for suppliers to ensure that meters are installed and maintained by person(s) with the appropriate expertise. Whether this should be set out as a requirement of the licence will be discussed in the impact assessment that we intend to publish on the 2 yearly inspection issue and the use of MAMs (see Chapter 6).

SLC 17A: Adjustment of Charges where Meter has Registered Erroneously

SLC: 17A(1) to (3)

Obligation: Where a consumer is supplied with gas through a meter at a rate not exceeding, subject to section 8A of the Act, 2,196,000 kilowatt hours a year, this condition shall apply if the meter is examined and found to register erroneously as mentioned in paragraph 4(3) of Schedule 2B to the Act. Where the error found is one of over registration, the charges made by the supplier in respect of gas supplied through the meter before it was found to register erroneously shall be adjusted by reference to the extent to which the meter is deemed by paragraph 4(3) of Schedule 2B to the Act to have registered erroneously and, accordingly, allowance shall be made to the customer by the supplier. Where the error found is one of under registration, the supplier shall not surcharge the customer in respect of gas supplied through the meter before it was found to register erroneously otherwise than by reference to the extent to which the meter is deemed by paragraph 4(3) of Schedule 2B to the Act to have registered erroneously.

REMOVE

Not matched

Respondents’ Views: Respondents supported Ofgem’s proposal to remove this obligation.

Proposal: This obligation relates to the actions a supplier must undertake once a meter has been identified as having been measuring erroneously. The obligation requires the supplier to adjust charges where a meter has under registered and repay charges where it has over registered. There is no corresponding obligation in the electricity supply licence. We propose to remove this obligation. Suppliers would be expected to adjust their charges when these are incorrect as a result of the meter measuring erroneously.



SLC: 17A(4) Obligation: Where, in relation to the supply of gas to any premises, paragraph 4 of Schedule 2B to the Act would apply but for the fact that the premises in question are secondary sub-deduct premises - (a) the supplier shall use reasonable endeavours to secure by contract that the provisions of that paragraph shall, as nearly as may be, apply; and (b) if the supplier has so secured, SLC 17A(1) to (3) above shall apply as if the meter had been examined and found to register erroneously as mentioned in sub-paragraph (3) of the said paragraph 4.

RETAIN/ REMOVE Modified SLC 12.8

Not matched

Respondents’ Views: In the July consultation Ofgem proposed to retain this obligation. Respondents supported this view.

Proposal: The provisions of paragraph 4 of Schedule 2B to the Act do not apply to secondary sub-deduct premises. This obligation seeks to secure that those provisions do so apply (i.e. via a contract). The specific nature of sub-deduct arrangements require accurate information about the gas consumed at each metering point. An inaccuracy with one meter may impact on the charges levied at another metering point. Given that any one metering point may be supplied by different suppliers then accurate information is essential and meter reads should be adjusted when it is shown that they are inaccurate. We therefore propose to retain the part of this obligation which aims to ensure that the provisions of paragraph 4 of Schedule 2B to the Act will apply (via contract) in relation to secondary sub-deduct premises. We propose to remove the requirement for a supplier to adjust charges in light of any error in the measurement of the meter being identified. This will be a matter of contract between the supplier and the customer. Most contracts require the charges to be based on the amount of energy consumed.

SLC 18: Not used

SLC 19: Provision of Information to the Authority

SLC: 19(1) and (2)

Obligation: SLC 19(1): Subject to SLC 19(2) and (4), the supplier shall furnish to the Authority such information and such reports as the Authority may reasonably require or as may be necessary for the purpose of performing its functions. SLC 19(2): The licensee shall not be required by the Authority to furnish it with information for the purpose of the exercise of its functions under section 34 of the Gas Act 1986. That section provides that the Authority shall keep under review and collect information about the carrying on of activities relating to the supply of gas.

REDRAFT

Modified SLC 5.1 and 5.2 (part)

Matched

Respondents’ Views: Most respondents agreed that this obligation should be retained. energywatch said that consumers expect, given Ofgem’s statutory duty to protect their interests, that the obligation under SLC 19 will be used in as effective a way as possible to prevent market abuse. Npower argued that reference should be made in the drafting to make clear that it relates to information the Authority may "reasonably require" to exercise its duties and is subject to relevant legislative provisions. SSE did not agree with the proposal as the Electricity and Gas Acts provided Ofgem with the power to gather information.

Proposal: There is a strong argument for maintaining an information gathering power as there may be information reasonably required by the Authority from licensees for the purpose of performing its functions under the Gas Act and other legislation. We therefore propose to retain these obligations with the existing exclusion in relation to general market surveillance (in section 34 of the Gas Act) to ensure that this power will not place an excessive burden on suppliers. We propose to clarify in the revised drafting that the relevant functions of the Authority are those transferred to it by or granted to it under legislation. We have made this change so that each time the Authority is given new functions, for example, under the Energy Act 2004 and, if it is enacted, the Consumers Estate Agents and Redress Bill, the condition will not need to be modified. It is intended that the supplementary document will list the relevant pieces of legislation. In relation to RWE npower’s comment, we intend to continue to use the



reference to, “reasonably require” in relation to the information, which is currently in SLC 19(1). In relation to SSE’s comment, the Authority has a number of different functions throughout various pieces of legislation. There are only some cases in which the legislation provides information gathering powers in relation to those functions, for example, section 38 of the Gas Act which allows the Authority to gather information about breach of a licence condition. In our view, it is appropriate that the Authority’s information gathering power extend to all of its functions except that in section 34 of the Gas Act.

SLC: 19(3) Obligation: The supplier shall, if so requested by the Authority, give reasoned comments on the accuracy and text of any information or advice

(relating to its activities as a supplier) which the Authority proposes to publish pursuant to section 35 of the Gas Act 1986.

RETAIN

Modified SLC 5.3

Matched

Respondents’ Views: British Energy, Good Energy and E.ON supported the retention of this obligation. SSE and ScottishPower said that it should be removed. ScottishPower said that it was unnecessary as suppliers would provide Ofgem with such comment on request and it is in the interests of both parties that they fully understand the context and accuracy of information that is provided.

Proposal: We propose to retain the obligation on a supplier to give comments on the accuracy and text of the information or advice. This will provide the Authority with confidence about the accuracy of the advice/ information published under section 38 of the Gas Act. Given that this may, depending on the information requested, potentially have commercial implications on a supplier’s business, we consider that, rather than being a voluntary obligation, it should be contained in the licence.

SLC: 19(4) Obligation: This SLC shall not require the supplier to produce any documents or give any information which it could not be compelled to produce or

give in evidence in civil proceedings before a court.

RETAIN Modified SLC 5.2 (part)

Matched

Respondents’ Views: Most respondents, other than SSE supported the retention of this obligation.

Proposal: This provision should be retained. It clarifies that the power for the Authority to request documents or other information under SLC 19 is no greater than that of a court. This provides certainty and protection for suppliers.

SLC: 19(5) Obligation: The power of the Authority to call for information under this condition is in addition to the power of the Authority to call for information

under or pursuant to any other condition. There shall be a presumption that the provision of information in accordance with any other condition is sufficient for the purposes of that condition. That presumption shall be rebutted if the Authority states in writing that in its opinion such further information is, or is likely to be, necessary to enable it to exercise functions under the condition in question.


Matched

Respondents’ Views: Good Energy said that the obligation should be retained and redrafted to require the Authority to justify its request to the licensee. SSE and ScottishPower considered that the provision was not required. SSE reiterated their view that there was not a need for a licence condition to allow Ofgem to obtain information as the Electricity and Gas Acts provide Ofgem with the power to gather information. energywatch did not consider that Ofgem’s interpretation of the supplier obligation in SLC 19(5) should be excessively restrictive if the requirement for information is important to an investigation. If additional information is required by the Authority which cannot be obtained under the narrower remit of another licence condition, Ofgem should not feel confined in seeking

Proposal: We propose to retain this obligation in a simplified form in the modified SLCs to clarify that the power to request information under the condition is in addition to the power to call for information in any other condition.



that data and should use SLC 19(5).

SLC 20: Not used

SLC 21: Publication of Information to Customers

SLC: 21(1) and (2)

Obligation: SLC 21(1): Subject to SLC 21(3), the licensee shall keep each customer informed of the name and address of the relevant transporter and the relevant transporter’s meter point reference numbers or codes for the customer’s premises. SLC 21(2): The licensee shall provide the information referred to in paragraph 1 in a form in accordance with the terms of a direction issued by the Authority, on each bill or statement given to the customers in relation to the supply of gas or annually where the customer does not receive such a bill or statement.

RETAIN / REDRAFT/ REMOVE/ EXTEND


Not matched

Respondents’ Views: Respondents apart from energywatch supported Ofgem’s proposals as set out in the July consultation, described in under the heading “Proposal” for these obligations. energywatch said that provision of the identity of the GT had relevance when switching. They argued that if a consumer is on an IGT network, this may affect the pricing that a supplier is prepared to offer, with consumers possibly subject to a surcharge for being on such a network. They said that it was therefore a vital piece of information to enable the consumer to be able to obtain and compare the full price details of various offerings. It may be simpler to retain this provision so that this piece of information is always readily to hand, but at the very least energywatch considered that it should be made available at least annually rather than on request. If a consumer remains with a supplier for any appreciable period of time, it may well be the case that the consumer forgets that they are on an IGT network or cannot recall which one. In the case of the former, they will not know to request the information. Providing this as a matter of course negates the need to contact the current supplier to request it, saving time and money to both consumer and supplier. It would also avoid a worse case scenario of a consumer being questioned by the current supplier as to why they wanted the information and used as a trigger for retention activity.

Proposal: As set out in the July consultation we propose to: • retain the obligation on suppliers to provide customers with the MPRN(s)

held by the relevant gas transporter for the premises. • remove the requirement for it to be provided in a form set out in a

direction issued by the Authority. • require that this information be clearly set out on all bills or statements or

annually where these are not provided. • remove the obligation to keep customers informed of the name and

address of their transporter and replace this with an obligation to provide customers with this information on request and to extend this requirement to include the GT’s enquiry service telephone number.

We do not agree with the view put forward by energywatch that the name of the GT needs to be included on bills or statements or annually. We consider that the provision of information on request will be sufficient to allow the customer to understand the terms that they will be offered on a specific transportation network. However we intend to extend this obligation to include the GT’s enquiry service telephone number. GTs are required under SLC 31 of their licences to provide an enquiry service for the use of customers.

SLC: 21(3) Obligation: The MPRN or code shall consist of a number of data items, each of which shall be represented by a numerical identifier which shall-

(a) have the number of digits specified in a direction issued by the Authority; (b) be approved by the Authority; and (c) be used by the licensee.

REMOVE

Not matched

Respondents’ Views: Respondents supported the removal of this obligation. E.ON commented that there was a question mark over the governance of MPRN allocation on IGT networks. They suggested that it would be better to remove this obligation and introduce a common licence obligation upon GTs to co-ordinate the creation of

Proposal: The GT is responsible for establishing and maintaining this data item under the Network Code. It is therefore not required in the supply licence and we propose that it should be removed. We consider that co-ordination of MPRN creation could be dealt with through the SPAA (as all GTs and IGTs are parties to that agreement) or under the IGT UNC.



standard MPRNs.

SLC: 21(4) Obligation: The Authority may issue a direction relieving the licensee of its obligations under paragraphs 1 and 2 to such extent and subject to such

terms and conditions as it may specify in that direction

REMOVE

Matched

Respondents’ Views: Respondents supported the removal of this obligation.

Proposal: We have proposed amendments to SLC 21(1) and (2) noted above. We consider that this is important information for customers to support competition and that it is not appropriate for the licensee to be relieved of its obligation to comply with this requirement. We therefore propose to remove the ability of the Authority to relieve a supplier of their obligations under SLC 21.

SLC 22: Domestic Premises

New obligation Obligation: Unless the context otherwise requires, a Domestic Premises is a premises at which a supply of gas is taken wholly or mainly for a domestic purpose except where that premises is a Non-Domestic Premises.

REDRAFT

Modified SLC 6.1

Matched


Proposal: “Domestic Premises” is currently similarly defined in SLC 1(1) of the gas supply licence. We propose to include a reference to “Unless the context otherwise requires” and “except where that premises is a Non-Domestic Premises” for completeness. We propose to include it in a standard condition along with paragraphs defining “Non-Domestic Premises” so that all relevant information about how premises may be classified is in one easily accessible place.

New obligation Obligation: Unless the context otherwise requires, a Non-Domestic Premises is a premises, that is not a Domestic Premises, at which a supply of gas

is taken, and includes: (a) a premises where: (i) the person who has entered into a Contract with the licensee for the supply of gas to the premises is a person who has entered or will enter into an

agreement with any other person for the provision of a residential or any other accommodation service at the premises; and (ii) the terms of the agreement referred to in sub-paragraph 6.2(a)(i) are commercial in nature and include a charge for the supply of gas to the premises (whether such charge is express or implied); and (b) any other premises that is to be treated as Non-Domestic Premises under paragraph 6.4 or 6.6.

EXTEND Modified SLC 6.2

Matched


Proposal: We propose to clarify the meaning of “Non-Domestic Premises” in the licence. Following revisions to the SLCs in 2001 Ofgem published clarification on the meaning of domestic and non-domestic premises2. In particular, it clarified that premises that are rented or occupied on a commercial basis and where the cost of the gas is included in the rent or occupancy fee for the premises should be treated as non-domestic premises. In our view the additional obligations associated with domestic premises would be disproportionate and unnecessary in such commercial agreements. Examples of such situations are hotels, nursing homes and local authority housing. We propose to include the meaning of “Non-Domestic Premises” in

2 http://www.ofgem.gov.uk/temp/ofgem/cache/cmsattach/2052_supplyguidanceapril.pdf



the standard conditions of the licence, based on our earlier clarification, to provide certainty to suppliers.

SLC: 22(1) Obligation: Any non-domestic premises which were supplied under a contract or a deemed contract by the licensee, at a rate reasonably expected not

to exceed 73,200 kilowatt hours a year, immediately before the date on which these standard conditions were determined by the Secretary of State pursuant to section 81(2) of the Utilities Act 2000 and in respect of which the customer has remained a customer of the licensee continuously from that date, shall, for the purposes of this licence, be treated as domestic premises until the first of the following occurs – (a) the customer’s contract expires or is terminated; or (b) the customer’s deemed contract ceases in circumstances where the premises come to be supplied under a contract with the licensee or the licensee ceases to supply the premises; or (c) 31 March 2003.

REMOVE

Not matched


Proposal: We propose to remove SLC 22(1) from the licence as it expired on 31 March 2003.

SLC: 22(2) Obligation: Any domestic premises which were supplied under a contract or a deemed contract by the licensee, at a rate reasonably expected to

exceed 73,200 kilowatt hours a year, immediately before the date on which these standard conditions were determined by the Secretary of State pursuant to section 81(2) of the Utilities Act 2000 and where the customer has remained a customer of licensee in respect of supply to the said premises continuously from that date, shall, for the purposes of this licence, be treated as non-domestic premises until the first of the following occurs (a) the customer’s contract expires or is terminated; or (b) the customer’s deemed contract ceases in circumstances where the premises come to be supplied under a contract with the licensee or the licensee ceases to supply the premises; or (c) 31 March 2003. (d)

REMOVE

Matched


Proposal: We propose to remove SLC 22(2) from the licence as it expired on 31 March 2003.

SLC: 22(3) Obligation: Any premises supplied by the licensee which were domestic premises when the customer entered into a contract or became subject to a

deemed contract with the licensee shall, notwithstanding subsequent changes to the nature of the consumption of gas at those premises, be domestic premises for the purposes of this licence, until the first of the following occurs: (a) in the case of premises supplied under a contract, the contract expires or is terminated; or (b) in the case of premises supplied under a deemed contract, the premises come to be supplied under a contract with the licensee or the licensee ceases to supply the premises.

REMOVE

Matched

Respondents’ Views: Respondents generally supported the retention of this provision and the potential to include it in the definitions in SLC 1. SSE did not believe that it should be retained as it was a historical provision that was no longer needed. They considered that the obligation was potentially confusing and open to abuse. E.ON noted that suppliers do not need the comfort, envisaged by this provision, that they will not be in breach of their licences as all

Proposal: We agree with the point raised by E.ON. All suppliers when they are granted a licence to supply domestic customers will also be licensed to supply non-domestic customers. This paragraph is not required. All suppliers are licensed to supply non-domestic premises. It is unlikely that a supplier will be in breach of their licence if they treat a non-domestic customer as if they were a domestic customer. Suppliers therefore do not require comfort that they will not be in breach of their licences if a domestic customer changes their use so



suppliers will be licensed suppliers to non-domestic premises. that they become a non-domestic customer. We are therefore amending our proposal to remove this provision rather than to redraft it.

SLC: 22(4) Obligation: Premises supplied by the licensee which were non-domestic premises when the customer entered into a contract or became subject to a

deemed contract with the licensee shall, notwithstanding subsequent changes to the nature of the consumption of gas at those premises, be non-domestic premises for the purposes of this licence until the first of the following occurs: (a) in the case of premises supplied under a contract, the contract expires or is terminated; or (b) in the case of premises supplied under a deemed contract, the premises come to be supplied under a contract with the licensee or the licensee ceases to supply the premises.

REDRAFT


Matched

Respondents’ Views: Respondents generally supported the retention of this provision and further consideration to include it in the definitions in SLC 1. SSE did not believe that it should be retained as it was a historical provision that is no longer needed. They doubted that there were substantial numbers of customers still being supplied on contracts that pre-date the introduction of this licence obligation (and customers have had 5 years to adopt the change to the definitions of class of customer in 2001). They considered that the obligation is potentially confusing and open to abuse .

Proposal: This paragraph provides comfort for suppliers in circumstances where premises that were non-domestic premises later became domestic premises. Such suppliers will not breach their licence if they supply under the terms originally agreed with the customer until a relevant event occurs. We are proposing to retain this obligation. Rather than include it in the definitions in SLC 1, we propose to retain this provision within a specific SLC on the definition of domestic and non-domestic premises to assist clarity. We consider that this is an ongoing requirement for suppliers where customer use changes and is not a historical issue as suggested by SSE. If this licence provision is removed a supplier, who is supplying a non-domestic customer, could still be in breach of their licence if the customer’s energy use changes to domestic and the supplier is not licensed to supply that domestic customer.

SLC: 22(5) and (6)

Obligation: Under SLC 22(5) any domestic premises supplied by the licensee under a multi-site contract, shall, for the purposes of this licence, be treated as non-domestic premises until that contract expires or is terminated. SLC 22(6) sets out that, for the purposes of SLC 22, a “multi-site contract” is a contract for the supply of gas both to: (a) one or more non-domestic premises; and (b) one or more domestic premises occupied for purposes ancillary to those for non-domestic premises where all the premises are owned or occupied by the same person or body of persons whether corporate or unincorporate or an undertaking (the “principal undertaking”) and any holding company, subsidiary, or subsidiary of the holding company of that principal undertaking, or any other undertaking in which the principal undertaking has a participating interest.

REDRAFT Modified SLC 6.5 and 6.6

Matched

Respondents’ Views: The majority of respondents supported the proposal to retain this obligation. SSE said that it should be removed as in its current form it could be abused by some suppliers to avoid the licence obligations in relation to supplying domestic customers.

Proposal: We propose to retain the principle set out in SLC 22(5) to allow suppliers who hold non-domestic supply licences only to supply multi-site contracts which include domestic premises. We do not agree that, with the restrictions on the use of this provision as described, suppliers will be in a position to abuse the arrangements by avoiding domestic customer licence obligations. This exception will only apply in specific circumstances where there is a commercial relationship between linked premises, at least one of which is domestic. We are not proposing to include this information in a definition of non-domestic premises in SLC 1 as originally suggested in July. Instead we propose to include it in a specific SLC on the definition of domestic and non-domestic premises for completeness.

SLC 22A: Restriction or Revocation: Securing Continuity of Supply



SLC: 22A(1) Obligation: Where, in preparation for a restriction or the revocation of its licence, the licensee is making arrangements for securing continuity of supply for its customers, it shall, in respect of its customers supplied with gas in pursuance of deemed contracts, except in so far as the Authority consents: (a) in making those arrangements, reasonably endeavour to select one or more new suppliers which offer or will offer comparable services at the lowest available cost, and (b) use its reasonable endeavours to give its customers likely to be affected, reasonable notice of those arrangements.

RETAIN/ EXTEND


Not matched

Respondents’ Views: Respondents supported Ofgem’s proposal, set out in the July consultation.

Proposal: We continue to propose that SLC 22A should be retained and extended so that suppliers should make arrangements for contract as well as deemed contract customers in preparing for a restriction or revocation of their licence. These obligations mitigate the risk of a supplier withdrawing from the market, failing to make appropriate arrangements for the continuity of supply to premises. Although the risk is small, the circumstances in which it may occur can be unpredictable and uncertain. Note that the Authority's consent is required for the revocation of a supply licence. Our approach is to make the arrangements consistent between the electricity and gas supply markets. In particular we have: • Defined an “Applicable Customer” for use in this condition in SLC 1.2. • Amended and simplified the arrangements for deemed contract customers

and extended these revised arrangements to cover contract customers. Suppliers will now be required to take all reasonable steps to ensure continuity of supply for customers being supplied under contracts and deemed contracts on terms that are the same or a similar as possible to the terms in place between them and the customers immediately before the licence restriction or revocation.

• Provided for the Authority to relieve the supplier of their obligations under this condition. Previously a waiver only existed in relation to deemed contract customers. This change allows the Authority to better respond, in consumers’ interests, to what may be highly unusual circumstances.

• We propose to remove the requirement on the outgoing supplier to make reasonable efforts to give deemed contract customers reasonable notice of the new arrangements. The licence already contains requirements for suppliers who supply on deemed contracts and domestic contracts to inform their customers about contract terms and arrangements. In this situation we consider that the new supplier will also have a commercial incentive to contact the customer whose contract they have taken over.

SLC 22B: Undertaken to be Given by Licensee to a relevant Transporter in Respect of Shipping Charges etc

SLC: 22B(1) to (11)

Obligation: SLC 22B requires the supplier to provide the Transporter with an undertaking to pay shipping charges in the event that the relevant shipper arrangements to pay charges to the Transporter are terminated.

REDRAFT Modified SLC 18.1 to 18.6

Respondents’ Views: In July Ofgem proposed to retain the basic principles of this condition but to significantly simplify its drafting. This approach was supported by respondents.

Proposal: This condition contemplates the situation which can occur in gas where a shipper and a supplier are separate companies and the supplier is required to have in place particular arrangements with the relevant



Not matched

transporter. Were the shipper to fail, the customers continue to take gas. Disconnection is not a practical or desirable option and the smearing of charges across the wider community is unsustainable. However, there is still a supplier in place who is able to bill customers and they should be obliged by the undertaking to pay charges to the transporter and to arrange for new shipper arrangements. We propose to retain the basic principles set out in 22B but to make the following changes: • simplify the drafting of the condition, • remove the transitional requirements • remove the role of the Authority to designate the form of the undertaking

(a transitional arrangement when these undertakings were first introduced. Transporters now have these in place as an established feature of the market arrangements.)

SLC 23: Payments Received in Relation to Standards of Performance

SLC: 23(1) and (2)

Obligation: Any relevant payment made to the licensee by the relevant shipper (or where the licensee is the relevant shipper, by the relevant transporter direct) shall be paid, as soon as reasonably practicable after its receipt, to the relevant customer.

RETAIN

Modified SLC 19.1

Matched

Respondents’ Views: Those parties that responded agreed that this obligation should be retained.

Proposal: This condition requires that any payment received from the GT or shipper shall be paid as soon as reasonably practicable after receipt to the relevant customer. We consider that this provision should be retained in principle to ensure that all suppliers pass on payments to customers within a reasonable timescale. Unlike electricity, an alternative mechanism for delivery is not available though an industry agreement that compels non-domestic and domestic suppliers to comply with such provisions.

SLC 24: Arrangements in Respect of Powers of Entry

SLC: 24(1) to (4)

Obligation: The licensee shall, in respect of both domestic and non-domestic premises, prepare and submit to the Authority for its approval a statement of its proposed arrangements in respect of the steps mentioned in SLC 24A (Authorisation of Officers). In the case of an extension of this licence, the licensee shall ensure that the arrangements remain sufficient for the purposes of satisfying SLC 24A (Authorisation of Officers). The licensee shall use its best endeavours to ensure, so far as is reasonably practicable, that it conducts itself in conformity with the arrangements made in pursuance of the statement. This condition is subject to the provisions of standard condition 27 (Preparation, Review of and Compliance with Statements and Customer Service Codes).

REDRAFT Modified SLC 13.1(part) and 13.2 (part)

Not matched

Respondents’ Views: Respondents supported Ofgem’s proposal set out in the July consultation to require suppliers to take reasonable steps to ensure that persons entering a premises: (a) are readily identifiable to members of the public; (b) use passwords provided for vulnerable customers; (c) are appropriate persons to visit and enter customers’ premises; (d) are able to inform customers, on request, of a contact point for help and advice that they may require in relation to the supply of gas. The supplier would also be obliged to prepare a policy statement

Proposal: We propose a substantial redrafting to this obligation to match our proposals for a modified electricity supply licence. We propose that the new condition will provide a list of obligations that would require a supplier to take all reasonable steps to ensure that any person entering a premises on its behalf: (a) possesses the skills necessary to perform the required function; (b) can be readily identified as a Representative of the licensee by a member of the public; (c) uses any password that the licensee has agreed with the Customer; (d) is a fit and proper person to visit and enter the Customer’s premises; and



about how its arrangements for complying with the requirements above would operate and to provide it to any person who asks for it. energywatch said that it was vitally important that all supplier agents conducted themselves with an acceptable standard of behaviour. They said that consumers must be made aware of their rights and the levels of service they can expect. ScottishPower agreed with the proposal subject to the obligations not being made more onerous by virtue of the drafting on the face of the licence. Any test of 'reasonableness' should not be increased. SSE supported both the proposal and the harmonisation of the arrangements between the gas and electricity supply licences.

(e) is able to inform the Customer, on request, of a contact point for any help and advice that he may require in relation to the supply of gas. This list has been enhanced from that proposed in July. In particular we propose to require that the use of passwords is extended from vulnerable customers to any customer that wants to use a password. We propose that the supplier should also be obliged to prepare a statement on how its arrangements for complying with the site access requirements above would operate and to provide it to any person who asks for it. We do not propose to retain the requirements set out in SLC 26 and SLC 27 for a code of practice to be produced, approved or for performance against that code to be reported. The effect of these changes is for the licence to clearly set out what a supplier is required to do and to remove unnecessary administration.

SLC 24A: Authorisation of Officers

SLC: 24A(1) Obligation: The arrangements referred to in SLC 24 (Arrangements in Respect of Powers of Entry) shall provide for the taking of all reasonable steps- (a) for the purpose of securing compliance with paragraph 28(1) of Schedule 2B to the Act; (b) for the purpose of securing that any officer authorised for the purpose of any provision of Schedule 2B to the Act possesses appropriate expertise to perform the particular tasks that he will be required to undertake under the provision in question; (c) for securing that a member of the public may readily confirm the identity or authority of an officer so authorised; (d) for securing that identity cards, uniforms, liveried vehicles and other things carried, worn or used by an officer so authorised which confirm or suggest that he may be such an officer are not misused; (e) for securing that all officers so authorised by the licensee comply with the provisions of the Rights of Entry (Gas and Electricity Boards) Act 1954; and (f) for securing that where, in relation to any premises - (i) a power of entry would be conferred on the licensee by Schedule 2B to the Act but for the fact that the premises in question are secondary sub-deduct premises, but (ii) the licensee has obtained such power as is mentioned in paragraph 2(a), the licensee complies, in relation to that power, with the requirements imposed on gas suppliers by paragraph 28(1) of the said Schedule 2B, and the requirements of sub-paragraphs (b) to (d) are complied with in relation to any officer authorised by the licensee to exercise any such power as if the officer were authorised for the purposes of the appropriate provision of that Schedule.


Not matched

Respondents’ Views: Respondents supported Ofgem’s proposal to redraft this obligation in light of the proposed amendments to SLC 24.

Proposal: We propose to retain a set of obligations on suppliers when they access customer premises as set out above for SLC 24. In addition to these requirements we propose to retain an obligation on the supplier in relation to the secondary sub-deduct premises. When (as set out below for SLC 24A(2)) powers of entry are obtained by the supplier though contract with the customer, they should be executed in accordance with the revised SLC 24 requirements.

SLC: 24A(2) Obligation: SLC 24A(2) sets out the requirements for dealing with entry to sub-deduct premises. In particular, the licensee shall use reasonable

endeavours to obtain by contract - (a) powers of entry that are, as nearly as may be, the same powers of entry that would have been conferred on it by Schedule 2B of the Gas Act; and (b) such rights as will provide, as nearly as may be, for the relevant shipper and relevant transporter to enter the premises in question on the same basis as where powers of entry would have been conferred on them by Schedule 2B of the Gas Act.




Not matched

Respondents’ Views: Respondents supported Ofgem’s proposal to redraft this obligation in light of the proposed amendments to SLC 24.

Proposal: We consider that a redrafted SLC 24 should retain provision for dealing with the circumstances of access to secondary sub-deduct premises.

SLC: 24A(3), (4) and (5)

Obligation: These obligations deal with the notification of customers in respect of secondary sub-deduct premises of the arrangements for officers to access premises (it is sufficient for that notification to be given on a bill) and the arrangements where the licensee is also the relevant shipper.


Not matched

Respondents’ Views: In the July consultation Ofgem proposed to retain the principle of this obligation. Respondents supported Ofgem’s proposal in light of the proposed amendments to SLC 24.

Proposal: We remain of the view that customers should be informed of the supplier’s arrangements for site access (to the extent discussed in relation to SLC 24 above). This applies equally for customers at secondary sub-deduct premises. We propose that this oblation is redrafted so that a statement of arrangements are made readily available on suppliers’ websites (if they have one) and free on request.

SLC 24B: Exercise of Powers of Entry

SLC: 24B Obligation: This condition requires that where a supplier uses its statutory powers of entry it shall use its reasonable endeavours to avoid undue disturbance to owners or occupiers of premises as a result of visits being made to their premises by authorised officers of different licence holders exercising powers of entry for like purposes. Additionally, the supplier shall not, in connection with the supply of gas to any premises, by contract acquire for any of its officers powers of entry additional to those enjoyed by its authorised officers under Schedule 2B to the Act or act in any manner calculated to suggest that any of its officers have such powers, other than where (a) in the case of a contract which relates exclusively, or to the extent to which it relates, to the provision of a gas meter or other gas fitting of which the licensee remains the owner; or (b) so far as the Authority so consents in cases, or descriptions of cases, specified by it. The restriction on contracts shall not apply in relation to any secondary sub-deduct premises as respects such a power of entry.

REMOVE

Not matched

Respondents’ Views: Respondents agreed with Ofgem’s proposal to remove this obligation. HSE said that their support was conditional on the redrafted SLC 24 including the necessary protection to avoid undue disturbance to owners or occupiers of premises.

Proposal: There is no equivalent to SLC 24B in electricity and we see no need to maintain such an obligation in gas. The redrafted SLC 24 should provide appropriate protection and align with SLC 24 in electricity. We propose that SLC 24B is removed.

SLC 25: Efficient Use of Gas

SLC: 25(1) Obligation: The licensee shall prepare and submit to the Authority for its approval a code of practice setting out the ways in which the licensee will make available guidance on the efficient use of gas. That guidance must be given or prepared by a suitably qualified person and must enable customers to make informed judgements on measures to improve the efficiency with which they use the gas supplied to them.


Matched

Respondents’ Views: There was general support for the proposal to move away from the use of codes of practice in favour of setting clear obligations on the face of the licence. There was also wide support from suppliers and customer representative groups for a continued requirement on suppliers to provide domestic customers with energy efficiency information. This view was not supported by Centrica who said that the market was responding well to energy efficiency challenges for customers. Energy Action Scotland said that customer awareness can reduce demand for energy and has a positive impact on the eradication of

Proposal: We propose to remove the obligation to prepare and submit to the Authority for its approval a code of practice on energy efficiency advice to customers. Instead, we propose to set out specific obligations about the provision of energy efficiency advice to domestic customers on the face of the licence. Where energy efficiency advice is required to be given we propose to retain the obligation for it to enable customers to make informed judgments on measures to improve the efficiency with which they use gas supplied to them. The reference to such guidance being prepared or provided by a suitably qualified person is unnecessary and should be removed. The important issue is



fuel poverty. They argued that customers in difficulty should be offered energy efficiency advice from independent advice agencies, and suppliers should provide contact details. Most respondents agreed that energy efficiency obligations should be limited to domestic customers and removed for non-domestic customers. Smartest Energy said that this was potentially an opportunity to transfer this responsibility to energywatch to ensure consistent quality advice. E.ON questioned whether the EU Directive on Energy Services was relevant as it may place some obligations on member states to ensure suppliers offer energy advice to business customers. E.ON supported the simplification of this condition, but were concerned that the requirement "must enable customers to make informed judgements" will make it harder to provide helpful advice without excessive detail and qualification.

that the quality of the advice given will allow the customer to make an informed decision. Suppliers should not be obliged to provide energy efficiency advice to non-domestic customers who would be better off receiving the targeted information provided by specialist organisations such as the Carbon Trust. We do not consider that the incentives provided under Energy Efficiency Commitment (EEC) requirements are sufficient to replace the obligation to provide information. Currently the EEC does not recognise the specific contribution made by general energy efficiency information provision although we understand that this being considered by Defra.

SLC: 25(2)(a) Obligation: The code of practice referred to in SLC 25(1) shall include but not be limited to the preparation and making available free of charge to any

customer who requests it of a statement, in a form approved by the Authority, setting out information and advice for the guidance of customers in the efficient use of gas supplied to them.

REDRAFT/ REMOVE/ EXTEND


Matched

Respondents’ Views: As noted above, respondents generally supported a requirement to provide energy efficiency information to domestic customers. There was no support for a prescriptive requirement to provide this information in the form of a statement. E.ON said that a basic leaflet should be available free of charge, but the licence wording should not prevent suppliers charging for more advanced services. As no supplier was likely to charge for basic advice, they argued that it would be simplest to delete the reference to 'free of charge'. E.ON said that some suppliers have restricted hours for energy efficiency advice, which can make it hard to access for many people. The ability to make a small charge could lead to an improved service.

Proposal: We propose that suppliers should be required to provide guidance to domestic customers on request, free of charge, setting out information and advice for customers on the efficient use of gas supplied to them for the purpose of enabling them to make informed judgments on measures to improve the efficiency with which they use the gas supplied to them. Such information should also be prominently shown on the supplier's website. Consumers should also be able to telephone their suppliers for the provision of this energy efficiency advice. The obligation to provide such information in a statement in a form approved by the Authority should be removed as this is inflexible and overly prescriptive. We do not consider that this obligation would prevent a supplier offering more detailed advice or additional services on a chargeable basis for example an energy efficiency audit of a consumer’s property.

SLC: 25(2)(b) Obligation: The code of practice referred to in SLC 25(1) shall include but not be limited to the making of arrangements for maintaining sources from

which customers may obtain further information about the efficient use of gas supplied to them, including the maintenance of a telephone information service.


Matched

Respondents’ Views: Other than Good Energy and Centrica there was general support for the retention of these obligations. National Energy Action said that the licence should clearly state that suppliers should operate a telephone advice service. They noted the proposal for websites to be a source of information but expressed concern about the ‘digital divide’ rendering this insufficiently comprehensive in ensuring access to advice for all consumers.

Proposal: See comment for SLC 25(2)(a). We also propose that suppliers should provide information about the efficient use of gas supplied to customers on their website (ensuring that it is readily accessible from it). This information should be equally accessible for those consumers that telephone their supplier for this information; suppliers should therefore maintain a telephone information service. This will be a clear obligation on the face of the licence not a requirement for inclusion in a code of practice.



SLC: 25(2)(c) Obligation: The code of practice referred to in SLC 25(1) shall include but not be limited to the preparation and making available free of charge to any customer who requests it of a statement(s) of sources outside the licensee’s organisation from which customers may obtain additional information or assistance about measures to improve the efficiency with which they use the gas supplied to them. Such statement(s) must include basic information which is publicly available on financial assistance towards the costs of such measures available from central or local government or through bodies in receipt of financial support from Government in connection with measures to promote the efficiency of energy use.

REDRAFT/ REMOVE Modified SLC 30.2 (part) and 30.3 (part)

Matched

Respondents’ Views: Other than Good Energy and Centrica there was general support for the retention of these obligations. NCC said that suppliers should continue to be obliged to signpost sources of energy efficiency information to consumers, as other organisations such as the Energy Savings Trust and Carbon Trust are unknown to some consumers.

Proposal: We consider that there is benefit in customers having access, free of charge, to sources outside the licensee’s organisation from which customers may obtain additional information or assistance about measures to improve the efficient use of gas. We propose to retain the spirit of this obligation whilst redrafting it to make it a clear obligation on the face of the licence and remove the requirement to include it in a code of practice. We have removed the requirement for suppliers to produce a statement. This is unnecessarily bureaucratic and we consider that a requirement to provide such information, in particular circumstances would be more proportionate.

SLC: SLC 25(3) Obligation: Where the Authority gives directions to do so, the licensee shall:

(a) review and prepare a revision of the code of practice; (b) take steps to bring to the attention of customers information on the efficient use of gas supplied to them; and (c) send to each customer a copy of any information in relation to the efficient use of gas published by the Authority pursuant to section 35 of the Gas Act 1986, in such manner and at such times as will comply with those directions.

REMOVE/ RETAIN/ EXTEND Modified SLC 30.3

Matched

Respondents’ Views: Good Energy said that suppliers should continue to have an obligation to provide energy efficiency advice but how they do that should not be mandated by the licence nor should the level they offer. The level of energy efficiency advice given is one way a supplier can differentiate themselves. Given the wider debate on carbon reduction this is likely to be an area of competition which will become a higher priority. SSE supported providing this information on their website and providing copies free of charge on request. They said that SSE’s policy was to offer all customers general advice on energy efficiency when contacted for advice on how to reduce bills etc. Energy Action Scotland did not agree that web based information would be adequate and considered that each customer should be sent information on efficient use of gas and electricity. energywatch said that suppliers should be required to provide energy efficiency advice "in house" and direct customers to expert agencies as required.

Proposal: Given the proposal to remove the requirement on suppliers to prepare a code of practice, the obligation on suppliers to review and revise the code where directed to do so by the Authority can be removed. Ofgem considers that suppliers should provide energy efficiency information to customers. However, rather than retaining a requirement to take steps to bring this information to the attention of customers, such information should only be required to be provided on request. Suppliers have incentives to provide energy efficiency information to customers through EEC and other competitive forces. We are further proposing to include a requirement on the face of the licence to provide such information on request to customers, to make it available on a supplier’s website if it has one and for the supplier to maintain a telephone information service. We consider that this is a more proportionate and targeted measure. We have further considered the requirement to send each customer a copy of any information in relation to the efficient use of gas published by the Authority pursuant to section 35 of the Gas Act 1986 and now propose to remove this obligation. We do not foresee that Ofgem will have a need to use such powers.

SLC: 25(4) Obligation: This condition is subject to the provisions of standard condition 27 (Preparation, Review of and Compliance with Customer Service Codes).



REMOVE

Matched

Respondents’ Views: Respondents generally agreed that this obligation should be removed although there was some concern about the monitoring of obligations from customer representative groups. energywatch agreed with Ofgem’s view that there was no practical merit in retaining obligations in respect of approval of codes of practice, the form of statements and obligations to report annually and that these should be removed. Money Advice Trust/National Debtline disagreed with the removal of the requirement that suppliers should report annually on their progress.

Proposal: We propose to remove the requirement for a code of practice to be established and therefore for it to be subject to the requirements of SLC 27.

SLC 26: Record of and Report on Performance This only includes comments received from respondents received in response to the July consultation and not those received in the Vulnerable Customers Consultation in March 2006.

SLC: 26(1) Obligation: The licensee must maintain a record of its general operation of its code of practices under SLCs 24 and 25, and where a Domestic Supply

Direction has been issued to the licensee under SLCs 35, 36, 37, 38 and 39 and if the Authority so directs in writing, of its operation of any particular cases or description specified by the Authority.


Matched

Respondents’ Views: No further responses were received on this obligation.

Proposal: The current SLC26(3) makes reference to information required under SLC26(1) and (2). This requirement has been incorporated into the drafting of modified SLC31.

SLC: 26(2) Obligation: Where Domestic Supply Direction issued to licensee, keep a statistical record of provision of supply services to domestic customers


Matched

Respondents’ Views: Proposal: The current SLC26(3) makes reference to information required under SLC26(1) and (2). This requirement has been incorporated into the drafting of modified SLC31.

SLC: 26(3) Obligation: The licence shall, from time to time as required, provide to the Authority and the Consumer Council such information contained in the

records prepared in accordance with paragraphs 1 and 2 as the Authority may request in writing.


Matched

Respondents’ Views: energywatch welcomed Ofgem's view that enforceable information gathering power equivalent to SLC 26 (3) should be retained. npower, SSE, Scottish Power believed that there was sufficient vires under SLC19 to deal with information requests, and suppliers would co-operate with requests for information from Ofgem. However, if it was considered that an enforceable provision was necessary, then SLC 19 should be amended rather than retaining a separate provision which mirrors SLC 26(3). SSE also considered that Ofgem already had sufficient powers under the Acts and therefore this additional obligation was just "red tape".

Proposal: We intend that an enforceable information gathering power equivalent to current SLC 26(3) should be retained so that we can monitor suppliers’ performance, in particular, in providing services to vulnerable customers and on the issue of debt and disconnection. The power under section 38 of the Gas Act for Ofgem to collect information to keep markets under review is not enforceable. The current SLC 19(2), now draft modified SLC 5.2, specifically excludes information that could be required under that section. In addition the modified SLC 5 applies to all suppliers (domestic and non-domestic). The modified SLC 31 only applies to domestic suppliers. The information that will be required will be set out in a direction, issued following a consultation with the licensee and the Consumer Council and it must be in a



statistical form. The information currently required under the direction issued under SLC 26 will continue to be required.

SLC: 26(4) Obligation: Each year the licensee must give the Authority and the Consumer Council a report on its performance and publish it ensuring adequate

publicity. They must also publish and secure adequate publicity for report on its performance and issue it free of charge to anyone who requests a copy. There is an exception relating to data that could be identified against an individual customer without their consent.

REMOVE

Matched

Respondents’ Views: energywatch considered that if the requirement to provide copies of annual reports was removed suppliers should signpost any customers and agencies seeking information that would have been required in their annual reports to the relevant page on the Ofgem website.

Proposal: We intend to remove this obligation to publish an annual report as it does not add anything to Ofgem's power to collect comparative data under SLC 26(3). We will continue to publish comparative data on a quarterly basis. If suppliers do receive any requests for information that previous appeared in the annual report, we would expect them as part of ordinary customer service to signpost the enquirer to Ofgem's website, without a licence obligation requiring this.

SLC: 26(5) Obligation: Report on performance to be presented, as far as reasonably practicable, in a standard form designated by the Authority.

REMOVE

Matched

Respondents’ Views: No further responses were received on this obligation.

Proposal: We intend to remove this obligation for a published annual report to be in a designated format as it does not add anything to Ofgem's power to collect comparative data under SLC 26(3).

SLC 27: Preparation, Review of and Compliance with Customer Service Codes This only includes comments received from respondents received in response to the July consultation and not those received in the Vulnerable Customers Consultation in March 2006.

SLC: 27(1) Obligation: This condition applies to the codes of practice required under SLCs 24 and 25 and where a Domestic Supply Direction has been issued to a

licensee 35, 36, 37, 38 and 39.

REMOVE

Matched

Respondents’ Views: The following comments also apply to other obligations in this and other licence conditions relating to the current regime for codes of practice. There has been consensus that the current regime requiring suppliers to produce 7 different codes, to have these approved by Ofgem and to comply with them, is administratively burdensome and does not add anything to the overall protection of customers.

Proposal: We intend to remove this obligation. In redrafting the licence where relevant obligations currently required by SLCs 24, 25, 35, 36, 37, 38 and 39 have been included on the face of the licence.

SLC: 27(2) Obligation: Before submitting to the Authority a code referred to in SLC 27(1) the licensee must first consult the Consumer Council and have regard to

any representations made about the code and the manner in which it is likely to be operated.

REMOVE

Matched

Respondents’ Views: See comments at SLC27(1). Proposal: We intend to remove this obligation.



SLC: 27(3) Obligation: The licensee will amend its code of practice as required by the Authority when notified within 30 days of submission to the Authority.

REMOVE

Matched


SLC: 27(4) Obligation: The licensee must review its codes of practice and the manner in which they are being operated as requested by the Authority to establish

whether a modification should be made to the code or its manner of operation.

REMOVE

Matched


SLC: 27(5) Obligation: In carrying out a review to determine if its codes of practice and the manner in which they are being operated should be modified, the

licensee should consult the Consumer Council and have regard to its comments.

REMOVE

Matched


SLC: 27(6) Obligation: If amending its code of practice, the licensee must seek approval from the Authority in writing for its intended changes.

REMOVE

Matched


SLC: 27(7)(a) Obligation: If the licensee makes or amends a code of practice it must, as soon as practicable, send a copy to the Authority and the Consumer

Council.

REMOVE

Matched

Respondents’ Views: See comments at SLC27(1). Proposal: We propose to remove this obligation.

SLC: 27(7)(b) Obligation: : At least once every year, the licensee must draw the attention of those customers to whom the codes apply to the existence of the code,

of each substantive revision of the code, and the means by which the customer can inspect the code.



REDRAFT

Modified SLC 26.10, 27.10 28.3

Matched

Respondents’ Views: energywatch supported statements of obligations particularly for consumer advisers who do not specialise in energy. energywatch had concerns that many vulnerable customers do not have access to the internet, and considered in some cases these statements may be necessary in different languages or different formats for deaf and blind customers. energywatch also thought the annual requirement would be more effective if it was on the face of the bill or the back of the billing envelope. CAB considered that the statement should be sent out proactively once the customer is in debt or on the PSR. energywatch further suggested 7 working days for free copies on request. Scottish Power thought the licence should not dictate marketing of statements, as suppliers distinguish themselves competitively in customer service. E.on believed that there should be discretion to publish separate statements and the obligation should be to secure adequate publicity rather than once a year (referring to information at time of debt). Bizz Energy considered that the annual statement presented difficulties.

Proposal: We do not intend to be too prescriptive as to the form of marketing required. However the new conditions for services for specific customer groups and disconnection (modified SLCs 26 and 27) have been drafted to require suppliers to publish a statement setting out, in plain and intelligible language their obligations under the standard condition. This statement must be readily accessible on the supplier’s website, and they must provide a copy free of charge to anyone who requests it. We note the concern that some customers do not have access to the internet and we have included a requirement to take all reasonable steps to inform customers annually of the existence of the statement and how it can be obtained. The PPM condition has a similar obligation, which differs in that information on PPMs (required to be provided by modified SLC28) as well as the statement of obligations, must be provided to all PPM customers annually. The site access condition (modified SLC 30.2 and 30.3) is similar but with no requirement to provide the information annually. The complaints procedure condition (modified SLC 30.4 and 30.5) has a slightly different structure as set out in this appendix under the current SLC 39 section. The energy efficiency condition (modified SLC 30.2 and 30.3) specifically includes the requirement for a telephone information service. On meeting the varying communication needs of blind, partially sighted, deaf and hearing impaired customers, we held a workshop on 26/09/06 which identified best practice in this area. A note of this meeting is published on our website.

SLC: 27(7)(c) Obligation: The licensee must send a copy of the code to anyone who requests it.

REDRAFT Modified SLC 26.10, 27.10 28.3

Matched

Respondents’ Views: Proposal: As above we intend to amend this obligation.

SLC: 27(8) Obligation: This obligation requires that no changes may be made to any code otherwise than in accordance with the procedures set out in this SLC.

REMOVE

Matched


SLC: 27(9) Obligation: The licensee shall ensure, so far as reasonably practicable, that it complies with such arrangements or procedures (as the case may be) as

are contained in or described by any code to which this condition applies and approved by the Authority or any revision to such code approved by the Authority.



REMOVE

Matched

Respondents’ Views: There has been consensus that the current obligations relating to codes of practice can be removed. SSE support removal of this obligation and believe that it may encourage suppliers to develop new Corporate Social Responsibility "CSR" and voluntary initiatives. However, energywatch were unaware of any instances where the codes of practices have prevented suppliers from either bringing forth our publishing innovations that go above the minimum statutory requirements.

Proposal: This obligation can be removed. Suppliers' obligations would be limited to those requirements on the face of the licence, which would not prevent suppliers from developing CSR initiatives which go beyond the licence requirements. It should also be noted that the current requirement refers to "the licensee shall ensure, so far as practicable, that it complies...". In the redrafting of relevant obligations covered by this condition, generally reference has been made to the licensee "taking all reasonable steps".

SLC 28: Deemed Contracts

SLC: 28(1) Obligation: This condition sets out the obligations on the licensee in relation to its deemed contracts

REMOVE Matched

Respondents’ Views: Respondents did not comment on this specific obligation

Proposal: This provision is not needed and we propose to remove it from the standard conditions.

SLC: 28 (2) to (4)

Obligation: The licensee shall use its reasonable endeavours to ensure the terms of its deemed contracts are not unduly onerous. The terms of a deemed contract will be unduly onerous if the revenue derived from supplying gas to customers of the class in question on those terms: (a) significantly exceeds the costs of supply of gas; and (b) exceeds such costs of supply by significantly more than the licensee's revenue exceeds costs of supply in the case of the generality of its domestic customers or, as the case may be, in the case of the generality of its non-domestic customers (excluding in each case customers supplied in accordance with standard condition 29 (Supplier of Last Resort)). "Costs of supply" will not include any costs attributable to any promotional, marketing or advertising activities of the licensee.

RETAIN / REMOVE Modified SLC 7.3 and 7.4

Matched

Respondents’ Views: There was general support for retention of regulation for deemed contracts. energywatch said that because a deemed contract is a contractual relationship that is imposed upon a user without choice, certain safeguards have to be in place to ensure a reasonably level playing field until a conventional contract can be concluded. This view was not shared by E.ON. They considered that it was not necessary to define 'unduly onerous' in the licence and it seems unlikely that any definition can foresee all relevant circumstances. They also dispute that competition will not deliver competitively priced deemed contracts. Customers who are new to a property are an attractive prospect, with no sales costs, who a supplier will wish to retain. SSE did not agree that there was a need for a SLC in relation to deemed contracts. They argued that the Electricity Act 1989 and the Gas Act 1986 covered deemed contracts.

Proposal: In general we consider it necessary to retain regulation of deemed contracts although in specific instances obligations can be streamlined or removed Deemed contracts are imposed by statute and result from the unique nature of energy supply. We consider that it is appropriate that suppliers should have a clear obligation to ensure that charges under deemed contracts must not be unduly onerous as such deemed contracts are not entered into by parties who are fully aware of the terms and conditions applying in relation to the supply. Inclusion of this term in the licence provides clarity about what would not be considered reasonable in relation to supply in these circumstances. We propose to retain SLC 28(2) and SLC 28(3) ensuring that deemed contract charges should not be unduly onerous and that “unduly onerous” should be defined in the licence. We propose to remove the specific requirement set out in SLC 28(4) for charges to exclude costs associated with promotional, marketing and advertising activities. SLC 28(4) is overly specific and there is no justification for its exclusion from the calculation of "unduly onerous". Suppliers could argue that their supply costs include costs associated with promotional, marketing and advertising activities and it should be for the supplier to determine whether the costs of this activity should be shared across all of their customer case, including deemed contract customers.



SLC: 28(5) Obligation: The licensee shall, as soon as is reasonably practicable after determining or revising any of the terms of its deemed contracts, send a copy to the Authority.

REMOVE

Matched

Respondents’ Views: There was full support for the removal of the requirement for suppliers to send copies of deemed contracts to the Authority.

Proposal: This obligation is unnecessary. We therefore propose that it should be removed. The Authority will be able to request this information through the retention of SLC 28(6) (see below).

SLC: 28(6) Obligation: At the request of any person, the licensee shall supply that person with a copy of the terms of its deemed contracts.


Matched

Respondents’ Views: energywatch supported Ofgem’s view that this obligation should be retained to ensure transparency and allow consumers to make informed choices about their energy supply. There was also support from other respondents. SSE did not agree saying that suppliers would provide this information to customers on request without the need for a licence condition. ScottishPower argued that the obligation should be recast so that it was an obligation to provide a copy of a customer’s deemed contract to that customer rather than a more open obligation to provide a copy to any person.

Proposal: We propose to retain this obligation. It is important for transparency that this information is obtained. We agree that suppliers are likely to provide this information to customers. However, given the nature of deemed contracts, which are not directly negotiated between the supplier and the customer and under which suppliers are able to charge for energy supplied, it is important to ensure that suppliers will (to the extent possible) provide the deemed contract terms on request to allow customers to make informed choices. This obligation can be used by Ofgem, energywatch and other customer representative bodies to obtain this information which may for example be used in advising on disputes.

SLC: 28(7) Obligation: The licensee shall ensure that the terms of its deemed contracts are such that, in their application to gas supplied under a last resort

supply direction, the amount of any charges for gas so supplied complies with the provisions of paragraphs 13, 14 and 16 of standard condition 29 (Supplier of Last Resort).

REMOVE

Matched

Respondents’ Views: There was broad support for removing this obligation. Its purpose was to be a reminder of the provisions of SLC 29 which are to be included in a deemed contract under the SoLR arrangements.

Proposal: We propose that this obligation be removed as it duplicates the requirements of the existing SLC 28(7) and is therefore unnecessary.

SLC: 28(8) Obligation: Where the licensee supplies a customer with gas under a deemed contract, it shall use its reasonable endeavours to furnish the customer

with - (a) details of the principal terms of that deemed contract; (b) written notice that contracts on terms other than deemed contracts may be available and as to how information can be obtained as to any such terms; and (c) where the customer is a domestic customer, an accurate summary of the principal terms of domestic supply contracts available.

RETAIN / REMOVE Modified SLC 7.7

Matched

Respondents’ Views: E.ON agreed that the market had developed such that it is impractical to provide customers with a summary of all options. They supported the removal of SLC 28(8)(c). SSE considered that all of 28(8) should be removed as it is in suppliers’ commercial interests to provide this information to customers. energywatch took the view that for consumers to make an informed choice about their supply arrangements they should be made aware of the other forms of contract that the “deemed supplier” has to offer. They accepted that providing detailed terms of those other offerings may be an onerous obligation upon suppliers but would

Proposal: We continue to propose, as set out in our July consultation that SLC 28(8)(a) and (b) should be retained whilst SLC 28(8)(c) should be removed. SLC 28(8)(a) and (b) require that customers on deemed contracts are provided with the information that they require to understand the terms of their supply and that other, potentially more advantageous, terms are available. We also propose to remove the requirement set out under SLC 28(8)(c) to use reasonable endeavours to provide domestic customers on a deemed contract with an accurate summary of the principal terms of domestic supply contracts available to them. We consider that this is an unduly onerous obligation on



expect that it will be in their best interests to provide sufficient information to the consumer for them to make informed comparisons between all the available suppliers. energywatch considered that an obligation to signpost the consumer to those other offerings of that supplier would be sufficient.

suppliers. We consider that the retention of SLC 28(8)(b) to sufficient to provide information on the availability of alternative contract terms.

SLC: 28(9) and (10)

Obligation: SLC28(9): The licensee shall ensure the terms of its deemed contracts - (a) include such term as is mentioned in SLC 14(4); (b) where the customer is a non-domestic customer, include such term as is mentioned in SLC 14(3); (c) make the like provision as is required in the case of a contract by SLC 29B(1); (d) where the customer is a domestic customer, make the like provision as is required in the case of a contract by SLC 45; (e) where the customer is a domestic customer, make the like provision as is required in the case of a contract by SLC 47(1); and (f) provide that where the customer intends to be supplied with gas at the premises under a contract with the licensee or another gas supplier, the deemed contract does not terminate but continues to have effect until the time when the licensee or, as the case may be, the other gas supplier begins to supply gas under a contract, at which time the deemed contract ceases to have effect. SLC 28(10): Subject to SLC 29(16), nothing in SLC 28(9) shall be construed as preventing the inclusion of terms providing for the termination of a deemed contract which are additional to and do not derogate from those required by sub-paragraphs (c), (e) and (f) of SLC 28(9).

RETAIN/ REMOVE/ EXTEND Modified SLC 7.1 (part), 7.5 and 7.6

Not matched

Respondents’ Views: The majority of respondents supported the retention of SLC 28(9) and the removal of SLC 28(10). Centrica, SSE and E.ON opposed Ofgem’s proposal to extend the prohibition on charging termination fees to deemed contracts. Centrica said that “The Unfair Terms in Consumer Contracts Regulations 1999” covered deemed contracts and hence the circumstances that a termination fee may be demanded. They considered that a restriction in this situation was therefore unnecessary. E.ON said that it was in customers’ interests that a reasonable termination fee, covering take-on risks, is charged rather than be included as an ongoing charge which would continue to be paid by customers who remain on deemed terms. energywatch endorsed the Ofgem view that termination fees should not be a feature of deemed contracts. Deemed contracts, they argued, are imposed on consumers and there is no choice in the matter. They said that this differed from contact consumers who actively accepted contractual terms that provide for a termination fee in return for more favourable rates of supply or other benefits.

Proposal: In July we said that we would retain the requirement for deemed contracts to include the terms set out under SLC 28(9). We have further reviewed the requirements of SLC 28(9) and propose the following: • Retain SLC 28(9)(a) and (b). These are important safety and security

measures. • Redraft SLC 28(9)(c). This obligation requires the deemed contract to

have a term that allows for it to terminate upon a last resort supply direction being given. We propose to retain the requirement. It is now set out under modified SLC 7.1. Modified SLC 7.1 also relates to contracts. By brining these two, previously separate, obligations together we have simplified the drafting in the licence.

• Remove SLC 28(9)(d). SLC 28(9)(d) requires a deemed contract with a domestic customer to include a provision about security deposits. We do not consider that a security deposit can be demanded for a deemed contract as by their nature they have not entered into an express agreement for supply. We are now proposing to remove this obligation.

• In line with the views we set out in the July consultation we propose to retain the obligations set out under SLC 28(9)(e) and (f) to clarify the circumstances under which a deemed contract will terminate. (Note the discussion below relating to SLC 47(1) and our proposals to amend the circumstances under which a contract will terminate.)

• Remove the provision from the licence under SLC 28(10) that allows suppliers to include additional termination provisions that do not derogate from those required in SLC 28(9).

• Finally, we propose to extend the licence obligations to make it clear that a termination fee may not be charged to customers as a consequence of them exiting a deemed contract. As deemed contract customers do not expressly agree terms for supply then suppliers should have a reasonable expectation, reflected in their charges that deemed contracts will be a temporary feature of their relationship with the customer.



SLC: 28(11) Obligation: In determining the number of kilowatt hours of gas which are to be treated as supplied or taken under a deemed contract, the licensee

shall act on a reasonable basis, taking into account available gas consumption data for the premises in question and other relevant factors.


Matched

Respondents’ Views: The majority of respondents supported the retention of this obligation. However SSE did not agree. They argued that it was unnecessary and the Energy Supply Ombudsman would now deal with any disputes that may arise from a supplier billing a customer unreasonably.

Proposal: When a meter read for the start of a deemed contract is not known, for example when a customer moves into a premises and does not read the meter, then the supplier will have to estimate the amount of energy consumed. Schedule 2B(8)(9) of the Gas Act states that the terms of the deemed contract may include terms for determining the amount of gas which is to be treated as supplied by the supplier or taken by the owner during the relevant period. This licence obligation adds the additional requirement that the supplier must act reasonably in setting these terms. Given the nature of deemed contracts and the disputes that may arise between the customer and the supplier over the validity of an estimated start meter read, we propose to retain this obligation. We note the role of the Energy Supply Ombudsman and would expect that they could provide support for customers in determining individual disputes and awarding compensation if appropriate.

SLC: 28(12) Obligation: SLC 28(2) to (4) and (8)(b) shall not apply in relation to customers supplied with gas in accordance with standard condition 29 (Supplier

of Last Resort).


Matched

Respondents’ Views: Respondents supported the retention of this obligation.

Proposal: Ofgem considers that SLC 28(12) provides clarity that, where a deemed contract is in place as a result of a last resort supply direction, requirements on the level of tariffs and provision of information on standard contract terms to customers in SLC 28 are not applicable. SLC 29 sets its own obligations on tariff levels and customer information. We propose to retain the clarification provided by SLC 28(12) that certain requirements (currently those set out under SLC 28(2) to (4) and SLC 28(8)(b)) do not apply where a deemed contract is in place following a last resort supply direction.

SLC 29: Supplier of Last Resort

SLC: 29(1) to (5)

Obligation: The Authority may in writing direct the licensee to supply gas where it may revoke the supply licence of another gas supplier ("the other supplier") and the licensee could comply with the direction without significantly prejudicing its ability to supply its customers and fulfil its contractual obligations. The direction shall take effect from the date of revocation of the other supplier's licence. The licensee shall supply gas to customers of the other supplier at such premises as are specified or described in the direction. However, the licensee shall not be required to supply gas to a particular customer which it would not be required to supply by virtue of SLC 32(3).


Matched

Respondents’ Views: Respondents supported the retention of this obligation.

Proposal:. We propose to retain these obligations. We have amended the specification in SLC 29(3) that the direction will make reference to the "time" as well as the date of licence revocation. SLC 29(5) provides that the obligation to supply under a last resort supply direction does not apply in the circumstances set out in SLC 32(2)(b) to (e). As discussed below, the exceptions on the duty to supply under SLC 32 are proposed for amendment. In line with this change the modified licence will refer to the provisions of SLC



32(2)(d) and (e) which are being retained.

SLC: 29(6) Obligation: Within 2 working days of the last resort supply direction taking effect, the licensee shall send to the Authority, for its approval, a draft of

the notice which the licensee proposes to send to each of the premises specified or described in the direction.

REMOVE

Matched

Respondents’ Views: Respondents supported the removal of the obligation.

Proposal: We propose that this obligation be removed. The obligation gives the Authority an opportunity to check that the notice sent to consumers reflects the terms of supply that were the basis upon which the Authority appointed the supplier of last resort appointment and that the requirements of SLC 29(7) have been complied with. As such the obligation could be considered unnecessary, for if the notice did not comply with these requirements, then the licensee would be in breach of SLC 29(7). We would expect that were the Authority to ask a supplier of last resort for a copy of their letter, they would provide one, and consider any comments Ofgem made. Therefore a licence condition is not needed.

SLC: 29(7) Obligation: The SoLR is required to notify each of the premises specified in the direction notice that the date from which licensee has been appointed

to be the supplier and details of the charges

RETAIN / EXTEND Modified SLC 8.5

Matched

Respondents’ Views: The circumstances in which a consumer finds that they are being supplied by a SoLR are unusual and rare. We consider that it is important that customers receive as much information as is necessary for them to understand the new circumstances of their supply so that they can make an informed decision as to what to do next. The best protection for consumers in this situation is the range of choices offered by the competitive market. In the July consultation we proposed to retain the obligations but to add a new element to the notification, that the SoLR should include in their communication with the customer a statement that the customer is being supplied on a deemed contract and accordingly that they have the option to enter into a contract with the SoLR or another supplier of their choice. This requirement is currently contained in the guidance notes on Supplier of Last Resort that Ofgem published in 2003. The views of respondents were split. Centrica, ScottishPower, SSE, E.ON and npower were opposed. SSE considered: "We do not believe that Ofgem should introduce a new element in relation to the notification into the licence as it is unnecessary and potentially harmful to the SoLR arrangements. For example, if greater churn is encouraged this will need to be factored into the risk facing suppliers, which in turn may reduce their willingness to take on the role without relying on the potential levy mechanism to remove excess costs." Other respondents were supportive of the proposal. British Energy said "… the SOLR arrangements are very unusual and could easily be misinterpreted by customers. Consequently, it is imperative that customers are fully informed of their rights particularly during SoLR arrangements if their interests are to be protected and their

Proposal: We propose to include an obligation requiring a SoLR to state in the notice they are required to send to each premises specified in the direction “that the customer may enter into a contract with the licensee or any other gas supplier under which gas will be supplied to his premises.” We consider that this gives adequate notice to the customer that they are free to switch and provides opportunity for the SoLR to offer an on-going contract.



confidence in 'supply competition' is to be maintained." Good Energy also supported this view. Total stated that many customers who are subject to a SoLR decision will not necessarily be aware of the implications of being transferred to another Supplier, and hence not aware that they are possibly subjected to different supply terms. It is therefore in the interest of customers that such information is provided at some stage of the SOLR process. energywatch also supported the proposal, saying that customers should be notified of their right to switch supplier when supplied by a SoLR.

SLC: 29(8), (12) and (13)

Obligation: Unless the Authority otherwise consents, the licensee shall give the Authority at least 5 days notice of any increase in charges for the supply of gas in accordance with the last resort supply direction. Where the Authority determines that such charges would be likely to cause hardship to domestic customers, it may direct that the licensee's charges shall not exceed those which it specifies in the notice.

REMOVE

Matched


Proposal: We propose to remove these obligations. As stated above, competition is the best form of protection for consumers in this circumstance. If a price rise was proposed the arrangements in SLC 28(8) would pertain. The consumer would be informed of the price rise and would be free to switch to another supplier (or to enter into a contract with the licensee on potentially better terms). Note that the amount a SoLR can charge is subject to SLC 29 (11).

SLC: 29(9) and (10)

Obligation: The licensee shall use all reasonable endeavours to secure a meter reading within 14 days of the direction taking effect, except in particular circumstances.

REMOVE

Matched

Respondents’ Views: We proposed to relax the requirements for a SoLR to take an opening meter reading along the lines of “the licensee should take reasonable steps to ensure that actual or estimated meter readings are secured to enable acceptable and timely billing of consumers”. Respondents largely supported the view although Good energy considered that the natural incentives on the SoLR to obtain a read were sufficient. We have considered the issue further and agree that the normal industry processes of seeking customer own reads or the use of estimates will operate adequately, given the time scales in which a SoLR direction is likely to be given.

Proposal: We prose to remove the obligation. We are satisfied that the incentives on the SoLR to obtain opening meter reads are sufficient and that therefore there is no need for a licence obligation. Ofgem issued a guidance note on the supply of last resort arrangements in 2003 that referred to the provision of advice to customers to take their own meter reads and recognised that the size of the portfolio will dictate the practicalities of meeting this requirement. We therefore propose a change in emphasis to that of the current drafting along the lines of “the licensee should take reasonable steps to ensure that actual or estimated meter readings are secured to enable acceptable and timely billing of consumers”.

SLC: 29(11) Obligation: The licensee may charge for the supply of gas to the premises specified or described in the last resort supply direction at a rate which is

no greater than - (a) such charges as may be expected, in aggregate, approximately to equal the licensee's reasonable costs of supply (including such costs attributable to the purchase of gas at short notice) together with a reasonable profit; or (b) the charges set out in the notice given by the Authority.


Matched

Respondents’ Views: SSE said that “we believe that this obligation may dissuade suppliers from volunteering to become a SoLR. It is also clear that prices charged could be a key consideration in deciding which supplier to appoint as SoLR. We are therefore not

Proposal: We propose that this obligation be retained. It is related to SLC 28(3) and a necessary element of regulating supply to consumers on deemed contracts. We consider that although the charges made to customers by a SoLR may be substantially higher, given the additional costs incurred, the



clear that this obligation is required, except perhaps in the narrow circumstances whereby Ofgem "force" a supplier to become a SoLR (rather than the supplier volunteering. E.ON. Other respondents

SoLR should not be unconstrained in what they may charge. The formula and the principle involved is analogous to the situation with deemed contracts, but allowance needs to be made for the SoLR to set charges in relation to their costs associated with acting as a SoLR.

SLC: 29(14) Obligation: Unless the Authority otherwise consents, the licensee shall ensure that its terms and conditions (including charges) for a supply pursuant

to a last resort supply direction do not show any undue preference or undue discrimination as between any persons or classes of persons.

REMOVE

Matched


Proposal: We propose that this obligation be removed. Before being appointed, a supplier of last resort will have set out the principal terms of its proposed deemed contract with consumers. As stated above, the offers available to consumers from a competitive market are a more effective protection than regulation in these circumstances. We do not therefore view a non-discrimination obligation as being necessary in these circumstances.

SLC: 29(15) Obligation: The terms of the licensee’s deemed contract scheme for the supply of gas to premises in accordance with a last resort supply direction

may provide that the customer may not terminate his deemed contract except – (a) with the consent of the licensee; (b) on taking a supply at the premises under a contract with the licensee or another gas supplier; or (c) on ceasing to take gas at the premises.

REMOVE

Matched

Respondents’ Views: Respondents supported the retention of these provisions.

Proposal: We propose to retain the effect of these but intend to remove them from the SoLR obligations and rely on the arrangements in modified SLC 7.5. A SoLR will supply customers on a deemed contract, and modified SLC 7.5 established the termination arrangements for a deemed contract.

SLC: 29(16) Obligation: Where the licensee enters into any new contract for the purchase of gas in order to comply with its obligations under this condition, it

shall use reasonable endeavours to make the purchase as economically as possible.


Matched

Respondents’ Views: We proposed to retain the obligation to ensure that the supplier of last resort does not seek to exploit the parameters of the calculation of 'the licensee's reasonable costs of supply (including such costs attributable to the purchase of gas at short notice)' in SLC 29(11) and the assessment of unrecovered cost in SLC 29A. Respondents generally agreed, although Good energy and SSE did not. SSE said “Any supplier operating in a competitive environment has the strongest possible incentive for economic purchasing and this requirement is therefore unnecessary.”

Proposal: We propose to retain the obligations. We agree that in the majority of cases that supplier is incentivised to purchase energy as economically as possible. However we are cautious of circumstances where the SoLR may be seeking to make a claim through the levy arrangements, and consider this condition necessary to support Ofgem’s role in giving consent to a levy claim as well as underpinning the arrangements in SLC 29 (11) above. Where the SoLR intends to make a claim through the levy arrangements, it is appropriate to ensure that their energy purchases are made under the same commercial disciplines as would apply were the comfort of the levy not available.

SLC 29A: Supplier of Last Resort Supply Payments

SLC: 29A(1) to (12)

Obligation: The condition sets out how, and how much, the licensee may recover in respect of any losses it incurs in complying with a last resort supply direction given under standard condition 29 (Supplier of Last Resort).



RETAIN


Matched

Respondents’ Views: Respondents supported the retention of these arrangements. We did discuss with the SLR Steering Group whether there was merit in removing the SoLR levy arrangements on the basis that it ultimately risked imposing cots upon customers who were not supplied by the failed supplier. However the response was that the levy arrangements acted as an important safeguard for suppliers who may be called upon to act as a SoLR in circumstances where they did not wish to be and may face significant costs in fulfilling that role.

Proposal:. We propose to retain the principles of this licence condition, but are proposing simplified drafting.

SLC 29B: Provision for Termination upon a Direction

SLC: 29B(1) and (2)

Obligation: The licensee shall only enter into a contract for the supply of gas if it provides that it shall terminate when a last resort supply direction given to an gas supplier other than the licensee in pursuance of standard condition 29 (Supplier of Last Resort).


Matched

Respondents’ Views: Respondents agreed that this obligation should be retained.

Proposal: We propose to retain this obligation. We consider that certainty is required when a SoLR direction has been issued that the relevant supply contract has terminated as a result of the direction, particularly for the parties to that contract and the SoLR.

SLC 30: Non-Domestic Transfer Blocking

SLC: 30(1) Obligation: The supplier shall not prevent a proposed supplier transfer of a non-domestic customer except for so long as - (a) the supplier is permitted to prevent the proposed supplier transfer by the provisions of a contract with the customer for the supply of gas at those premises; or (b) the supplier which has initiated the proposed transfer has agreed with the licensee that the proposed transfer has been initiated in error; or (c) in relation to a contract entered into between the licensee and the customer prior to 5 January 2004 which does not contain provisions that permit the licensee to prevent a proposed supplier transfer: (i) the customer fails to pay charges for the supply of gas to those premises or any premises previously occupied by him in respect of which such charges are payable which- a) are due to the licensee and have been demanded in writing; and b) have remained unpaid for 28 days after the making of the demand; or (ii) the customer is bound by the provisions of that contract with the licensee for the supply of gas at those premises which will neither expire nor, to the knowledge of the licensee, be terminated on or before the date of the proposed transfer.

RETAIN Modified SLC 14.1 and 14.2

Not matched

Respondents’ Views: All respondents agreed that this obligation should be retained. E.ON commented that current SLC 30(1)(a) should be extended to include deemed contracts. They argued that although an efficient supplier would avoid debt being built up for more than a few months, it is to all customers' cost that debt collection costs are increased by not being able to object when a customer changes supplier without paying a previous bill. Centrica supported this view. They said that suppliers can incur debts as a consequence of customers not properly notifying a supplier and they urged Ofgem to give further careful consideration

Proposal: We propose to retain these obligations. In response to the issues raised by E.ON and Centrica we do not consider that it is in customers interests for their supplier to be able to object in the circumstances set out in their deemed contract. Deemed contracts are given effect by provisions in the Act. Such contracts are not expressly entered into and negotiated between the customer and the supplier and an objection would prevent a customer from accessing the competitive market.



to the reintroduction of the right to object for debt under a deemed contract for Non-Domestic customers. In their view, this would bring consistency with other contract types and avoid suppliers taking alternative costly and lengthy courses of action, such as disconnection. Centrica suggested that a working group could help address this issue.

SLC: 30(2) Obligation: The supplier shall, at the same time as making that request block a customer transfer, send notification to the non-domestic customer that

it has made a request to prevent the proposed supplier transfer, the grounds for the request and how the customer may dispute or resolve such grounds.


Not matched

Respondents’ Views: Respondents supported Ofgem’s proposal to retain this obligation.

Proposal: This information is important to provide information to the customer that an objection has taken place and how to resolve the reason for the block on their transfer. We propose to retain these obligations.

SECTION C: DOMESTIC SUPPLY OBLIGATIONS SLC 31: Interpretation of Section C

SLC: 31(1) Obligation: This condition sets out a series of definitions that are used exclusively in Section C of the licence.


Not matched

Respondents’ Views: This SLC was not commented on by respondents. In the July consultation we commented that this licence condition would be considered by the legal workgroup.

Proposal: We propose to remove this licence condition and to include all definitions in SLC 1. This will improve clarity on the location of defined terms. See discussion on definitions above in relation to SLC 1.

SLC 32: Duty to Supply Domestic Customers

SLC: 32(1) Obligation: Subject to the provisions of the condition, and without prejudice to any of the supplier's obligations and rights under the Gas Act 1986 or this licence, the supplier shall, upon receipt of a request from a domestic customer, as soon as is reasonably practicable: (a) offer to enter into a domestic supply contract to supply gas to the domestic premises in respect of which the supply is requested; and (b) where the terms offered are accepted by the domestic customer, give a supply of gas to those premises in accordance with the terms offered.

REDRAFT Respondents’ Views: Respondents were split on whether this obligation should be retained. Centrica, SSE and energywatch considered that it could be removed. SSE said that, given the development of competition there was no evidence that suppliers would choose not to supply certain customer groups if this obligation was removed. Centrica said that it was the current healthy state of competition that ensured customers received a range of offers and that those offers meet the needs of customers. energywatch considered that suppliers should not target more affluent segments

Proposal: The duty to offer terms and provide supply for customers at domestic premises was included as a licence obligation to mitigate the concern that certain groups of customers would be excluded from the benefits of the competitive market. We would expect that suppliers will actively offer terms to all customers, although individual suppliers, particularly new entrants, may elect to focus on specific groups of customers as happens in many other markets. The retention of this obligation also supports the IMGD requirement for a supplier to offer customers a wide choice of payments. If there is no




Matched

of society and fail to offer reasonable terms to more financially vulnerable consumers or to withdraw from a sector of the market such as PPMs. energywatch said that Ofgem's argument to retain SLC 32 was flawed, as it will merely achieve an offer of terms that a supplier considers commercially expedient. energywatch would prefer to see SLC 32 strengthened to provide duty to supply on reasonable terms. As this was not being considered energywatch said that it was immaterial if it was retained or removed. Professor Littlechild argued that there was evidence that the competitive market can, does and will meet the needs of vulnerable customers without exploiting them. He said that concerns about more vulnerable customers could be addressed in less onerous ways. And if problems do arise in future, it is straightforward to introduce or reintroduce licence conditions to address them. Other respondents disagreed and argued that the duty to supply should be retained within the licence. Bizz Energy, Energy Action Scotland, Good Energy, Smartest Energy, E.ON and ScottishPower said that the obligation should be retained. HSE agreed with the proposal to retain the obligation arguing that retaining it would ensure that all domestic customers (in particular the vulnerable) were offered terms for supply and have access to energy all year and were not put at risk from a lack of heating, light or cooking facilities. PUAF said that Ofgem should not encourage the sort of market in which certain companies feel it unnecessary to meet their social obligations. PUAF also favoured the introduction of an obligation on suppliers to offer tariff rates suitable for the needs of low income consumers. The requirement to offer a range of payment methods was, they argued, of little value if the tariffs associated with certain methods are prohibitively expensive. ScottishPower agreed with the proposal to retain the obligations with the proviso that suppliers could object for debt and were able to manage risk through the terms offered.

requirement to offer terms then it follows that there will not be a requirement to offer new customers different payment options. We therefore intend to retain the obligation in a simplified form (see modified SLC 22). The Commission has indicated that it is considering further energy legislation next year. This may allow us to argue that the legislation is amended so that this obligation is not required in markets where competition is firmly established. As noted below for SLC 32(3) we have removed the definition of “request” from the licence. We consider that this is unnecessary. If a customer does not provide the information that a supplier needs to supply a customer’s premises then it is likely to be unreasonable for the supplier to be obliged to do so until it obtains the necessary information.

SLC: 32(2) Obligation: Where the licensee has applied to the Authority for the revocation of its licence or for a restriction of its licence under section 7A(6) of the

Gas Act specifying domestic premises situated in a particular area or of a particular description (“excluded premises”) and the Authority has granted that request, or confirmed in writing its intention to do so, then, for such period not exceeding 3 months, or such longer period of not more than 6 months as the Authority may accept, prior to the date on which the revocation or restriction takes effect, or is intended to take effect, as is notified to the Authority by the licensee - (a) nothing in paragraph 1 shall require it to offer to supply or supply gas to a domestic customer, in the case of revocation, at any domestic premises or, in the case of a restriction, at excluded premises; (b) nothing in paragraph 4 of standard condition 44 (Notification of Terms) shall require the licensee to offer or enter into any new contract to supply gas to a domestic customer, in the case of revocation, at any domestic premises or, in the case of a restriction, at excluded premises.

REMOVE Respondents’ Views: Most parties that responded supported the removal of these provisions. However, this view was not supported by ScottishPower. They said that these provisions offered important

Proposal: We do not consider that there is a need to retain this obligation. It is overly specific and is not set out in the electricity licence. We consider that suppliers who have applied to have their licences restricted or revoked should



Not matched

protection from the duty to offer terms in the event of a supplier application for restriction or revocation of its licence, and as such, it was important protection for customers also. Whilst they have never to date been used, in theory, they argued that they could. ScottishPower suggested retaining the obligation and extending it to the electricity licence.

explain the implications to customers who request a supply and ask them to contract the supplier to whom contracts are being assigned.

SLC: 32(3) Obligation: Suppliers shall not be required by SLC 32(1) or SLC 29 to give a supply of gas where:

(a) the domestic premises in question are not connected, whether directly or by means of a service pipe, to a relevant main; (b) the domestic premises in question have been disconnected by the relevant transporter, or the supply of gas thereto has been cut off by a gas supplier and by reason of Schedule 2B, paragraph 19 to the Gas Act, the transporter or supplier is not under any obligation to re-connect the premises or, as the case may be, resume the supply of gas to the premises; (c) the domestic customer having requested a supply of gas, declines to enter into a domestic supply contract offered pursuant to SLC 32(1); (d) the licensee or another gas supplier is bound by the provisions of a domestic supply contract in respect of the premises where the supply is requested and such domestic supply contract will neither expire nor have been terminated by the date from which the domestic customer requires a supply of gas from the licensee to commence; (e) it is not reasonable in all the circumstances for the licensee to be required to supply gas; (f) there are circumstances beyond the licensee’s control which prevent it from complying with the requirement in question but this shall not relieve the licensee from the obligation to take all requisite steps, so far as is reasonably practicable, to secure the necessary supplies of gas and their conveyance to the domestic premises; (g) compliance with the requirement in question would, or might, involve danger to the public and the licensee has taken all such steps as it was reasonable to take both to prevent the circumstances from occurring and to prevent them from having that effect; (h) in relation to an obligation set out in SLC 32(1), the licensee has requested a deposit by way of security for the payment of charges and the domestic customer concerned has not paid this; (i) in relation to the obligation set out in SLC 32(1), the discharge of which would require the implementation of a proposed supplier transfer in relation to any premises, the gas shipper which had made arrangements in pursuance of which gas was then conveyed to the premises (or, where applicable, sub-deduct arrangements) has, without breach of the conditions of its licence, prevented the implementation of that transfer; (j) in relation to the supply of gas to any secondary sub-deduct premises, the licensee would, but for the fact that the domestic premises are secondary sub-deduct premises, be entitled to cut off the supply of gas, or, as the case may be, not resume the supply of gas, to those premises by virtue of any provision of Schedule 2B to the Gas Act, or (k) in relation to the obligation set out in SLC 32(1), the licensee is not, at the time the offer is accepted, a relevant supplier in respect of the particular domestic premises and to supply those premises would significantly prejudice its ability to continue to supply gas to domestic customers at premises where it already does so, but the licensee shall - (i) take all such steps as are reasonable to avoid such a situation arising, and to resolve any that does arise; and (ii) inform the Authority in writing, as soon as is reasonably practicable, of any such situation that does arise, and of when it has been resolved provided that, in respect of sub-paragraph (e), the licensee shall – (i) refer any question as to whether the circumstances are reasonable, to the Authority for determination; and (ii) where the licensee already supplies gas to the premises in respect of which the supply is requested, give not less than 7 working days’ notice of its intention to discontinue the supply.

RETAIN/ REMOVE Modified SLC 22.5

Respondents’ Views: Respondents agreed that, if the duty to offer terms was retained, it would be appropriate to set out a list of exceptions to this obligation along current lines.

Proposal: In the July consultation we proposed that all of the exceptions set out in SLC 32(3) should be retained. We have further considered the detail of the exceptions and are now proposing that SLC 32(3)(b), (c), (d), (f), (i), (j) and (k)(part) are removed. We consider that these provisions are either unnecessary or can be adequately covered by the retention of a general exception under SLC 32(3)(e) where it is not reasonable in all the circumstances to be required to supply gas.



Not matched

We propose to retain the list of exceptions to the obligation on suppliers to offer supply terms to domestic customers set out in SLC 32(2)(a), (e), (g), (h) and (k)(part). This aims to provide a sensible balance between the need to protect customers' interests and the risk that suppliers would otherwise be compelled by their licences to offer to provide supply in inappropriate circumstances. We are proposing to retain the part of SLC 32(k) which required that, if a supply is already being provided, a supplier gives not less than 7 days notice of their intention to disconnect supply. We have removed the reference to SLC 29(1) which relates to SoLR provisions. This obligation remains in the licence but has been redrafted in modified SLC 8.4 to sit with the SoLR arrangements.

SLC: 32(4) Obligation: In this condition-

(a) “request” includes, to the extent that the licensee so requires, the following information- (i) the premises in respect of which the supply is required; (ii) the day on which the supply is required to commence; and (iii) the minimum period for which the supply is required to be given, and (b) any reference to giving a supply of gas includes a reference to continuing to give such a supply and any reference to requesting a supply includes a reference to requesting such a supply to continue to be given.

REMOVE

Not matched

Respondents’ Views: Good Energy, E.ON, ScottishPower and SSE all agreed with Ofgem’s proposal to remove this obligation. Centrica disagreed and considered that, if the duty to offer terms is to be retained, this should also be retained.

Proposal: We propose to remove SLC 32(3)(a). If a customer does not provide the information that a supplier needs to supply a customer’s premises then it is likely to be unreasonable for the supplier to be obliged to do so until it obtains the necessary information. We also propose to remove SLC 32(3)(b). The duration of the contract will determine the period of supply. Termination arrangements are required to be set out in the contract and the supplier is required to be supplied in accordance with the domestic supply contract.

SLC 32A: Security of Supply - Domestic Customers

SLC: 32A(1) and (2)

Obligation: Where the relevant shipper pays over to the supplier a sum received by it from the relevant transporter by reason of the failure of the transporter to convey gas to a domestic premises (or, where the supplier supplies gas to any secondary sub-deduct premises which are a domestic customer’s premises, the failure of the transporter to convey gas in accordance with the sub-deduct arrangements applicable to those secondary sub-deduct premises), the supplier shall - (a) set-off that sum against any charges in respect of the supply of gas to those premises which are or may become due to be paid by the customer, or (b) use its reasonable endeavours to pay that sum (so far as not set off against charges) to the customer. For the purposes of paragraph 1 the relevant shipper shall be deemed to have paid over to the supplier such a sum as is there mentioned where the holder of this licence, being not only the relevant supplier but also the relevant shipper, receives such a sum from the relevant transporter.

REDRAFT

Modified SLC 19.2

Not matched

Respondents’ Views: Respondents agreed with Ofgem’s proposal to retain this obligation and to redraft it together with the provision of SLC 23 (Payments Received in relation to Standards of Performance). energywatch agreed that this was a suitable arrangement given the potential number of gas consumers involved in the non-conveyance of gas.

Proposal: The ability of suppliers under SLC 32A(1) to offset domestic customer payments against charges that are or may become due is different to other GT standards of performance in that it has the potential to affect large volumes of customers. The other GT standards of performance are more targeted at individual customers. In recognition of the potential volumes involved, SLC 32A(1) allows the supplier to provide payment to the customer



In July we asked for specific views on whether this is a requirement for the non-domestic market. No responses were received on this question.

within their normal billing cycle rather than having to make one-off payments on a tighter timescale. Given the potential costs for suppliers in passing through GT standards of performance payments for failure to convey gas, it is recommended that the flexibility envisaged by SLC 32A(1) is retained so that payments can be made with the normal billing cycle. However, we propose that these provisions would be better placed with the other provisions on standards of performance in SLC 23.

SLC: 32A(3) to (6)

Obligation: SLC 32A(3) states that subject to SLC 14(5) (Security and Emergency Arrangements), unless, by means of its contracts with gas shippers or otherwise, the supplier secures that all gas conveyed by gas transporters for supply to its domestic customers is conveyed in conformity with those transporters’ Network Codes, the supplier shall take such steps as are necessary or expedient to secure that the domestic supply security standards are satisfied as respects the availability of gas to its domestic customers. SLC 32A(4) and (5) define domestic supply security standards. SLC 32A(6) notes the linkages to the GT and shipper licences. If a modification is being made to the provisions in SLC 32A(4)(a), equivalent modifications should be made to the GT and shipper licence.

REMOVE

Not matched

Respondents’ Views: Respondents supported the removal of this obligation for the reasons set out by Ofgem in the July consultation. No respondent provided information to suggest that there are any particular instances that fall outside of the Network Codes that would require the supplier to secure by contract with gas shippers or otherwise that all gas conveyed by GTs for supply to its domestic customers is conveyed in conformity with those GTs’ Network Codes.

Proposal: Standard special condition A11(1)(e) (Network Code and Uniform Network Code), which applies both to the DNs and NTS, sets out an obligation to facilitate the achievement of an objective to provide reasonable economic incentives for relevant suppliers to secure that the domestic customer supply security standards (within the meaning of SLC 32A(4) of the gas supply licence) are satisfied in respect of the availability of gas to their domestic customers. We do not consider that there are any particular instances where suppliers would supply gas to domestic customers in circumstances that would not be in conformity with Network Code arrangements. We therefore propose that this obligation should therefore be removed. Standard special condition A11(1)(e) (Network Code and Uniform Network Code) in the GT licence describes the security arrangements that must be achieved in by reference to the content of supply SLC 32A. If SLC 32A(3) to (6) is removed then a consequential amendment will be required to standard special condition A11.

SLC 33: Last Resort Supply: Security for Payments

SLC: 33(1) to (11)

Obligation: The supplier shall establish and maintain security arrangements by taking out a bond or making other arrangements as the Authority may approve to secure a sum of money payable to a person appointed by the Authority as a supplier of last resort.

REMOVE

Matched

Respondents’ Views: The removal of this obligation was supported by Bizz Energy, Good Energy, E.ON, ScottishPower, Centrica and SSE.

Proposal: Ofgem consulted in June 2001 on the level of the security cover that domestic suppliers should have in place to pay for the unrecovered costs of a supplier of last resort. As a result of that consultation, security cover was set at £0.00. Ofgem has seen no reason to revise that view since and does not envisage any circumstances in which it would be appropriate to require any such amount in the future. We propose to remove this licence condition.

SLC 34: Metering Arrangements for Domestic Customers



SLC: 34(1) and (7)

Obligation: SLC 34(1) states that subject to SLC 34 (7), the licensee shall not be required by standard condition 32 (Duty to Supply Domestic Customers) to supply or continue to supply gas to a domestic customer, or to offer a new contract where the meter or the arrangements are not acceptable to the supplier. Under SLC 34(7) the licensee must not refuse to accept a meter provided by a domestic customer which does not contravene section 17 of the Act and which is appropriate for registering the quantity of gas supplied except where a) the customer is to be supplied by a prepayment meter and the meter installed is not appropriate; b) the meter does not offer the facilities requisite for the purposes of the contract or having regard to its terms. Further, the licensee must not refuse to accept arrangements for reading the meter which comply with a direction of the Authority.

REMOVE

Not matched

Respondents’ Views: E.ON, ScottishPower, SSE and Centrica supported the removal of these obligations. Smartest Energy said that they were not aware of any specific issues but suspected that licence obligations were required. However, the HSE expressed concern about the removal of the obligation on the supplier to take over the existing meter. This, they argued, was likely to lead to an increase in the frequency and volumes of meter replacement work. They said that the proposal included no consideration of the associated safety risks. HSE strongly recommended that this proposal was independently risk assessed before any further decisions are taken, to enable a risk-based approach to meter management. HSE acknowledges that in the future, the introduction of smart metering may lead to changes in metering maintenance and replacement arrangements. They expected that any reliance upon the safety gains of introducing smart metering to be evidence-based and included within the independent risk assessment before any changes to the supply licence are implemented.

Proposal: SLC 34(1) provides that, subject to SLC 34(7), a supplier is not obliged by SLC 32 to offer to and to supply a customer where the arrangements for metering are not acceptable to the supplier. SLC 34(7) clarifies that where the customer has provided the meter and the meter is appropriate for registering the quantity of gas and is of an approved type (as defined in the Gas Act), then the supplier must not refuse to accept it (except on certain specified grounds). Were a domestic consumer to provide their own meter and if that meter were to prove unacceptable to the supplier in the circumstances set out in the licence then it would need to be changed. Therefore this condition appears to offer no significant protection to consumers in such circumstances. We consider that this is an unnecessarily complex formulation. We agree that a supplier should not be obliged to supply under SLC 32 if the metering arrangements are unacceptable, but this can be dealt with though the terms offered by suppliers in their contracts or through reference to SLC 32(3)(e) that states that "it is not reasonable in all the circumstances for the licensee to be required to supply gas". We therefore propose to remove these obligation. Note that there is no similar obligation in electricity. In response to the comments made by the HSE, we do not consider that this proposal needs to be independently risk assessed before any further decisions are taken. If a customer’s meter needs to be changed then it should be done in accordance with current SLC 34(5) and (6) which we propose to retain. Whether there should be a licence requirement for other meter related work to be done by a MAM will be discussed in the impact assessment that we intend to publish on the use on MAMs (see Chapter 6). The number of meters held by domestic customers is also very low. We do not anticipate that the number of cases where a meter would need to be replaced would be high. Typically, if a domestic customer owned their own meter they would seek out a supplier that was able to support that meter. We would expect suppliers, under their duty to offer terms and give a supply, to make reasonable effort to support the customer’s meter.



SLC: 34(2), (2A) and (3)

Obligation: The licensee shall, if so requested by one of its domestic customers or a person who has agreed to become such a customer, arrange for the provision by a Meter Asset Manager to that customer of a meter owned by the licensee or the relevant transporter which is of an appropriate type for registering the quantity of gas supplied to him by - (a) arranging with the relevant transporter for the meter owned by it and installed in the premises to remain in place; (b) arranging with the owner of the meter installed in the premises to purchase or otherwise acquire that meter and for it to remain in place; (c) arranging for the installation of a meter where there is no meter in place, or the meter in place is inappropriate or cannot be purchased or acquired on reasonable terms; or (d) making such other arrangements for the provision of a meter as may be agreed between the licensee and the customer. SLC 34 (2A) defines the terms “Meter Asset Manager”, “approved by the Authority” and “Meter-Related Services”. SLC 34(3) requires that where requested to provide the meter, the supplier may only require that the customer takes the meter on hire or loan

REMOVE

Not matched

Respondents’ Views: ScottishPower, HSE and E.ON supported the retention of these obligations redrafted to either simplify the text or link it to the duty to offer terms in SLC 32. E.ON sought clarification that the “hire or loan” requirement only applied if a meter was being fitted to make supply available. If a customer requested a different type of meter to be supplied, for instance a smart meter, they argued that it should be possible to ask the customer to pay for it. SSE and Centrica said that this obligation should be removed as it was not necessary. SSE noted that it was not a requirement in the electricity market.

Proposal SLC 34(2) places an obligation on the supplier to provide a meter to a domestic customer where asked by the customer to do so. This may occur for example, for a new connection, following a disconnection or where a replacement meter is required. The objective of SLC 34(3) is to secure that, where a customer asks for a meter to be supplied, they are not required to own the meter. We consider that it is reasonable for suppliers to provide a meter when asked to do so. However, having reviewed the issue further we consider that suppliers have commercial incentives to supply customers and that, as the Gas Act requires (Schedule 2B paragraph 2) a supply to be taken through a meter, a licence obligation is not required. We further consider that, as suppliers have an obligation to offer terms to domestic customer and provide a supply when these terms are accepted, unless it is unreasonable for the supplier to do so, this will meet the needs of customers in this area. Because the supply of gas requires a meter we consider that there are sufficient incentives in place to ensure that all suppliers will provide meter where they supply a consumer. In the extremely unlikely event that a supplier only proposed to provide energy and not the meter it is likely that the consumer would transfer to another supplier. Ofgem therefore proposes to amend the proposal we made in the July consultation so that this obligation should be removed. The provision of a domestic meter by a Meter Asset Manager (MAM) is currently covered in SLC 34(2) and (3). As discussed above, we are of the view that a meter provision obligation is no longer appropriate. However, there seems to be a case for retaining the element of those obligations that relate to the use of MAMs. In particular, the HSE has indicated that for safety reasons where a supplier contracts for meter related services, he should do so by contracting with a MAM. We intend to consider this specific issue in the impact assessment which is looking at the safety issues surrounding the need for a 2 yearly inspection.

SLC: 34(4) Obligation: Where a domestic customer of the licensee hands over to it a meter which is owned by the relevant transporter, the licensee shall so

inform that transporter, and hold the meter to the transporter’s order for a period of one month in the condition in which it was received and with the index unaltered.



REMOVE

Not matched

Respondents’ Views: Respondents agreed with Ofgem’s proposal to remove this obligation.

Proposal: SLC 34(4) seeks to ensure that meters owned by transporters are returned to them where changed and that the index is unaltered (for example, in the event that the meter reading is needed for billing purposes). We propose that this obligation is removed. This obligation is now dated, as Meter Asset Managers (MAM) may own the meter rather than a transporter. As a result, this no longer appears to be an issue that needs be dealt with through a licence condition. If agreement is needed between suppliers, MAMs and gas transporters this could be dealt with through contract, Network Codes or the SPAA.

SLC: 34(5) & (6)

Obligation: When the licensee is informed that a meter has been installed by someone other than an approved meter installer, it must use its reasonable endeavours to ensure that within 90 days, an approved meter installer examines the connection and carries out any remedial work. Note that these arrangements are similar to those in SLC 7A (3) and (4) but apply to domestic premises.


Not matched

Respondents’ Views: E.ON. HSE, ScottishPower and SSE supported the retention of this obligation. HSE said that the licence should place the responsibility on the supplier to ensure that any meter work is done by an OAMI. If not, there was a risk of increasing the work done by incompetent installers and increasing the chances of incidents associated with meter installations. Centrica argued against retaining these provisions. They said that it was not clear why safety protection of this nature needed to be ensured via the licence when it should be covered by safety regulations/legislation. This anomaly, Centrica suggested, should be addressed via the existing HSE review of the gas safety arrangements if such protection is required and not in the licence. It is our understanding that the HSE review is not likely to recommend the necessary changes. This might suggest that the provisions in the supply licence are unnecessary.

Proposal: This obligation is the hook by which the Ofgem Approved Meter Installer (OAMI) approval scheme operates. The obligation should be retained in the licence as a means to ensure that installations are safe and appropriate,. OAMI’s are CORGI registered gas meter fitters with a specific Meter Installation Qualification. OAMI’s sign up to the Ofgem Codes of Practice 1/a, 1/b and 1/c depending on what work they intend to do. The codes set out the processes that the meter fitter must undertake to install a meter. The OAMI scheme (run by Corgi) ensures that the meter fitter is trained to the relevant CoP standard to undertake a meter installation We propose to retain SLC 34A(5) and (6) given the safety related nature of the obligations but to combine the drafting with the provisions of SLC 7A(3) and (4). We acknowledge the points put forward that the provisions could be removed because of the wider review of gas safety legislation but this work is not yet completed and such an amendment now would be premature Note that proposed modified SLC 12 provides that any inspection of a connection must be carried out no later than 20 days after the date on which the connection is made or the date of connection specified in any relevant Notice or information.

SLC 34A: The Supply Point Administration System

SLC: 34A (1) to (6) inclusive

Obligation: The condition sets out the requirement for domestic gas suppliers, in conjunction and co-operation with all other suppliers, to prepare, maintain and become a party to the SPAA. The condition describes the purpose, parties, relevant objectives and contents of the SPAA. Finally, SLC 34A(6) requires that the licensee shall take all reasonable measures to secure and implement (consistently with the procedures applicable under or in relation to the core industry documents to which it is party (or in relation to which it holds rights in respect of amendment)), and shall not take any steps to prevent or unduly delay, such changes which are appropriate in order to give full and timely effect to any modification which has been made to the SPAA.

RETAIN Respondents’ Views: Respondents generally supported the retention of the SPAA licence provisions.

Proposal: We understand the issues raised by SSE on the future role of the SPAA, and we are in discussions with industry parties about how these issues




Not matched

This view was not supported by SSE. They noted that they had supported Ofgem’s proposal to introduce a SPAA in gas on the grounds that it would offer an equivalent to the MRA in electricity. The MRA framework was in their view a more efficient governance process that has hitherto applied in gas. It also involves a greater degree of industry self-regulation. The SPAA, however, has been implemented with a major shortcoming in that it is voluntary for I&C suppliers. As a result, it has failed to deliver its objectives. Consistent with Ofgem’s remit of delivering better regulation, SSE said that it was now time to either address this shortcoming or acknowledge the SPAA’s failings and reintegrate the Code’s retail element back into the UNC and abolish the SPAA. In SSE’s view the Xoserve governance processes, rather than a separate SPAA code could better meet the relevant objectives in the retail gas market.

may be resolved. However, this matter cannot be dealt with satisfactorily within the scope of the SLR. We propose to retain the obligation on domestic gas suppliers to be a party to, comply with and maintain the SPAA. We propose to remove the elements of the current standard condition that deal with the initial preparation and introduction of the SPAA, as these are no longer needed. The revised standard condition will continue to set out the relevant objectives of the SPAA. Where the SPAA contains provisions which are required by the licence condition and those provisions cannot be changed without the written consent of the Authority we have removed reference to them from the licence as they are no longer necessary. We have broken the requirements of SLC 34A(6) into two obligations. The first relates to the practical changes required by a modification and is a requirement to take all reasonable steps to secure and implement changes to its systems, procedures and processes, as necessary to give effect to a modification of SPAA. The second relates to changes required to other industry documents that the licensee holds rights of amendments to. This is drafted as an obligation to take reasonable steps to secure and implement changes and not take any unreasonable steps to prevent or delay any changes to industry documents which are required to give effect to a modification of the SPAA. This recognises that beyond raising a proposal to such other documents, the licensee may have no further control over whether it is successful.

SLC 35: Code of Practice on Payment of Bills and Guidance for Dealing with Customers in Difficulty

This only includes comments received from respondents received in response to the July consultation and not those received in the Vulnerable Customers Consultation in March 2006.

SLC: 35(1) Obligation: This requires the licensee to submit to Ofgem for approval a code concerning the payment of bills by domestic customers, including those

in difficulty.

REMOVE Matched

Respondents’ Views: See comments at SLC 27(1). Proposal: We propose to remove this obligation.

SLC: 35(2) Obligation: This requires suppliers to include in their codes procedures for distinguishing, so far as is reasonably practicable, between customers in

difficulty and others in default.

REMOVE

Matched

Respondents’ Views: energywatch agreed that this requirement should go, but advocated that suppliers should adopt a "get behind the account number" approach to examine the circumstances that have led to debt accruing. Scottish Power considered it was in a supplier's commercial interest to establish whether a customer is 'can't pay' or 'won't pay' in order to best be able to collect any outstanding debt and to be able to tailor their debt follow-up to suit

Proposal: We intend to remove this obligation as it is impractical and does not add anything to the overall requirements. The modified condition requires suppliers to offer a number of services when they are aware or have reason to believe that a customer is having or will have difficulty in paying. We recognise Scottish Power’s concern about treating all customers as can’t pays but consider that this is an important step in ensuring that customers who are struggling to pay their bills are given appropriate help and are



the customer type. However, Scottish Power added that it was not commercially viable to treat all customers as can't pays and the implications could have significant financial repercussions for both customers and suppliers. Powergen agreed with our view that the starting presumption should be that customer in arrears is having difficulties unless there is evidence to contrary.

protected from disconnection. Only where a supplier has taken all reasonable steps to recover charges by the means set out in modified SLC 27.6 will they be able to disconnect a customer who has not made a payment.

SLC: 35(2)(a) Obligation: This requires suppliers to include procedures in their codes of practice by which the licensee can provide general information as to how

customers with payment difficulties might reduce their bills through more efficient use of gas.


Matched

Respondents’ Views: energywatch believed that it was vital to provide energy efficiency information to customers experiencing payment difficulties, and welcomed the proposal to retain SLC 25. energywatch wanted debt to continue to serve as a trigger for the supplier to initiate a dialogue with the consumer to improve their energy efficiency. Scottish Power agreed with incorporation into SLC 25 but would want to see the new drafting first. SSE believed requirements to be more proactive are covered elsewhere and a redraft of this condition would cut across self-regulatory initiatives.

Proposal: In the July 2006 consultation we proposed to retain this obligation in principle but that to avoid duplication we said we would consider redrafting SLC25 on general energy efficiency information to include this more proactive requirement for domestic customers with payment difficulties. We continue to consider that there is a need for this pro-active step in debt situations to help prevent further build up of debt. We note ERA's general comments regarding the best practice guidelines on debt and disconnection, however these guidelines are not binding on suppliers and at the last review by Ofgem in 2005 there were in some instances subject to significant variations in approach by suppliers. We intend to retain this obligation and have, on reflection, decided to draft this obligation (modified SLC27.6(b)) separately to the general energy efficiency information (modified SLC 30.2) to highlight the importance of this information at the time that the customer gets into debt.

SLC: 35(2)(b) Obligation: This requires suppliers to include procedures in their codes of practice by which the licensee can accept payment which is deducted at

source from social security benefits for customers with payment difficulties, where such a facility is available. This provision relates to the Department of Work and Pensions ("DWP") Fuel Direct scheme.


Matched

Respondents’ Views: PUAF considered that there was potential to improve Fuel Direct by developing it as a widely available payment option that low income customers can choose alongside other payment methods. Bizz Energy had an issue with SLC 35(2)(b) as Fuel Direct payment amount does not seem reasonable. Bizz Energy would prefer to remove the specific figure in favour of a general obligation to consider customer circumstances when agreeing arrangements to pay and giving undertaking to co-operate with any agencies acting on behalf of customers.

Proposal: We intend to retain this obligation which has now been redrafted in modified SLC27.6(a)(i). In our view this licence obligation to offer Fuel Direct (where available) for customers in payment difficulty, coupled with the restriction on disconnection (modified SLC27.7(a)) unless all reasonable steps have been taken to recover debts through this mechanism - provides essential protection for vulnerable customers. In respect of comments that Fuel Direct should be extended, we would welcome such an extension but note that this is a matter for the DWP. The Fuel Direct payment amount is set out in legislation and can only be used in specified circumstances.

SLC: 35(2)(c) Obligation: This requires suppliers to include procedures in their codes of practice by which the licensee can detect failures by customers to maintain

repayment arrangements.

REMOVE

Matched

Respondents’ Views: NCC did not support the proposal to remove this obligation and were not convinced that suppliers had the incentive to be proactive in avoiding build-up of customer debt, as long as they had the option of imposing PPMs on customers. PUAF considered that removing this obligation will encourage suppliers to install PPMs as a first option debt recovery method rather than one of a number of options. Scottish Power considered that it was in the

Proposal: We intend to remove this requirement as we do not believe that it encourages suppliers to be more pro-active in avoiding the build up of debt. Other requirements (see below) are being retained as essential protection to help avoid the build up of debt. We note comments that removal of this obligation could lead to more PPMs being installed but do not consider that retention of this obligation would provide the protection inferred. Modified SLC27.5 and 27.6 has been drafted so the licensee has to "offer" Fuel Direct,



commercial interests of a supplier to detect failures by customers in making repayment arrangements, as the supplier will want to ensure ongoing payment by the customer for energy consumption and debt

payment by instalments and a PPM when a customer is or may have payment difficulties. We have also made it clear under modified SLC 26.8(a) that a supplier cannot disconnect a customer who has not paid unless it has first taken steps to recover those charges by each of these repayment methods. In any respect we would continue to monitor the number of PPMs being installed.

SLC: 35(2)(d) and (e)

Obligation: SLC 35(2)(d) requires suppliers to include procedures in their codes of practice by which the licensee can make debt repayment arrangements to take into account the customer’s ability to comply with the arrangements (SLC 35(2)(e)) also requires suppliers to ascertain customer’s ability to comply with the debt repayment arrangements with the assistance of other persons or organisations).


Matched

Respondents’ Views: energywatch stated that repayment rates should be capped in line with Fuel Direct for customers on benefits, unless the customer explicitly agrees to pay more and they can afford to do so. energywatch also wanted SLC35(2)(e) to be strengthened so that “due consideration” was given to representations from third parties. CAB wanted Ofgem to take a more prescriptive approach and to include guidance on maximum repayment levels in the licence, which would be more transparent for customers and prove to be more cost-efficient for suppliers. NCC considered that suppliers should be obliged to monitor repayment rates proactively to ensure that they are appropriate and reasonable. Scottish Power considered it was in the supplier's interest to ensure that any payment arrangements made with the customer are within the customer's ability to pay. Powergen strongly agreed that the licence should not be prescriptive, with Ofgem setting out Best Practice in guidance notes. SSE believed more prescriptive licence requirements may lead to unintended consequences for individual customers.

Proposal: The requirement to take into account ability to repay debt should be retained as this is an essential protection for customers with payments difficulties. We have tidied up the legal drafting, combining current SLC35.(2)(d) and (e) with similar requirements for PPMs, into the modified SLC27.7, which includes reference to "due consideration" being given relevant information provided by third parties. We have also noted the range of views about the need to formally prescribe a standard rate or maximum amount for debt recovery, in particular where customers are vulnerable or on low incomes. At present Ofgem has, through its existing guidance on the Codes of Practice, given guidance on the appropriate level for debt recovery from customers on benefit and has stated that this should not exceed the Fuel Direct rate (currently £2.85) unless the customer agrees otherwise. We do not intend to set out specific sums in the licence but will continue to provide guidance in this area which will be incorporated into explanatory notes that will accompany the licence.

SLC: 35(2)(f) Obligation: This requires suppliers to include procedures in their codes of practice by which the licensee can provide for customers who have failed to

comply with repayment arrangements, a PPM in preference to disconnection "where safe and practicable to do so.


Matched

Respondents’ Views: NCC welcomed the intention to retain the obligation but regretted that guidance was to be directed principally towards safety issues rather than comparative costs. CAB and energywatch wanted a more explicit explanation of the term "where safe and practicable to do so" with guidance such as an ongoing obligation to reassess whether PPM is appropriate. energywatch also had concerns that suppliers should not use the caveat as a means of not installing a PPM and jumping straight to disconnection. Scottish Power stated that where a customer was experiencing genuine payment difficulties, they would endeavour to offer a prepayment meter in as many cases this is reasonable and practicable. Centrica had no objection to installing PPMs in preference to disconnection, but this was not reasonable in all circumstances e.g. cases of theft or meter tampered with or excessive cost of installation. SSE were concerned that guidance may lead to suppliers avoiding certain types of customers or being forced to pursue aggressive debt

Proposal: The option of a PPM for customers with payment difficulties should be retained as an essential customer protection. Modified SLC 27.6(a)(iii) has been redrafted so the licensee has to "offer" a PPM when a customer is or may have payment difficulties, rather than current wording which requires to "provide" a PPM where the customer fails to comply with repayment arrangements. Under modified SLC 27.8(a) we have made it clear that a supplier cannot disconnect a customer who has not paid unless it has first taken all reasonable steps to recover those charges by "each" of the repayment methods, which includes PPMs. Given that what is "safe and reasonably practicable" will inevitably be dependent on a range of factors and the individual circumstances of the case we consider it appropriate to cover the issue in general guidance rather than be prescriptive in the licence. The guidance will indicate that the customer must be able to understand and operate the PPM and must be physically capable of accessing the meter and visiting top-up points to add more credit in order for it to be safe and practicable to install a PPM.



management policies. Typically we would expect the issues of safety and practicability to relate to the customer’s interests. However we recognise that in some extreme situations, for example, where the customer has had a history of theft or meter tampering it may not be safe and practicable for the supplier to install a PPM.

SLC: 35(3) Obligation: This requires the supplier not to cut off the supply otherwise than following compliance with paragraph (2).

REDRAFT

Not matched

Respondents’ Views: SSE and Scottish Power considered that the condition created unnecessary duplication with the preceding requirements and should be removed.

Proposal: We consider that the protection provided by current SLC 35(3) of the Gas Supply Licence is important when a supplier is revisiting the process immediately prior to disconnection. We have redrafted the preceding requirements under modified SLC 27.5 and 27.6 so that the licensee has to “offer” Fuel Direct, instalments or a PPM when a customer is having or may have payment difficulties. We have also made it clear under modified SLC 27.8(a) that a supplier cannot disconnect a customer who has not paid unless it has first taken all reasonable steps to recover those charges by “each “ of these repayment methods.

SLC: 35(4)(a) and (b)

Obligation: Require suppliers to formulate procedures with particular regard to pensioners, disabled or chronically ill customers who have payment difficulties, and to avoid in so far as is practicable, the disconnection of premises occupied by such customers during winter months.


Not matched

Respondents’ views: Age Concern were disappointed that it was not proposed to extend the moratorium on disconnections to cover the whole year , and considered that the licence should require a moratorium on all energy disconnections for people of pensionable age. energywatch were concerned that that the ERA safety net only applied to its members, and wanted a "trigger clause" which would review the disconnection licence conditions if the ERA safety net proved ineffective. Money Advice Trust recommended that families with children under 18 should also be included in winter moratorium group, and supported the notion of year round moratorium. Centrica considered that the existing gas moratorium on disconnection in Winter was drawn too widely and suggested that it should be limited to pensioners on means tested benefits. Scottish Power is fully committed to the ERA Safety Net, and considered that any attempt to incorporate this into the licence condition which would undermine self-regulation. SSE supported the retention of the obligation and agreed that the winter moratorium in gas should be replicated in electricity licence.

Proposal: We have retained the obligation in current SLC 35(4)(a) and (b) (Gas) and the modified SLC 27.9 requires suppliers to take all reasonable steps to avoid disconnecting premises occupied by people of pensionable age, disabled or chronically ill customers in winter. These arrangements are an essential protection for these customers. We also intend that the existing obligation in SLC 37A (Gas) not to disconnect pensioners who live alone, or with other pensioners or people under 18 years old, during winter months will be retained in gas and replicated in electricity. The ERA safety net is a year round moratorium on disconnection of vulnerable customers. While we note the desire amongst consumer groups to enshrine these arrangements in the licence we agree with the industry that the incentive to apply self-regulatory principles would be lost if the ERA safety net on disconnection was to become a regulatory requirement. Equally we do not consider that it is necessary to include a trigger clause in the licence in case the ERA safety net is removed as in our view the risk of this occurring is sufficiently low.

SLC: 35(5) Obligation: SLC35 is subject to the provisions of SLC27 (Preparation, review of and compliance with codes)

REMOVE

Not matched

Respondents’ Views: Ofgem decision: Since we are removing the relevant obligations in SLC27 (Preparation, review and compliance with codes) this obligation can also be removed.



SLC 36: Code of Practice on the Use of Prepayment Meters This only includes comments received from respondents received in response to the July consultation and not those received in the Vulnerable Customers Consultation in March 2006.

SLC: 36(1) Obligation: This requires the supplier to prepare and submit to Ofgem for approval a code concerning the use of prepayment meters (“PPMs”),

including appropriate guidance for the assistance of those of its PPM customers who wish to take supply on other terms.

REMOVE

Matched

Respondents’ Views: See comments at SLC 27(1). Proposal: We intend to remove this obligation.

SLC: 36(2)(a) Obligation: This requires the code of practice to include procedures by which the licensee will, where appropriate, provide general information on the operation of PPMs, including the advantages and disadvantages of PPMs, details of token outlets or charging facilities, actions where the PPM or the PPM card or key malfunctions, and standards of performance.

RETAIN & REDRAFT Modified SLC 28.1 (part) and 28.3

Matched

Respondents’ Views: energywatch and PUAF considered that the information should include the costs associated with PPMs and cheaper payment methods, steps to take if debt repayment levels prove too onerous, and relevant performance standards. energywatch also mentioned that information should be provided when customers are intending to acquire a PPM, when a PPM is installed, on request to existing users and to new customers moving into premises where a PPM is already installed. Scottish Power, npower and SSE considered that there was a strong commercial incentive on suppliers to provide general information on PPMs to customers and that formal regulation was not needed. Scottish Power believed that the move to key meter prepayment technology would remove many of the perceived disadvantages of PPMs. E.on believed that suppliers will be proactive in situations where there is reasonable probability of removal of a PPM being appropriate when a new owner moves into a property. Good Energy stated that as many PPMs are fitted at the request of a landlord rather than because of debt, information in such instances is not so effective.

Proposal: We continue to consider that there are limited commercial incentives to provide certain types of information, in particular on the possible disadvantages of PPM and their removal. However we do consider that suppliers as part of good customer service would have an incentive to provide much of the other information highlighted by consumer bodies and do not propose to retain obligations to inform customers of these matters. In addition regulations on PPM standards of performance require suppliers to inform customers annually what their rights are. The licence has been drafted (modified SLC 28) so that as a minimum the supplier is required to details on: the advantages and disadvantages of a PPM, where to obtain information and assistance if the PPM, or a device which allows payment through the PPM, is not operating effectively, and procedures for removing or resetting the PPM. The licensee is also required to publish a statement of its obligations under this condition on its website, give copies free of charge when requested, and take all reasonable steps to annually make its PPM customers aware of the existence of the statement.

SLC: 36(2)(b) Obligation: This requires the code of practice to include procedures by which the licensee will, where appropriate, arrange for the calibration of any

PPM provided in accordance with SLC35(2)(f) to take into account the customer’s ability to pay and charges due under arrangements made under SLC35(2)(f) and any additional charges being recovered through the PPM.

RETAIN &REDRAFT Modified SLC 28.2 (part)

Matched

Respondents’ Views: energywatch supported the proposal to retain this obligation. Energy Action Scotland recommended that customers are clearly informed that suppliers are obliged to take account of ability to pay when negotiating debt recovery levels. npower did not believe it necessary for the licence condition to place a requirement on suppliers to take account of ability to pay as the ERA billing code requires that they take into account a customer's

Proposal: We intend to retain the requirement to take into account ability to pay (for debt and additional charges) as essential protection for customers with payment difficulties. We do not agree that suppliers will always have the commercial incentive to take into account ability to pay for PPMs. We have subsumed these requirements into a single licence obligation on ability to repay debt with modified SLC 27.7.



known circumstances when arranging a repayment period. Scottish Power considered that it was within the supplier's interests to ensure that, as with all repayment arrangements, repayment through prepayment meters should be at a rate that the customer can manage. Scottish Power agreed that it was sensible to refine these conditions into a single condition to reduce the level of regulation and administration within the licence.

SLC: 36(2)(c) Obligation: This requires the code of practice to include procedures by which the licensee will, where appropriate, arrange for the recalibration of a

PPM at the conclusion of any repayment arrangement and generally following price changes.


Matched

Respondents’ Views: Comments were received regarding the recalibration of PPM meters in a timely manner following a price increase, which is a particular issue for electricity token PPM which require manual recalibration. Nevertheless we consider that for gas PPMs it is still appropriate to retain a broad requirement to recalibrate (which can be carried out remotely) at the conclusion of any repayment arrangement and generally following price changes.

Proposal: We are proposing to amend this licence obligation to require suppliers to take all reasonable steps to recalibrate meters in a timely manner. Our views on this issue (and the other actions we have taken to address our concerns in this area) are set out in chapter 5 of this consultation.

SLC: 36(2)(d) Obligation: This requires the code of practice to include procedures by which the licensee will, where appropriate remove PPMs, and setting out the

timescale and conditions under which removal might take place.

RETAIN & REDRAFT Modified SLC 28.1 (part)

Matched

Respondents’ Views: Help the Aged stated that once PPMs are installed, it seems suppliers are not taking action to remove them or reassess whether households still need them and considered that the licence should provide clear lead on how suppliers should act in these situations. Scottish Power stated that providing guidance further compounds this negative view of PPM and hinders its progress as a forward-thinking, innovative product offering allowing customers to manage their budget. Scottish Power considered that the decision to provide information on PPMs should be wholly at supplier’s discretion. SSE believed that it was in their commercial interests to provide customers with information both on advantages and disadvantages of using a PPM. npower mentioned that customers can approach suppliers at any time if they want to have a PPM exchanged for a credit meter. E.on considered that customers should have access to their policy through publication on the website or sending the relevant statement, but saw minimal benefit in a proactive requirement.

Proposal: (See also SLC36(2)(a)). We continue to consider that there are limited commercial incentives to provide certain types of information to customers. This includes details of the procedures for the removal of PPMs. We have redrafted modified SLC28.1(c) to include a proactive requirement to provide information on procedures for the removal of PPMs, including timescales - so that consumers have clear information about how and when they can request the removal of a PPM. We will cover the question of suppliers reassessing whether a household still needs a PPM in guidance. In our view suppliers should consider this on an ongoing basis and if it becomes clear that a customer can no longer cope with a PPM an alternative payment method should be sought (although this will not mean that suppliers have to proactively reassess this on frequent basis).

SLC: 36(3) Obligation: SLC36 is subject to the provisions of SLC27 (Preparation, review of and compliance with codes).

REMOVE Matched

Respondents’ Views: There were no specific additional comments received on this obligation.

Proposal: Since we are proposing to remove the relevant obligations in SLC27 (preparation, review and compliance with codes) this obligation can also be removed.

SLC 37: Provision of Services for Persons who are of Pensionable Age or Disabled or



Chronically Sick This only includes comments received from respondents received in response to the July consultation and not those received in the Vulnerable Customers Consultation in March 2006.

SLC: 37(1) Obligation: Requires suppliers to prepare and submit a code detailing the special services to be made available to domestic customers who are of

pensionable age or disabled or chronically sick.

REMOVE Matched

Respondents’ Views: See comments at SLC 27(1). Proposal: We intend to remove this obligation.

SLC:37(2)(a) Obligation: Requires free gas safety checks to be carried out on request and at intervals of not less than 12 months, for elderly or disabled people

living alone (or with others who qualify for the PSR or are under 18) where a landlord inspection is not required under Health and Safety Legislation. It should be noted that this service is not dependent on these qualifying customers being registered on the PSR.

RETAIN & REDRAFT Modified SLC 26.8

Not matched

Respondents’ Views: All respondents accepted that checks should only be free for those who cannot afford to pay for them. However, some consumer groups argued that the eligibility for free checks should be extended to all owner occupiers on benefits. Age Concern considered that other people on the PSR who do not receive benefits should be offered gas safety checks at cost. HSE commented that there should be free gas safety checks for the most vulnerable customers where there is an appreciable risk. CO Gas Safety wanted the check to include a test for carbon monoxide leakage with a flue gas analyser with a set procedure and time specified. Centrica were concerned that any increase in volume or cost of safety checks would be at the expense of wider budgetary provision made for customer safety awareness. A number of other suppliers considered that free checks should be limited. E.on considered that ability to pay should be tailored to risk, so that a first check would be more subsidised than a repeat check.

Ofgem decision: We intend to retain this obligation but to limit eligibility for free gas safety checks to those who are currently eligible who are also on means tested benefits. Our views on this issue are set out in detail in chapter 5 of the consultation and in the draft Impact Assessment included at Appendix 5.

SLC: 37(2)(b)(i)

Obligation: This requires the code of practice to include arrangements by which the licensee will provide on request to such customers and in each case free of charge, where reasonably practicable and appropriate - special controls and adaptors for gas appliances and meters (including PPMs).

REMOVE

Respondents’ Views: (Special controls and adaptors) - A number of consumer groups had concerns about relying on the DDA. CAB considered that the idea of vulnerable customers pursuing cases

Proposal: We intend to remove this obligation. Our detailed views on this issue are set out in chapter 5 of the consultation.



Not matched

through the courts was fanciful. CAB was not aware of evidence that this obligation was causing undue expense to suppliers. energywatch and CAB wanted Ofgem to consult organisations representing disabled customers on special controls, adapters and meter moves. energywatch wanted Ofgem to publish the advice it receives from disability groups and information received from suppliers. Centrica, Powergen, and SSE support the removal of the obligation on the basis that it is adequately covered by the DDA. Scottish Power considered that the obligation is historical particularly as suppliers are no longer responsible for the sale or manufacture of appliances.

SLC: 37 (2)(b)(ii & iii)

Obligation: SLC37(2)(b)(i) This requires the code of practice to include arrangements by which the licensee will provide on request to such customers and in each case free of charge, where reasonably practicable and appropriate – repositioning of meters. SLC37(2)(b)(ii) requires the licensee to reimburse, through the relevant transporter, the relevant shipper for repositioning any gas meter.

REMOVE

Not matched

Respondents’ Views: (Meter moves): Age Concern commented that most older people do not consider themselves as disabled and would not request a meter move, but considered that if this requirement was removed it was vital to retain special quarterly reads. PUAF considered that it is essential that customers are able to read their meters, as recommended by energy efficiency advisers. Help the Aged mentioned that if the obligation to reposition meters was removed, suppliers must provide good service in terms of meter readings. Centrica and National Grid supported the removal of this obligation as suppliers are obliged to address the needs of disabled customers under the DDA, and supported quarterly reads as a cost effective alternative. Scottish Power considered that as existing legislation already provided for free meter moves for disabled customers an extended obligation in licence was not necessary.

Proposal: We intend to remove this obligation. Our detailed views on this issue are set out in chapter 5 of the consultation.

SLC: 37 (2) (b) (iv)

Obligation: This requires the code of practice to include arrangements by which the licensee will provide on request to such customers and in each case free of charge, where reasonably practicable and appropriate - a special means of identifying persons acting on behalf of the licensee.


Not matched

Respondents’ Views: energywatch supported the retention of this obligation but also wanted suppliers to address concerns about security and integrity about passwords which was indicated in energywatch's PSR research. Age Concern also supported the proposal to retain this requirement. Scottish Power did not believe that it was proportionate to retain this obligation solely to retain visibility of the service. E.on considered that responsible suppliers will continue to provide this service as there is little cost. SSE believed that there was no need to retain the obligation as it is good customer service and popular with customers.

Proposal: In the July consultation we suggested that this obligation could be combined with the similar obligation for all customers in respect of site access currently under SLC24 (now modified SLC13.1). However, we intend to retain this obligation to ensure that PSR eligible customers are aware that the service is available and to provide reassurance to such customers who may be concerned about visitors to their homes. Modified SLC26.5 has been drafted so that when a customer's name is added to the PSR they must be given free advice and information on services that are available (including the password scheme).

SLC:37(2)(b) (v)

Obligation: This requires the code of practice to include arrangements by which the licensee will provide on request to such customers and in each case free of charge, where reasonably practicable and appropriate - give advice on the efficient use of gas, gas appliances and other gas fittings.



REDRAFT


Not matched

Respondents’ Views: A number of consumer groups supported information being available to all customers. HSE commented that many consumers are not aware of the dangers so would not seek information on request. energywatch also considered that it was vital that suppliers are able to signpost vulnerable customers who have their appliances condemned to sources of help, either at the point of condemnation or through appropriate supplier follow up. Scottish Power, npower and SSE had concerns about a requirement to provide information to all customers, and suggested that responsibility should be placed on manufacturers and installers. Most suppliers mentioned that they already provide information voluntarily on carbon monoxide dangers and benefits of alarms. E.on considered that the licence should not be prescriptive as to format and frequency, and that annual untargeted communication was likely to be ineffective and wasteful. Centrica mentioned that a multi message leaflet will have less impact than a single topic leaflet about carbon monoxide.

Proposal: We intend to retain this obligation but to expand it so that all customers (not just PSR customers) receive information. We also intend to be much more specific about what information must be provided under this condition. Our views on this issue are set out in detail in chapter 5 of the consultation and in the draft Impact Assessment included at Appendix 5.

SLC: 37 (2)(b)(vi)

Obligation: This requires the code of practice to include arrangements by which the licensee will provide on request to such customers and in each case free of charge, where reasonably practicable and appropriate - send bills to a third party.


Not matched

Respondents’ Views: Scottish Power considered that it was sensible for suppliers to enable customers to direct bills to a third party and that regulation is not necessary. E.on commented that suppliers offer this service as it supports their credit management processes. SSE mentioned that this is included in their customer charter as it is a popular service and did not considered that the obligation needed to be retained.

Proposal: We intend to retain this obligation to ensure that PSR eligible customers are aware that the service is available. Modified SLC 26.5 has been drafted so that when a customer's name is added to the PSR they must be given free advice and information on services that are available (including third party billing).

SLC: 37 (2) (b) (vii)

Obligation: This requires the code of practice to include arrangements by which the licensee will provide on request to such customers and in each case free of charge, where reasonably practicable and appropriate - where neither the customer nor anyone living with him is able to read the meter, for the meter to be read once in each quarter and for the customer to be informed of the readings so obtained.


Not matched

Respondents’ Views: energywatch considered that this was not always a suitable alternative to a meter move in some cases, especially if the consumer is keen to preserve independent living. Age Concern commented that it is vital that this was retained if meter moves obligation is removed. E.on referred to the DDA and stated that the Energy Services Directive is likely to make such frequent readings a requirement. SSE believed that there was no need for the obligation as it was considered good customer service. Scottish Power commented that suppliers may accept a number of key PSR offerings and agreed that this service was preferable to the requirement to provide free meter moves. ScottishPower was moving to attempt to access all customer properties on a quarterly basis to read the meter.

Proposal: We intend to retain this obligation as we see it as an important and more cost-effective alternative to meter moves to enable eligible customers to monitor consumption. Not all suppliers attempt to read meters on a quarterly basis, and in addition this obligation requires an actual read and the customer being informed of the reading obtained. Therefore it is appropriate to retain this as a licence required rather than to rely on self regulation. This is the PSR service with the greatest uptake. Modified SLC 26.5 has been drafted so that when a customer’s name is added to the PSR they must be given free advice and information on services that are available (including quarterly reads)



SLC: 37(3)(a) Obligation: This requires the code of practice to include arrangements by which the licensee will establish a list (the Priority Service Register “PSR”) of

domestic customers who by virtue of being elderly, disabled or chronically sick and who require any of the services set out in SLC37(2).


Not matched

Respondents’ Views: energywatch preferred a definition based on those who were actually experiencing vulnerability bringing together statutory and voluntary services. CAB and PUAF wanted low income groups included. Age Concern supported the proposal to retain the current definition to deal with accessibility issues. NCC wanted Ofgem to keep the eligibility definition under review. SSE agreed that the current definition should be retained and that additional measures to protect vulnerable customers should be addressed through CSR work.

Proposal: We continue to consider that the focus of the PSR (and the focus of prescribed services under this condition) should remain on customers with access, safety and communication needs. The scope of the PSR has traditionally been focused on issues relating to communication and accessibility – services which are typically only required for elderly or disabled customers. We do not intend to widen its scope as part of this review to cover financially vulnerable customers. In terms of help available to financially vulnerable customers there are various arrangements in place to help protect these customers, including obligations under SLC35 (now modified SLC27) and assistance through corporate social responsibility initiatives.

SLC: 37 (3)(b) and (c)

Obligation: SLC 37(3)(b) requires the code of practice to include arrangements by which the licensee will notify its customers at least once a year of the existence of the PSR and how to be included on it. SLC 37(3)(c)(i) requires the supplier to maintain the PSR and provide registered customers with information about the services available under SLC37(2).

REDRAFT Modified SLC 26.5 and 26.6

Matched

Respondents’ Views: energywatch and Money Advice Trust highlighted that web only publications may not always be the best medium for vulnerable customers. Help the Aged considered that not enough was being done by suppliers to notify customers of the PSR and that the best way to tackle the problem was to reward suppliers who proactively set themselves targets to bring vulnerable customers onto the PSR. Help the Aged also wanted a common name for the scheme to encourage awareness and take-up. Scottish Power and SSE agreed with the proposal to retain the current obligation to notify annually. However, Scottish Power did not consider it appropriate for the licence to define what is meant by 'prominently' in this context or for Ofgem to require the annual notification to include a list of all the services available to PSR customers. E.on considered that this obligation should be rephrased to "as the supplier believes will give adequate publicity" to be more targeted than once a year covering everything.

Proposal: We continue to consider that whilst it is not necessary to be too prescriptive as to how suppliers market them, prominence must be afforded to services available for PSR eligible customers, to ensure those eligible are made aware of the services that they are entitled to. The requirements under this condition have been redrafted (see modified SLC 26). Suppliers will continue to be required to take all reasonable steps to inform all customers annually of the existence of the PSR and how to become listed on it, and when a customers name is added to the PSR they must be given free advice and information on PSR services available. In addition the licensee will be required to publish a statement of their obligations under this condition on their website, give copies free of charge when requested, and take all reasonable steps to make all customers aware annually that this statement exists and how to obtain it. We consider that these are proportionate requirements to ensure adequate publicity of the PSR and the services available when registered on it, with additional targeted information provided once a customer becomes listed on the PSR.

SLC: 37(3)(d) Obligation: Requires the supplier to secure that the relevant transporter is provided with the information in the PSR in an appropriate form and at

appropriate intervals.

REDRAFT Modified SLC 26.7 Not matched

Respondents’ Views: E.on, Scottish Power and SSE agreed that this obligation should be retained.

Proposal: We intend to retain this obligation but to redraft it so that it obliges the licensee to provide the transporter with information, relevant to the transporters obligations, consisting of details of those on the PSR and any passwords that have been given. This is because it enables the transporter to have details on passwords for visiting the homes of PSR customers, and it enables the transporter to comply with its obligations to provide PSR customers alternative heating and cooking facilities in the event the supply is cut off in emergency



SLC: 37(4) Obligation: SLC 37 is subject to the provisions of SLC 27 (Preparation, review of and compliance with codes)

REMOVE Matched

Respondents’ Views: Proposal: Since we are intending to remove the relevant obligations in SLC27 (Preparation, review and compliance with codes) this obligation can also be removed.

SLC 37A: Pensioners Not to Have Supply Cut Off in Winter This only includes comments received from respondents received in response to the July consultation and not those received in the Vulnerable Customers Consultation in March 2006.

SLC: 37A (1) (a,b and c)

Obligation: Pensioners not to have supply of gas cut off in Winter, where to the knowledge or reasonable belief of the licensee the customer is of pensionable age and lives alone or with other persons all of whom are also of pensionable age or under 18, and where the customer is in default of its obligation to pay for gas supplied through misfortune or inability to budget to meet bills for gas supplied on credit terms.


Not matched

Respondents’ Views: A number of consumer groups wanted the winter moratorium (i.e. as provided for by SLC 37A Gas) extended to cover the whole year. CAB also supported extending the licence to cover all vulnerable households. CO Gas Safety considered that there should either be no disconnection during the winter months except on safety grounds, or a wider definition of vulnerable customers. A number of other consumer groups wanted the ERA safety net on disconnections incorporated into the licence on the basis that its advantages may be lost in a harsher economic climate. NCC considered it not appropriate to delegate the provision of a safety net for vulnerable customers to the voluntary and altruistic actions of suppliers in a competitive market. ERA supported the retention of the winter moratorium in the licence. ERA highlighted the success of the voluntary safety net, and expressed concern that if it were incorporated into the licence this would undermine self regulation and would have a negative impact on future voluntary initiatives.

Proposal: We intend to retain this obligation (see also comments above at SLC 35(4)).

SLC: 37A(2) Obligation: Defines the winter period beginning 1 October in any year and ending 31 March in the next following year.


Not matched

Respondents’ Views: As above Proposal: This definition has been incorporated into modified SLC1.2.

SLC 38: Provision of Services for Persons who are Blind or Deaf This only includes comments received from respondents received in response to the July consultation and not those received in the Vulnerable Customers Consultation in March 2006.

SLC: 38(1) Obligation: This requires each supplier to prepare and submit to the Authority a code of practice detailing the services it will make available to

persons who are blind, partially sighted, deaf or hearing impaired.



REMOVE

Matched

Respondents’ Views: See comments at SLC 27(1). Proposal: We propose to remove this obligation.

SLC: 38(2) (a) and (b)

Obligation: SLC 38(2) requires the provision, on request and free of charge: (a) for blind and partially sighted customers, billing information by telephone or other appropriate means, and (b) for these customers and deaf and hearing impaired customers, a facility for enquiring or complaining about bills or any service provided by the licensee.

RETAIN

Modified SLC 26.3

Matched

Respondents’ Views: CAB did not recommend reducing services to blind and deaf and considered that the eligibility criteria are too narrowly defined. They also commented that Ofgem had no powers to enforce the DDA and that it would be left for consumers to seek redress through the courts. RNID believed that there should be a commitment to move away from over-reliance on call centres to prioritising and investing in alternative means of communication i.e. text phones, instant message services, talk by text. Bizz Energy found the obligation to provide a Braille service unduly onerous given the number of potential customers who would need it and wanted to see this requirement removed. They considered that third party billing could provide an alternative. Centrica, Scottish Power and SSE did not support retention of these obligations given the overlap with the DDA. SSE also referred to the DDA guidance for utility billing.

Proposal: We believe that there needs to be a clear and enforceable licence obligation in this area. Unlike the other areas under consideration (e.g. meter moves) where it is more appropriate for suppliers to consider a range of options and factors in meeting the individual customer’s needs, we consider that blind and deaf customers as a group benefit from facilities for making complaints and billing information in alternative formats. We therefore intend to retain this condition. Modified SLC 26.2 and 26.3 require bills to be provided by means that are readily accessible to blind and partially sighted customers, rather than the previous drafting which put the emphasis on "telephone or other appropriate means" which allows for flexibility and further technical developments in the future. More generally on meeting the individual needs of blind, partially sighted, deaf and hearing impaired customers, we held a workshop on 26/9 to which identified best practice in this area. A note of this meeting has been published on our website.


REMOVE

Matched

Respondents’ Views: Since we are proposing to remove the relevant obligations in SLC 27 (Preparation, review and compliance with codes) this obligation.

Proposal: We propose to remove this obligation.

SLC 39: Complaint Handling Procedure This only includes comments received from respondents received in response to the July consultation and not those received in the Vulnerable Customers Consultation in March 2006.

SLC: 39(1) Obligation: This requires the licensee to prepare and submit to the Authority a code setting out its procedure for handling complaints from domestic

customers about the manner in which the licensee conducts its supply business. Such a code shall also establish a procedure for handling complaints from domestic customers which relate to any activity connected with the supply of gas not forming part of the supply business.

REMOVE

Matched

Respondents’ Views: See comments at SLC 27(1). Proposal: Obligation can be removed, but see SLC 39(2) below in relation to complaint handling procedures.



SLC: 39(2) Obligation: This requires the procedures established to specify the period within which it is intended that different descriptions of complaint should be processed and resolved.

REDRAFT


Matched

Respondents’ Views: CAB considered that the proposal waters down SLC 39 which currently requires suppliers to specify time periods for dealing and resolving complaints. energywatch was disappointed that Ofgem no longer considered it necessary to update consumers on progress and inform them about escalation procedures. energywatch considered that the complaint handling procedure should be provided at the point that the complaint is registered. SSE commented that it makes commercial sense for suppliers to maintain sound complaint handling procedures, in order to keep customers informed when they experience customer service failures. SSE did not agree that it is necessary to retain regulation in this area, but were comfortable with the proposal to require suppliers to publish plain English policy statements and publish these prominently on their websites. Bizz Energy also supported putting their complaints procedure on the web and making a copy available on request, but stated that there should not, however, be prescriptive deadlines on how long each of the complaint stages should take.

Proposal: We consider that some continued regulation is necessary given issues relating to the review of consumer representation and compliance with the Directives. We are not minded to prescribe the additional requirements suggested by energywatch as we consider that suppliers should be expected to give customers an appropriate level of information on complaints procedures at the time a complaint is made, as part of good customer service. In addition we would expect that there would be an overall incentive to prevent cases being escalated to the Energy Services Ombudsman. Whilst at present the Ombudsman only covers suppliers who are members of the ERA, we note that Consumer Representation Bill will require that all suppliers are members of an Ombudsman scheme. We have drafted the licence so that the licensee is required to produce a procedure in plain and intelligible language, that this procedure is readily available on the supplier's website, that the licensee takes all reasonable steps to ensure that customers are made aware of how to obtain it annually, and that a free copy is sent to anyone who requests it. We have removed the additional requirement for the procedure to contain timescales within which a complaint will either be processed or resolved. This is because we consider that this will either be incorporated into the procedure and/or be given as part of good customer service. In addition, suppliers will need to set their timescales for the resolution of a complaint in accordance with any ombudsman schemes to which they are a party.


REMOVE

Matched

Respondents’ Views: Proposal: Since we are intending to remove the relevant obligations in SLC 27 (Preparation, review and compliance with codes) this obligation can also be removed.

SLC 40: Information Given to Domestic Customers

SLC: 40(1) and (2)

Obligation: The licensee shall keep each of its domestic customers informed as to the quantity or amount of gas shown in its records - (a) as having been registered by the meter through which the customer is supplied with gas, or (b) as having been estimated to have been supplied to the customer where a bill based on such an estimate has been rendered to him. That information may be given on or with each bill or statement given to a domestic customer or annually, where the customer does not receive such a bill or statement.

REMOVE

Matched

Respondents’ Views: CAB considered that the proposal to remove obligations for suppliers to keep customers informed of the amount of fuel registered by a meter was an excuse for suppliers not to incur the expense of reading meters and was a disincentive to provide smart meters. energywatch support this point. They argued that Ofgem should replace the condition with another, including a sunset clause, for when other initiatives may have proven their

Proposal: We propose to remove this obligation. In line with Ofgem's conclusions on the billing super-complaint, members of the ERA have implemented back billing arrangements and an Energy Services Ombudsman scheme. These measures set minimum standards for billing and provide suppliers with an incentive to meet consumers’ billing requirements. The Ombudsman scheme sends commercial signals to suppliers to improve performance through compensation payments, case handling charges and



worth. An alternative suggestion was for a billing licence condition with sunrise clause if a supplier or ERA code fails to deliver. NCC did not agree that suppliers had commercial incentives to provide customers with information relating to the amount of gas and electricity registered on the meter, as suppliers have a commercial interest to ensure that as many customers as possible pay by direct debit. British Energy argued that the implementation of the back billing arrangements and the Energy Services Ombudsman scheme should be assessed over a period of time prior to any removal of relevant licence conditions. Good Energy, E.ON, ScottishPower, Centrica and SSE agreed with Ofgem’s proposal to remove this obligation.

information provision. We therefore propose to remove obligations to provide customers with consumption information on bills or statements (or annually where these are not provided). The Government has issued a consultation on metering requirements in the energy industry in line with the Energy End-Use Efficiency and Energy Services Directive. We will monitor the development of this consultation but note that obligations on the collection of information about consumption could be required by Government.

SLC: 40(3) Obligation: The licensee shall inform any of its domestic customers of the most recent meter reading if so requested.

REMOVE

Matched

Respondents’ Views: Responses to our proposal to remove SLC 40(3) were generally in line with those received on SLC 40(1) and (2) above. SSE added that they fully support the removal of this obligation as it is unnecessary and this is something that suppliers would provide on request.

Proposal: We continue to propose that the obligation on suppliers to provide customers with their last meter read on request should be removed from the licence. We are supportive of ERA suppliers’ implementation of back billing arrangements and an Ombudsman scheme to prevent and resolve such billing disputes. This is an area where self regulation should provide effective incentives for suppliers to improve billing performance. Where self regulation does not provide adequate customer protection then Ofgem will propose licence obligations to address relevant matters. We further note that the Government is consulting on a statutory ombudsman scheme and if such a scheme was implemented it would be likely to be in place for all domestic suppliers.

SLC: 40(4) Obligation: Where a bill or statement given to a domestic customer in relation to the supply of gas is expressed in terms of the amount of gas

supplied, the licensee shall inform the customer in writing - (a) of the basis on which that amount is calculated from the quantity of gas supplied, and (b) if in making that calculation adjustments are made in respect of a temperature and pressure conversion factor within the meaning of regulations from time to time in force under section 12 of the Gas Act, particulars of any such adjustments, by giving such information on or with each such bill or statement.

RETAIN

Modified SLC 30.4

Not matched

Respondents’ Views Responses were mixed on whether this obligation should be retained. SSE did not consider that there was a need to retain the obligation as it was not an electricity obligation and in order to harmonise the licences it should not be a gas only requirement. Suppliers, they argued, would provide this information on request. E.ON argued that the Gas Act and The Gas (Thermal Energy Regulations) Regulations 1996 were sufficiently robust to not require this obligation.

Proposal: We propose to retain the requirement for suppliers to provide customers with information on bills and statements about how the amount of gas consumed is calculated. This is not a requirement of the Gas Act or The Gas (Thermal Energy Regulations) Regulations 1996. Temperature and pressure values are used in the conversion of the volume of gas measured by the meter into energy measured in kilowatt hours. This information is therefore required by customers to allow them to determine the basis upon which they are billed. Electricity is not subject to the same variation in calorific value depending on temperature and pressure.



SLC: 40(5) Obligation: The supplier shall keep each of its domestic customers informed: (a) that the Consumer Council can assist in resolving complaints which the licensee has not resolved to the customer’s satisfaction; and (b) how the relevant office of the Consumer Council can be contacted, by giving that information on or with each bill given to such customers and annually to each domestic customer to whom no such bills or statements are given.

RETAIN

Modified SLC 30.1

Matched

Respondents’ Views: British Energy, Centrica, Good Energy and energywatch agreed that this obligation should be retained. energywatch said that there had been concerns about the different approaches by suppliers to providing details about the Consumer Council: some give an adequate description about who energywatch was and what they do, but others put this at the bottom of a list of other more general consumer agencies. energywatch requested a greater degree of guidance to be given to suppliers about this, either in the licence or in the supporting notes. SSE, ScottishPower and E.ON did not agree that the obligations should be retained. ScottishPower and E.ON said that it should be sufficient for a supplier to say how the customer can obtain a copy of the complaints handling procedure on a bill instead. This procedure will give energywatch’s details, as well as other potential organisations which can help the customer.

Proposal: We propose to retain this obligation. It is required by customers when they have an enquiry or unresolved complaint to enable them to know that energywatch can assist them and how to contact them. Provision of this information with customer bills and statements or annually is an appropriate and efficient information distribution mechanism.

SLC 41: Terms for Supply of Gas Incompatible with Licence Conditions

SLC: 41(1) to (3)

Obligation: SLC 41(1): The licensee shall not enter into or offer to enter into a variation of or operate any domestic supply contract or deemed contract for the supply of gas to a customer at domestic premises otherwise than on terms which comply with the licensee’s obligations under the licence. SLC 41(2): The licensee shall not enforce or take advantage of any term of a domestic supply contract for the supply of gas to a customer at domestic premises if: (a) the inclusion of that term was incompatible with its obligations under any of the conditions, or (b) the enforcement or the taking advantage of that term would be so incompatible. SLC 41(3): The licensee shall not take advantage of the omission of any term from a domestic supply contract or deemed contract for the supply of gas to a customer at domestic premises if that term was required to be included in the contract or deemed contract in question by reason of the conditions.

REMOVE Respondents’ Views: Respondents generally agreed with Ofgem’s proposal to remove this licence conditions. However, this view was

Proposal Ofgem remains of the view that this condition should be removed from the licence. Suppliers should not enter into, or offer to enter into a



Matched

not shared by energywatch. energywatch said that although the Authority has the power to take enforcement action for breach of the inclusion or omission of a specific term, in reality, before Ofgem undertook a full investigation of a regulatory breach, it would consider a variety of criteria including the nature of the breach, the frequency of the breach, the consumer detriment and issues of proportionality. It was not true that Ofgem pursues every breach it became aware of, and the Authority does not impose fines for every single breach. In instances where Ofgem does not take action against a supplier for a breach of its licence, the consumer needs some other form of protection. Whilst it is not a substitute for enforcement action by the regulator, other forms of legal redress need to be open to the consumer. energywatch does not believe that recourse to the courts to protect consumers’ rights is an adequate or proper alternative to regulation but in extreme cases they argue that it is better than nothing. energywatch consider that SLC 41 would afford some protection should a consumer be so minded as to sue for the supplier taking advantage of the inclusion or omission of a contract term, or should the supplier attempt to sue the ex-customer for non-compliance with a prohibited term.

variation of, or enforce or take advantage of the inclusion or omission of, a term in a domestic supply contract or a deemed contract so that their terms are incompatible with the requirements of SLCs. A licensee has a requirement to comply with conditions in its licence. If it does not comply, it may be subject to enforcement action.

SLC 42: Domestic Supply Contracts

SLC: 42(1) and (2)

Obligation: A domestic supply contract is a contract for the supply of gas to domestic premises (as varied from time to time) which complies with the provisions of this condition. The licensee shall not supply gas to domestic premises except under a domestic supply contract or a deemed contract.

RETAIN Modified SLCs 1.3 (part) and 22.1

Matched

Respondents’ Views: Good Energy, E.ON and ScottishPower supported the proposal to retain these provisions. CAB welcomed the retention of the concept of a domestic contract and the prescription within the licence of terms that should be contained within that contract. energywatch accepted the need to retain the concepts of deemed and domestic supply contract. Centrica said that the intention behind this definition was appropriate but there may be better means to achieve the same outcome. SSE did not believe that there was a need to retain the definition of a domestic supply contract. They considered that existing contract law was sufficient for the energy sector as it was sufficient for other industries.

Proposal: We propose to retain these requirements to ensure that effect is given to those obligations that bear upon the contract. The purpose of SLC 42(1) and (2) is to clearly establish that energy must be supplied under either a deemed contract or a domestic supply contract to domestic premises. We continue to believe that a defined concept of “Domestic Supply Contract” is a helpful and simple term to which obligations in the rest of the licence can be attached. We have defined this term in proposed modified SLC 1.3.

SLC: 42(3)(a) Obligation: A domestic supply contract shall be in a standard form, save that there may be (reasonably) different forms for different areas, cases and circumstances.

REMOVE Respondents’ Views: Good Energy, E.ON, SSE, Centrica and ScottishPower supported the proposal to remove these provisions.

Proposal: We continue to consider that domestic supply contracts should not be required to be in a standard form and propose the removal of this



Matched

energywatch agreed stating that, to prescribe a standard form of domestic contract was an unnecessary requirement and can be safely removed. Consumer protection legislation and the general laws of contract, as well as supplier commercial self-interest, offer sufficient safeguards for consumers and incentives for suppliers to ensure that the form of the contract is adequate. Money Advice Trust/National Debtline disagreed with the proposal to remove the requirement. They argued that, as a standard form would be a universal document, it would be less subject to individual disputes and unfavourable comparisons between one company and another.

obligation. In our view, the protection afforded to customers by the law generally, for example, by the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) which require contracts to be in plain and intelligible language, is sufficient.

SLC: 42(3)(b) Obligation: A domestic supply contract shall set out all the terms and conditions, including terms as to price, on which the licensee will supply gas in

the relevant case.

RETAIN/ EXTEND Modified SLC 22.4 (part)

Matched

Respondents’ Views: Good Energy, Centrica and E.ON supported the retention of this obligation with the further clarification that the terms and conditions should be set out in writing. energywatch said that providing core contractual terms in writing removes ambiguity and lessens the probability of subsequent argument over detail of the contract. Clarity aids customers in comparing suppliers’ offerings should they consider switching. Issues such as fixed price tariff surcharges, termination fees or termination notices should be as transparent as unit pricing. ScottishPower disagreed and said that it was common sense for a contract between two parties to contain the full terms and conditions upon which the contract rests in a form agreed by both parties and, as a commercial reality, this will always be done. Sector-specific regulation is unnecessary. They said that if this obligation was retained then consideration should be given to the definition of “writing” in relation to domestic supply contracts, to allow electronic communications including email and SMS to be included within the definition, when agreed by both customer and supplier. SSE also did not consider that there was a need to retain this licence obligation. They said that it was in suppliers’ commercial interest to ensure that contracts set out all terms and conditions clearly to avoid confusion and future disputes. They also said that this was covered by the Distance Selling Regulations and the Doorstep Selling Regulations which set out information that must be provided to customer prior to or in a good time after the conclusion of a contract so there was no need to duplicate this information in a licence condition.

Proposal: For domestic customers Ofgem continues to consider that the licence should include a requirement for all terms and conditions (including price) to be included in a written contract. This is necessary to provide consumers with certainty about their rights and obligations in respect of their energy supply. There is potential that without this obligation there may be confusion about such rights and obligations, for example, where terms have been agreed orally and the views of the customer and supplier differ as to what was agreed. SSE argued that this obligation is not required given the requirements of the Consumer Protection (Distance Selling) Regulations 2000 (Distance Selling Regulations) and the Doorstep Selling Regulations (The Consumer Protection (Cancellation of Contracts concluded away from Business Premises) Regulations 1987). Neither of those Regulations requires that all the terms and conditions of a contract need to be in writing or have the effect that a domestic supply contract must include all its terms and conditions. We note the issue raised by ScottishPower on the definition of “written”. We have included a definition of “Writing” in SLC 1.2 which would allow a written communication to be sent by electronic means, including by email or SMS, if agreed by both customer and supplier.

SLC: 42(3)(c) Obligation: A domestic supply contract shall contain terms reflecting the termination provisions of standard conditions 46 (Termination of Contracts on

Notice) and 47 (Termination of Contracts in Specified Circumstances).




Matched

Respondents’ Views: Good Energy, Centrica, Scottish Power and E.ON supported the retention of this obligation. energywatch agreed stating that, given that gas and electricity can only be delivered through a single metering point by one supplier at any given time and it was not possible to run two or more contracts alongside one another. They said that it was therefore only right that full details as to how a contract can be terminated and any financial implications of doing so (such as a termination fee) should be made crystal clear to consumers. ScottishPower said that it was useful for both the customer and for the supplier “particularly in regard to industry processes” to have clarification of termination provisions in domestic supply contracts. SSE disagreed saying that it was in their commercial interest to provide this information to customers. SSE said that they would provide this information to customers whether or not it was a licence obligation to prevent confusion and possible disputes.

Proposal: We propose that an obligation to include those termination arrangements required by the licence in domestic supply contracts should be retained. As set out below the current termination arrangements found in SLC 46 are proposed for removal. We propose to retain modified termination arrangements currently set out in SLC 47. The supply of gas is different from the provision of other goods and services. In particular, a domestic customer is supplied at premises by one supplier at a time (under a contract) through a single metering point. Clarity is therefore required in the contract on the circumstances in which contracts will terminate, for example where a customer ceases to own or occupy premises and another customer begins to do so.

SLC: 42(4)(a) Obligation: The supplier shall determine the terms on which it is prepared to enter into a domestic supply contract and, for the purposes of this

paragraph different terms may be determined for different cases or classes of cases, or for different areas.

REMOVE

Matched

Respondents’ Views: Respondents agreed that this obligation should be removed from the licence.

Proposal: This provision allows suppliers to define different contractual terms for different cases and classes of cases or for different areas. It provides that, whilst domestic supply contracts should be in a standard form, suppliers are able to define separate contracts for different groups of customers. We propose that this obligation should be removed. It should be for suppliers to determine the terms and conditions which they are prepared to offer customers within the constraints provided by licence obligations and general law such as the Competition Act. The removal of the provision will not affect the ability of suppliers to do that.

SLC: 42(4)(b) and (5)

Obligation: SLC 42(4)(b); The supplier shall determine the terms on which it is prepared to enter into a domestic supply contract. The terms as to charges may be expressed as subject to transportation adjustments within the meaning of paragraph 5 but, in such case, the licensee shall, if so requested by a domestic customer, give him particulars, so far as is reasonably practicable, of the transportation adjustments (if any) likely to be made to the charges in respect of the supply of gas to premises specified in the request, SLC 42(5) sets out that these transportation adjustments relate to: a) supplemental charges levied by the transporter for the cost of laying new gas pipes to premises not previously supplied. b) in the circumstances where the customer is on an IGT network supplied by a DN and the aggregate transportation charges are greater or less than those that would have been levied for a comparable premises on a DN.

REMOVE

Not matched

Respondents’ Views: HSE, SSE and Scottish Power agreed with Ofgem’s proposal in the July consultation to retain obligations on the provision of information to customer on transportation adjustments. energywatch said that it was essential that there is transparency of rights and obligations and that consumers should know if they are being charged additional fees because they are connected to an IGT network. This view was not shared by E.ON and Centrica. E.ON commented

Proposal: We have further considered these obligations and for the reasons set out in chapter 4 we now propose that they should be removed from the licence.



that this was unnecessary additional complexity as customers were protected against surprise charges by general fair trading legislation. Centrica commented that this was unnecessary regulatory intervention especially in light of the recent introduction of relative price controls.

SLC: 42(4)(c) Obligation: The supplier shall determine the terms on which it is prepared to enter into a domestic supply contract and the terms shall include ones

which correspond, as nearly as may be (save in so far as they may provide for lower charges), to those of a deemed contract under paragraph 8 of Schedule 2B to the Gas Act 1986.

REMOVE

Matched


Proposal: Schedule 2B(8) to the Gas Act 1986contains a number of provisions about deemed contracts, including one at paragraph 8(9) which provides that suppliers may include terms and conditions in deemed contracts for estimating the quantity of gas supplied or taken from the beginning of the supply to the time when the meter is first read or when the supplier ceases to supply or the supply ceases to be taken, whichever is earlier. We propose to remove this provision. It is in suppliers' commercial interests to include all appropriate terms in contracts to mitigate disputes with customers about the use of estimated meter reads and ascertaining consumption.

SLC: 42(4)(d) Obligation: The supplier shall determine the terms on which it is prepared to enter into a domestic supply contract and so far as the terms provide for

charges related to the amount of gas supplied they shall provide that the number of kilowatt hours supplied shall be calculated in the same manner as the number of kilowatt hours conveyed to the premises falls to be calculated in pursuance of section 12(1) of the Gas Act 1986 or, where the premises in question are secondary sub-deduct premises, in the same manner as such number would have fallen to be so calculated if the gas had been conveyed to those premises by a gas transporter.


Not matched

Respondents’ Views: Respondents agreed that this obligation should be retained. E.ON commented that it may be more applicable to remove this licence obligation and amend The Gas (Thermal Energy Regulations) Regulations 1996 to include gas suppliers in respect of application. This would harmonise the requirement of Gas Suppliers regarding the calculation of kWh with that of gas transporters and shippers.

Proposal: Section 12(1) of the Gas Act sets out the manner in which kilowatt hours conveyed by transporters shall be calculated. This sets the standard for this calculation which should be employed by suppliers for the purposes of customer billing. We propose to retain this obligation so that it applies to all premises supplied by the supplier including secondary sub-deduct premises. We do not consider that it would be more appropriate to address this requirement in the Thermal Energy Regulations. Those regulations are made by the Authority under S.12(1) of the Gas Act and relate to the number of therms or kWh conveyed by a GT to premises or to pipeline systems by other GTs.

SLC: 42(6) and (7)

Obligation: SLC 42(6): The terms of contract to supply gas to a domestic customer shall be agreed between the licensee and the customer and, subject to SLC 42(7), the licensee shall ensure that those terms are in conformity with those for the time being determined under SLC 42(4). SLC 42(7): Where the licensee proposes, in pursuance of a single domestic supply contract, to supply to a domestic customer both gas and other goods or services relating to the supply or use of gas, the licensee shall ensure that the domestic supply contract identifies, separately, the charges to be made for the supply of gas, for other goods sold, for other goods provided on hire and for services


Respondents’ Views: energywatch agreed with Ofgem’s proposal to retain this obligation. They said that it was important that charges relating to the energy part of the contract were clearly distinguishable from any other goods or services that are also

Proposal: Ofgem remain of the view that SLC 42(7) should be retained. It is important that charges for the energy part (which includes charges for the provision of a meter) of any contract be clearly distinguishable from other charges. The purpose of this is two-fold. Firstly, to engage with the



Not matched

covered by the same contract and those consumers must understand the circumstances under which suppliers may exercise their (considerable) statutory powers. Good Energy, Centrica and ScottishPower also agreed that the obligation should remain. ScottishPower said that they would not support any modification to extend this obligation to separation of billing, particularly given the recent development of self-regulation in relation to billing. Professor Littlechild suggested that this obligation was a hangover from the days when electricity Area Boards also had supply showrooms and used the electricity bill as a means of recovering debts on appliances. He argued that the restriction might be problematic if a supplier offered to install a smart meter as part of a contract, as indeed happened when competition started in Sweden. He asked whether it was proposed to split the contract price into an energy part and a meter part and whether this was a helpful complication given the aim of facilitating smart metering. E.ON disagreed with the proposal to retain this obligation. They argued that it reduced their flexibility to offer packages and in particular, would restrict the development of energy services products. This, they argued, conflicts with Article 6 of the Energy Services Directive. They further considered that the requirement was unnecessary as customers were only interested in the price of the package being reasonable. SSE agreed that this is something that suppliers would make clear whether or not a licence obligation and was therefore not required. They argued that it was in their interests to make sure that customers are informed of the charges for electricity and gas separately from any other services that they provide to the customer. This will avoid confusion and disputes with customers if they query the amount of their bill. In addition the Electricity Act 1989 and the Gas Act 1996 set out suppliers' powers in relation to recovering charges due for gas or electricity used.

competitive market customers should be aware of the cost of their energy bill to allow comparison and consideration of alternative supply offerings. Secondly, and most importantly, it should be clear that any powers granted to suppliers under the Gas Act and supply licences, for example on rights of entry and disconnection for debt, should be exercised in relation to energy charges only. This approach does not restrict a supplier from linking the provision of other goods or services with the contract for the supply of energy. Charges for the supply of gas are defined in the licence as including charges made for the provision of the meter. In relation to the comments made by E.ON, the relevant Articles are 6(2)(a) and 6(2)(b). These give the government a range of options to use for compliance including requiring energy services or using an EEC type mechanism. We understand that compliance is proposed to be achieved though EEC. We propose to remove the obligation under SLC 42(6). We consider that it is unnecessary. Supplier will be required to comply with the licence requirement for certain terms to be included within domestic contracts.

SLC: 42(8) Obligation: If the whole or a significant part of the pipe-line system operated by Transco plc on 1 March 1996 comes to be operated by another gas

transporter (“the relevant system”) and that transporter (not being the relevant transporter) conveys by means of the relevant system the gas that is subsequently conveyed to particular premises by the relevant transporter then, in relation to those premises (or to any secondary sub-deduct premises in relation to which those premises are relevant primary sub-deduct premises), any reference in sub-paragraphs 5(b) or (c) to Transco plc shall have effect as if it were a reference to that other transporter; and the Authority shall determine any question arising under this paragraph as to whether a part of the pipe-line system operated by Transco plc on 1 March 1996 is a significant part thereof.

REMOVE

Not matched

Respondents’ Views: The limited number of respondents who replied on this issue said that this obligation should be redrafted.

Proposal: We propose to remove this obligation form the licence. It is no longer required as the transportation charges to which it relates in SLC 42(4)(b) and (5) are also proposed for removal.

SLC: 42(9) Obligation: Where a domestic supply contract may be terminated by a customer by virtue of any provision included in that domestic supply contract in compliance with standard conditions 46 (Termination of Contracts on Notice) and 47 (Termination of Contracts in Specified Circumstances), the



licensee may at its discretion accept a lesser period of notice than is specified in that provision.

REMOVE

Matched

Respondents’ Views: Respondents supported the removal of this obligation. SSE said that general consumer law already provided customers with appropriate protection.

Proposal: This provision provides guidance that a supplier can accept less notice that the maximum of 28-days set out in SLC 46. As noted below, we are proposing to remove the restriction on notice periods in the licence in favour of reliance on general customer protection legislation. We therefore propose to remove this provision from the licence.

SLC: 42(10) Obligation: Nothing in the licence shall prevent the licensee from entering into a domestic supply contract which contains provisions for its termination

that are additional to and do not derogate from the principles set out at standard conditions 46 (Termination of Contracts on Notice) and 47 (Termination of Contracts in Specified Circumstances).

REMOVE

Matched

Respondents’ Views: Respondents supported the removal of this obligation. SSE said that the removal of this obligation would provide suppliers with the ability to provide innovative offerings to customers.

Proposal: Whilst this provision intends to provide helpful clarification, it is not needed. Suppliers are currently free to provide innovative offerings to customers where this does not contravene the requirements of the licence and should continue to be free to do so. We therefore propose to remove this obligation.

SLC 43: Contractual Terms - Methods of Payment

SLC: 43(1) Obligation: Where the licensee offers to supply gas to domestic customers under a domestic supply contract, it shall have available forms of domestic supply contract which provide for the payment of charges for gas supplied to domestic premises: (a) by prepayment through a prepayment meter; (b) by different methods, including: (I) by cash, at such places and to such persons, as are reasonable in all the circumstances; and (ii) by cheque, and (c) at a reasonable range of different intervals, including: (I) paying twice-monthly or fortnightly or more regularly, such sums as agreed; (ii) paying monthly a predetermined sum; and (iii) paying quarterly in arrears.

REDRAFT


Matched

Respondents’ Views: In July Ofgem proposed to retain a simplified a requirement to offer all domestic customers prepayment through a prepayment meter, Fuel Direct and weekly/fortnightly cash payment. In addition to we proposed to allow for the Authority to direct that all of part of this obligation will not apply to a particular supplier or group of suppliers as set out in the direction. The views of respondents were mixed on this approach. Bizz Energy, CAB, Centrica, CO-Gas Safety, Energy Action Scotland, energywatch, HSE, NCC, NEA supported the retention of a general obligation on suppliers to provide the specified methods of payment. CAB said that these payments were of critical importance to customers on low income and weekly and fortnightly cash payments They said that information about the availability of all payment options should be included on customers' bills to raise awareness of the options on offer, and the licence condition should be amended to reflect this. HSE agreed that this information should be more widely

Proposal: As set out in chapter 2 the reasons behind our proposals to retain a simplified obligation to offer payment methods to domestic customers and to introduce a threshold based on the number of domestic customers supplied by a supplier below which the obligation to offer a range of payment methods would not apply. We are proposing that the threshold be set at ‘fewer than 50,000 domestic customers’.



promoted. Energywatch said that they would have grave concerns if this SLC was removed or failed to provide a safety net for those on low incomes or in financial difficulties who needed these payment methods that enable them to budget effectively. A number of respondents argued that the obligation could be removed. SSE and Professor Littlechild did not support the retention of requirements in the licence to offer a specified range of payment methods. Professor Littlechild commented that in a competitive market one would expect to see a range of payment methods being offered to meet customer needs, although not necessarily by all suppliers. SSE said that if the obligation to offer customers a range of payment methods was removed from the licence they did not believe that suppliers would cease to offer customers a range of payment methods. In their view it was in a suppliers’ commercial interests to make different methods of payment available to customers in order to ensure that the customer will be able to make payment for the energy that they have used. They noted that suppliers had shown their commitment to vulnerable and fuel poor customers through voluntary measures. E.ON agreed with proposal to retain an obligation but said that it should be amended so that suppliers should not be obliged to have a form of domestic supply contract which allows payment by Fuel Direct; but to require instead that they cannot disconnect a customer without offering Fuel Direct. They accepted that consumer group concerns meant that the licence also needed to require suppliers to have available a fortnightly or weekly payment form of contract, but felt that this should (a) not be on offer to all customers (as suppliers can require payment through a PPM where safe and practicable), and (b) that there should be flexibility for these payments to have to build up to cover each quarterly bill (with any residual amount from a factual bill paid in full), rather than just a uniform payment with regular review as could be inferred from "such sums as may be agreed". Good Energy, Bizz Energy and FPAG agreed with the proposal to allow the Authority to issue derogations to some suppliers for small suppliers. Good Energy said that this condition presented a barrier to entry and that if new suppliers could enter the market offering only direct debit then they believed that there would be several more players in the market by now. Consumer groups’ fears of vulnerable customers being impacted were in their view unfounded as other suppliers would move into the market to fill the gap and offer services tailored to this sector for example, a specialist PPM supplier would now be in the market. They said that when a customer was experiencing difficulties paying it is in any supplier’s commercial interests to offer them flexible terms, even if it is not part of their general service. Bizz Energy agreed and said that the cost of providing these services to a relatively small number of



customers is out of all proportion to the cost per customer a large supplier will incur and further erodes the competitive position of the new entrant. Given the market share of the six main suppliers they did not consider that an exemption for small suppliers would create customer detriment. To deal with a change of tenancy they suggest that the new supplier would talk to the customer and suggest the payment methods on offer. If agreement cannot be reached the customer would be advised how to choose an alternative supplier. Bizz Energy did not believe that suppliers would cease to offer range of payment methods due to the number of customers in each category but also did not think these obligation should apply to small suppliers. FPAG said that it would be acceptable for small suppliers to be exempt from payment method obligations but that this privilege should be removed once certain size had been attained and should not be open to large suppliers. RWE npower, CAB, Energy Acton Scotland, energywatch, NCC, NEA, Centrica, SSE and SmartestEnergy argued against allowing the Authority to issue derogations to suppliers relieving them of their obligations to offer prescribed payment methods. RWE npower said that this would distort competition in the form of 'cherry picking' and the potential bypassing of vulnerable customers. They were concerned that a 2-tiered industry could be created if Ofgem proceed with this proposal, existing suppliers would see average customer debt increasing as they lose there low-risk groups and higher process for many who can least afford it. Energy Action Scotland said that new entrants should be required to offer customers at least the same range of payments as existing suppliers and did not consider that the obligation to provide frequent payment facilities should deter any new entrants from offering “innovative web-based services” to customers if they so wish. They were concerned that any decision to remove the obligation would have serious implications for those people who do not have a bank account. Energywatch said that internet offerings were ideal for those fortunate to have access to internet and the ability to use the internet but it would fail to offer sufficient choice to a significant number of consumers, whom energywatch and Ofgem have a statutory duty to protect. NCC expressed concern that low income or vulnerable customers risked being viewed as undesirable part of customer base. They argued that if an exemption for small companies and new entrants is clearly set out in licence, along with any threshold, it will not be necessary for Ofgem to grant derogations on a case by case basis. NEA said that allowing these so-called niche suppliers to segment the market in such a way as to exclusively target those consumers who are cheapest to serve will also mean that prices for other



payment methods will correspondingly increase. NEA acknowledged that requiring all suppliers to offer all payment methods provided only limited customer protection when suppliers can set tariffs which effectively price some options beyond the reach of low-income consumers.. In NEA’s view suppliers should be required to offer payment methods appropriate to the circumstances of low-income consumers. Centrica commented that if it was Ofgem’s intention to ensure that the obligations falling upon suppliers are proportionate to the needs of all customers, and removed where it is proven that customer protection is no longer warranted, it therefore follows that the remaining obligations should apply equally to all suppliers. They said that in the absence of this condition it is unlikely that new entrants would offer the complete range as currently defined. SmartestEnergy considered that this obligation did not present a barrier to entry but said that suppliers would cease to offer defined methods of payments and frequency if this obligation was removed.

SLC: 43(2) Obligation: Where the licensee supplies gas to domestic premises under a deemed contract, the terms of that contract shall include terms in respect

of all the ways of making payments mentioned in sub-paragraph 1(b) and the frequencies mentioned in sub-paragraph 1(c). The foregoing shall not apply to deemed contracts made following a direction under paragraph 1 of standard condition 29 (Supplier of Last Resort).

REMOVE

Matched

Respondents’ Views: E.ON, Centrica and ScottishPower said that this obligation should be retained. Good Energy and SSE considered that it was unnecessary as it was in the commercial interests of the supplier to offer terms which get the money owed paid.

Proposal: Where a supplier is supplying under a deemed contract there is no contractual arrangement in place to determine how payment should be made. Arguably, this obligation removes doubt that the consumer may pay charges arising from the use of energy on a deemed contract in any of the ways set out in 43(1). However, we do not consider that there is a need to retain this obligation simply for those reasons. Suppliers will have strong incentives to allow deemed contract customers to pay for their energy charges in a manner that suits their needs. We therefore propose to remove this obligation.

SLC: 43(3) Obligation: Before entering into any domestic supply contract (other than through a prepayment meter) the licensee shall inform the customer of and

offer to enter into domestic supply contracts which comply with sub-paragraphs 1(b) and (c).

REDRAFT Modified SLC 27.1 (part) and 27.2 (part)

Matched

Respondents’ Views: All suppliers who responded on this obligation considered that it should be removed from the licence. Good Energy, ScottishPower and SSE said that suppliers had commercial incentives to offer customers appropriate terms. Centrica agreed saying that this obligation took no account of the practical interaction between a customer and supplier or the needs of different customers. Suppliers are already incentivised to bring to the attention of customers the arrangements that are relevant to the particular needs of that customer. This obligation for example would place an unnecessary requirement on the supplier where the customer clearly asked for and his circumstances were appropriate to a direct debit arrangement. This obligation should be removed. E.ON supported this view.

Proposal: This obligation requires that the range of payment methods required by the licence to be promoted to the consumer. The advantage of the obligation is that consumers who may otherwise risk building up a debt are alerted to other methods of budgeting for their energy bills. We propose to require suppliers to offer a wide choice of payment methods, including payment by cash and PPM, unless a customer has requested a specific payment type and the supplier has offered it to them or the supplier supplies less then 50,000 domestic customers (or another figure directed by the Authority).



SLC: 43(4) Obligation: The licensee shall process all requests for a supply of gas to domestic premises without undue preference or undue discrimination.

REMOVE

Matched

Respondents’ Views: All those that responded on this point agreed that the obligation could be removed from the licence.

Proposal: Ofgem considers that the requirement to process all contracts for an gas supply to domestic premises without undue preference or undue discrimination should be removed. Suppliers have commercial incentives to process contracts. There is also a requirement (currently set out in SLC 32(1)) to give a customer a supply if they accept the terms offered. Also, under competition law dominant suppliers may in certain circumstances be caught by the requirement not to discriminate between different customers.

SLC: 43(5)(a) Obligation: The licensee shall send copies of each of the forms of domestic supply contract (as revised from time to time) under which it supplies or

offers to supply gas on receipt of a request, to any person.

RETAIN

Modified SLC 22.7

Matched

Respondents’ Views: Scottish Power, energywatch and E.ON agreed that this obligation should be retained. E.ON said that only Ofgem and energywatch should be able to make a blanket request and they would only expect to provide competitors with contracts which have been specifically requested. Good Energy, Scottish Power and SSE disagreed. Good Energy said that the requirement was too wide. ScottishPower said that is was in suppliers’ commercial interests to provide contracts. SSE argued that suppliers would provide this information to customers as a matter of course. In addition, they said that Ofgem had powers to request information under Section 34 of the Gas Act 1996 and Section 47 of the Electricity Act 1989. Furthermore SLC19 (if retained) also gave Ofgem the power to request information.

Proposal: Ofgem considers that suppliers should continue to be required to provide copies of each of the forms of their domestic supply contracts to any person on request. This information is important for transparency to understand the nature of the terms and conditions being offered. This obligation is also required for regulatory purposes so that energywatch and Ofgem have access to domestic supply contracts. We disagree with the issue raised by SSE. Section 34 of the Gas Act 1996 and Section 47 of the Electricity Act 1989 do not provide powers for the Authority to require a supplier to provide information (it may request such information but there is no obligation on a supplier to provide it) but requires that the Authority keeps the market under general surveillance. Further, SLC 19 only provides for the Authority to request information where this is reasonably required for the purpose of performing its functions with the exclusion of Section 34 of the Gas Act 1996 and Section 47 of the Electricity Act 1989.

SLC: 43(5)(b) Obligation: The supplier shall send copies of each of the forms of domestic supply contract (as revised from time to time) under which it supplies or

offers to supply gas, not later than the date on which it first offers to supply gas under each such form of domestic supply contract (or revision thereof), to the Authority and the Consumer Council.

REMOVE

Matched

Respondents’ Views: All respondents agreed with Ofgem’s proposal to remove this obligation.

Proposal: Ofgem considers that the obligation to provide copies of contracts to Ofgem and energywatch should be removed. These contracts are not approved by either body. It would be expected that, the retention of the obligation under SLC 43(5)(a) as suggested above, will be sufficient to require suppliers to provide Ofgem and energywatch with copies of contracts on request.

SLC: 43(6) and (7)

Obligation: The supplier shall prepare, in respect of each form of domestic supply contract: (a) a document which sets out an accurate summary of the principal terms of that form of domestic supply contract; and (b) particulars of any inducements offered to any person entering into such a domestic supply contract which might reasonably be expected materially to influence the decision whether or not to enter into it. These must be published and copies sent to energywatch and Ofgem.

REMOVE

Respondents’ Views: Respondents supported Ofgem’s July proposal to remove this obligation from the licence. energywatch agreed that SLC 43 (6) & (7) could be removed provided, as proposed, that the safeguards contained in SLC 43(5)(a) and SLC 44(1) are retained.

Proposal: SLC 43(6) and (7) sets out requirements on suppliers to publish the principal terms of domestic supply contracts in a manner that the supplier considers will secure adequate publicity for them. “Principal terms” are defined in SLC 1 (Definitions and Interpretation). It will be in a supplier's commercial



Matched

interests to promote awareness of the offerings that they wish to make to customers. Given the requirement to provide terms and conditions of domestic supply contracts on request under SLC 43(5)(a) and to provide principal terms to customers before entering into a domestic supply contract under SLC 41(1) we view the requirement to publish prices to be unnecessary. We propose that the obligation under SLC 43(6) and (7) to publish principal terms should be removed.

SLC 44: Notification of Terms

SLC: 44(1) Obligation: Before entering into any domestic supply contract the supplier shall take all reasonable steps to draw the attention of the customer to the principal terms of the domestic supply contract.


Matched

Respondents’ Views: Respondents generally agreed with Ofgem’s proposal to retain this obligation. CAB said that this would ensure that suppliers give customers clear, accurate and timely information. energywatch agreed saying that the retention of obligations set out in SLC 44(1), (3) and (4) represented a baseline that all suppliers should adhere to. They did not believe that it was onerous for suppliers to comply with and would safeguard consumer interests. Professor Littlechild did not agree. He argued that successful suppliers would continue to want to meet customers’ wishes in these respects. Domestic customers can and do move if their suppliers do not behave responsibly. This position was supported by SSE who said that it was in suppliers’ interests to provide this information.

Proposal: Ofgem propose to retain the obligation to draw the attention of the customer to the principal terms of the domestic supply contract. Customers require information on the principal terms of a prospective new domestic supply contract to make an informed choice. It may not always be in a supplier's interest to provide this information. For this reason an obligation should be retained in the licence. Annex A of the IMGD also sets out a requirement that contract terms should be provided prior to the confirmation or conclusion of the contract. We further propose to retain the current definition of the principal terms in SLC 1 as being those that include: a) charges for the energy supply, b) any requirement to pay charges by prepayment through a prepayment meter, c) any requirement for a security deposit, d) duration of the contract or deemed contract, e) the rights to terminate the contract (including any obligation to pay a termination fee), or the circumstances in which a deemed contract will expire, as well as f) such other terms as would significantly affect the customer’s evaluation of the contract.

SLC: 44(2) and (3)

Obligation: Where a domestic supply contract has been entered into with, or an offer which is not within 5 days rejected by the supplier is made by, a domestic customer in the course of: (a) any visit by a representative of the supplier to the premises of the domestic customer, (b) any conversation in a place to which the public have access between a representative of the supplier and the domestic customer, or (c) any telephone conversation, or any internet or other electronic or telegraphic communication between the licensee and the domestic customer, the supplier shall (except where it has already done so) provide the domestic customer with a copy of the full terms of any domestic supply contract that has arisen, or which on acceptance will arise, between the supplier and the customer within 5 days after the domestic supply contract was entered into, or the offer was made by the customer.

REMOVE

Matched

Respondents’ Views: Respondents generally agreed with Ofgem’s proposals in the July consultation to retain this obligation. CAB said that this would ensure that suppliers give customers clear, accurate and timely information. energywatch agreed saying that this represented a baseline that all suppliers should adhere to. They did not believe that it was onerous for suppliers to comply with and it would safeguard consumer interests. Providing a copy of the

Proposal: Ofgem have further considered the ongoing requirement for this obligation to be set out in the gas supply licence. We note the comments from a number of respondents who considered that the obligation was unnecessary as it was in the supplier's interest to provide a copy of the contract in any case. We also note that the AES Code requires that a copy of the contract is provided by the sales agent. Additionally, the Consumer Protection (Distance Selling) Regulations 2000 requires that key



contract, energywatch argued, acted as trigger for the consumer to challenge the existence of a contract where there had been an erroneous transfer. ScottishPower agreed that the principle of this obligation should be retained but said that the drafting should be relaxed around the 5 day requirement. Instead, they said that this should be redrafted to ensure that the contract is sent 'within a reasonable period' of being entered in to. Professor Littlechild did not agree. As with his views on the provision of information on principal terms he said that, successful suppliers will continue to want to meet customers’ wishes in these respects. Domestic customers are no longer tied to a supplier for life, they can and do move if their suppliers do not behave responsibly. This position was supported by SSE who said that this licence obligation was adequately addressed by the Distance Selling Regulations. They said that the Regulations required suppliers to provide the customer, either prior to contract formation or in a good time after the conclusion, with certain information in a written and durable form e.g. suppliers identity, price of the good/service and the right to cancel etc.

information about the contract is provided to the customer in writing. We agree that there are benefits to the customer having written confirmation of their contract with the supplier but consider that the incentives on suppliers through regulation, the AES Code and competitive pressure for customer service will be adequate to deal with the issue. We have therefore concluded that the obligation is unnecessary, especially given that an obligation on the supplier to take all reasonable steps to draw to the attention of the customer the principal terms of the contract before the customer enters into it, will be retained. This requirement will ensure adequate protection for customers so that they are fully aware of the key terms of the contract.

SLC: 44(4) and (5)

Obligation: Under SLC 44(4) the supplier shall, subject to SLC 32(5), at least 30 days before a domestic supply contract is due to expire or otherwise terminate, send the domestic customer: (a) a written offer to enter into a new domestic supply contract from the date of expiry of the existing domestic supply contract, drawing the attention of the domestic customer to the principal terms relevant to that offer; (b) an accurate summary of the principal terms of other domestic supply contracts which the supplier will make available to the domestic customer; and (c) details of how the domestic customer can obtain continuity of supply from the supplier; and (d) the principal terms in writing of the deemed contract that would apply upon the expiry or termination of the domestic supply contract if no new domestic supply contract is agreed. Unless, as set out in SLC 44(5): (a) the domestic customer has informed the supplier that they do not wish to continue to be supplied with gas by them after the expiry or termination of the existing domestic supply contract; or (b) it is not reasonable in all the circumstances for the supplier to be required to continue to supply that customer and the licensee has (at least 30 days before the contract was due to expire) both notified the domestic customer to that effect and informed him that if the domestic customer does not make arrangements to obtain a supply from another gas supplier, then the customer’s supply will be under deemed contract.

REMOVE / RETAIN

Modified SLC 23.2

Respondents’ Views: Respondents generally agreed with Ofgem’s proposals in the July consultation to retain the obligation currently set out in SLC 44(4)(d) (with the exceptions as set out in SLC 44(5)) to provide customers on domestic supply contracts with information on the principle terms of deemed contracts that would apply 30 days before their contract is due to expire or otherwise

Proposal: The Gas Act provides that where supply is not taken in pursuance of a contract then it is taken under a deemed contract. In certain circumstances a domestic supply contract may terminate when it reaches the end of the contract term period. If the contract does not make provision for itself to continue (or for another contract to begin) following the fixed term period then a deemed contract will have effect. Suppliers typically make provisions for



Matched

terminate. We also proposed removing the obligations to provide such customers with the information set out in SLC 44(4)(a), (b) and (c). energywatch said that if a fixed term contract ends there was a danger that the consumer could transfer to a deemed rate contract or other unfavourable terms by default, so it is appropriate that the supplier should notify the customer ahead of the expiry. CAB said that this would ensure that suppliers gave customers clear, accurate and timely information. ScottishPower gave conditional support to Ofgem’s July proposals. They said that contract terms and conditions were already regulated through the licence to ensure that they are fair and reasonable for consumers, and these should also be sufficient to ensure protection for consumers who reach the end of a fixed term contract. They did not agree that there was a need for additional protection for fixed term contract customers through the licence. Suppliers have a commercial incentive (customer retention) to notify customers about the termination of fixed term contracts. As with the other information provisions in this condition Professor Littlechild said that, to the extent that customer protection legislation and contract law do not consider it reasonable to provide for these actions. Successful suppliers will continue to want to meet customers’ wishes in these respects. Domestic customers are no longer tied to a supplier for life, they can and do move if their suppliers do not behave responsibly. SSE did not believe that it was necessary to retain this obligation. The provisions set out in gas and electricity for a deemed contract have the effect of leaving the supply unaffected in the event of a customer's contract expiring. As long as the customer's security of supply is protected they did not believe that it was appropriate to directly regulate for the provision of information to customers in such scenarios. Whilst they welcomed the proposal to remove obligations 44(4)(a)-(c) they considered that the obligation could be removed entirely as the Acts already provide customers with the protection of deemed contracts.

contracts to continue following the expiry of fixed term periods and it is likely to be in their commercial interests to do so. However, if the contract does not make provision for the period after a fixed term has expired, customers would be best protected by requiring suppliers to provide customers with information on the deemed contract terms that would apply within sufficient time for them to assess these terms and seek alternative arrangements. In these cases, the customer is unlikely to cease taking a supply at the time when the contract ends and switching to an alternative supplier will take time. We consider that it is appropriate for the customer to be alerted to the new terms of supply, and that sufficient notice is given for the customer to enter into a new contract with the supplier or to switch to a new supplier to avoid the deemed contract terms. We therefore continue to propose the retention of the obligation currently set out in SLC 44(4)(d) to provide customers on domestic supply contracts with information on the principal terms of deemed contracts that would apply 30 working days – (i.e. sufficient time for the customer to enter into a new contract and switch supplier) before their contract is due to expire or otherwise terminate. There does not appear to be a need for the supplier to inform the customer of the terms of other domestic supply contracts that may be available to them or to offer them a new contract. This is a commercial decision for the supplier in line with their customer retention policy. (The supplier will also have an obligation to make an offer in response to a request, expect in particular circumstances.) We therefore propose to remove the obligations to provide such customers with the information set out in SLC 44(4)(a), (b) and (c). We have given further thought to whether it is necessary to retain the exceptions as set out in SLC 44(5). They do not appear to be necessary. Such information should be provided to the customer to assist them in making an accurate assessment of the options available to them when their fixed term contract is coming to an end.

SLC: 44(6) and (7)

Obligation: Except in such cases or classes of cases as may be approved by the Authority, where a domestic supply contract allows for its unilateral variation (in any respect) and accordingly the licensee raises the charges for the supply of gas pursuant to such contract or otherwise varies any term to the significant disadvantage of the domestic customer, the licensee shall within 10 days of the variation give to the customer written notice: (a) of the variation; (b) of the domestic customer’s right to terminate the domestic supply contract; and (c) that where a domestic customer gives to the licensee a valid notice of termination within 14 days of receiving notice the supplier shall treat the variation as ineffective and shall neither enforce nor take advantage of it.



REDRAFT


Matched

Respondents’ Views: Those suppliers who supported retaining the requirement for domestic customers to receive individual notification of a price rise argued that the specification of the notice requirements should allow for easier and less costly operation of the obligation. There was also a view that the current arrangements were not clear where a customer gave notice but did not subsequently switch supplier. ScottishPower argued that notification should be able to be given electronically. SSE argued for the removal of the obligation or alternatively that notification should be permitted through mass media. Customer representatives considered the obligation to be valuable, but agreed that there should be more flexibility. energywatch noted the concerns that suppliers had about the cost of managing the unpicking of price rises, but supported the retention of the obligations and considered that transparency of information is vital for customers to make informed choices. However, major suppliers argued that the current obligation was expensive to maintain. Information provided by them suggests that it has cost the industry around £15million collectively this year to communicate two sets of price rises. They say that the vast majority of consumers effectively find out from the mass media, rather than their individual letters. Stephen Littlechild has commented: “Why do you trust suppliers to adjust prices and quality, but not to tell the customers in an adequate way what they are doing?” There was general support for the move to allow communication to be done in writing and sent by electronic means, with customers’ agreement. Centrica commented that they were pleased that Ofgem had recognised that this licence condition is too prescriptive for customers that are prepared to receive bills and other communications via electronic media.

Proposal: The IMED and IMGD require that customers are notified directly of price increases no later than one "normal billing period" after the increase comes into effect. This is an area where we think that regulation at the European level could be updated to permit suppliers greater flexibility to inform customers of contract changes in the way they think best meets the needs of their customers, where the market is sufficiently competitive and customers have effective choice. We think that, although the requirement for individual notification should be retained, there should be far more flexibility for suppliers to manage the requirement to help them reduce its cost. Suppliers have indicated that the existing provisions do not work well and that there is ambiguity in instances where customers terminate contracts but do not subsequently switch supplier. To address these matters we are proposing the following arrangements: • That suppliers have up to 60 working days following the unilateral change

(made in accordance with the terms of the contract) to increase prices or otherwise to the significant disadvantage of the domestic customer to notify him or her of that change. The 60 working day period is intended to be equivalent to one billing period (consistent with the requirement of the IMED and IMGD, referred to above). The notice to the customer must inform them of their right to terminate their contract if the variation is unacceptable to them and how they can transfer supplier without being subject to the variation.

• Domestic customers must be directly notified. However, that notification can be sent using electronic means where the customer agrees (for example, email or text messaging rather than the current requirement for notification to be given in writing by post).

• The proposed contract term will not have effect if the domestic customer gives notification terminating the contract no later than 10 working days after the receipt of the notification from the supplier, and the licensee subsequently receives notification (through the normal industry processes) within 15 working days that the customer is switching to an alternate supplier. (This replaces the current requirement for a termination notice to be provided at least 28-days in advance of the date it has effect and, where not later than that date, either a new supplier begins supplying the premises or the premises are cut off.)

This final element is designed to resolve the ambiguity in the current arrangements where the customer terminates the contract but subsequently fails to transfer to a new supplier. These proposals provide flexibility for suppliers which could significantly reduce the costs of notification, for example by including the notification with the customer’s bill. Finally, we propose to retain the ability of the Authority to set out circumstances where suppliers would not be required to comply with this obligation. There may be a requirement for such operational flexibility in rare circumstances.

SLC 45: Security Deposits



SLC: 45(1) Obligation: The supplier shall not, in respect of the supply of gas to any domestic customer, require a deposit:

(a) where the domestic customer is prepared to be supplied through a prepayment meter and it is reasonably practicable in all the circumstances (including in particular the risk of loss or damage) for the licensee to provide such a meter; or (b) where it is otherwise unreasonable in all the circumstances to do so.


Matched

Respondents’ Views: energywatch said that sometimes a PPM may be a viable alternative to a security deposit where, for example, the consumer cannot raise the deposit. Equally, a consumer may elect to pay a security deposit, rather than pay higher PPM tariff charges or be put to the inconvenience of having to charge a PPM card or purchase tokens. In circumstances where it is appropriate for a supplier to offer to supply subject to payment of a security deposit or installation of a PPM, we believe that ultimately the consumer should have the choice. Consequently, they welcome the proposal to retain SLC 45(1). NCC welcomed the proposal to retain the requirement for suppliers to provide PPM as an alternative to security deposits. NEA said that in addition to offering a PPM as an alternative to a security deposit they would suggest that consumers on the Fuel Direct scheme should be similarly exempt.

Proposal: We propose to retain this obligation. It allows customers, who are not able to or who do not wish to provide a security deposit requested by a supplier, the opportunity, in normal circumstances, to access the supply market through a prepayment meter unless this is not safe or reasonably practicable. We further propose to retain the prohibition on suppliers requiring a security deposit if it unreasonable in all of the circumstances to do so. We propose to retain the clarification that such a request should therefore be reasonable. If suppliers do not act reasonably, we would still be able to rely on our enforcement powers to secure compliance with the licence. There may be scope in the future, for this issue to be dealt with by an industry ombudsman (with relevant powers), particularly if a scheme underpinned by statutory requirements has come into effect. In those circumstances we could review whether we need to retain any licence condition in respect of security deposits. We note the comments from NEA on the Fuel Direct scheme but do not consider that it would be appropriate to require exemption in such instances, given that a customer’s registration on the Fuel Direct scheme is not solely a matter for the supplier and may change over time

SLC: 45(2) Obligation: Any deposit required of such a domestic customer may be 1½ times the value of the average quarterly consumption of gas reasonably

expected at the relevant premises, or more if that is reasonable in all the circumstances.


Matched

Respondents’ Views: In July we proposed to redraft this obligation as a simple requirement that the circumstances where, and the value of, the security deposit demanded should be reasonable. energywatch noted Ofgem’s comments in the July consultation about the overlap with the Unfair Terms in Consumer Contracts Regulations (UTCCRs) and with common law in relation to the amount of a security deposit that can be demanded. However, they did not regard the rights conferred by the UTCCRs or common law necessarily to be viable alternatives to regulation. Generally those who are being asked to accept a PPM or provide a security deposit are of limited financial means, quite possibly with no or a poor financial track record. The awareness of available means of redress, the financial ability to pursue matters through the courts (even the small claims court) and the delay in access to an energy supply whilst that court action is being pursued are all compelling reasons why Ofgem needs to retain a role in this area. Having a legal right to something does not necessarily mean that one is able to exercise that right. Whilst the proposed redrafting of SLC 45(2) will replace the certainty of 1½ times the value of the average quarterly

Proposal: We propose to redraft this obligation as a simple requirement that the circumstances where, and the value of, the security deposit demanded should be reasonable. Where concerns were raised on the amount demanded by suppliers for a security deposit then this could be reviewed as an enforcement issue by Ofgem. If security deposits are an issue in the future, this could be dealt with by an industry ombudsman with relevant functions, particularly if a scheme underpinned by statutory requirements has come into effect.



consumption with a simple requirement for the deposit to be reasonable in the circumstances, this is viable if Ofgem proposes to monitor industry’s interpretation of “reasonable” and retains its right to settle disputes as in SLC 45(7). They were pleased that Ofgem accepted the latter and would urge it to do the former. NEA said that, in the absence of a licence requirement Ofgem, and subsequently the ombudsman, should issue guidance about the acceptable level of security deposits. Bizz Energy proposed the removal of all clauses stating the terms on which deposits may be requested. In their view this was a commercial decision for the supplier. If they attempted to impose unreasonable terms customers could walk away from the contract offer.

SLC: 45(3) to (6)

Obligation: Where the licensee requires a deposit from a domestic customer it shall at the same time inform him that (unless it is reasonable in all the circumstances for the licensee to retain the deposit) any deposit shall be repaid (with interest) by the licensee: (a) within 14 days where, in the previous 12 months, the domestic customer has paid all charges for gas supplied within 28 days of each written demand made; or (b) as soon as reasonably practicable, and in any event within 1 month, where the licensee has ceased to supply the customer and the customer has paid all charges for gas supplied. Where the supplier holds any deposit for more than a month, it shall pay the domestic customer simple interest on the deposit at a rate which is from time to time equivalent to the base rate of Barclays Bank plc or, if there is no such base rate, not less than such base rate as the Authority may designate for the purposes thereof.

REMOVE

Matched

Respondents’ Views: Bizz Energy said that all customers should be treated individually and in extreme circumstances it may be appropriate to refund deposits only on account closure. energywatch said that SLC 45(3) to (6) regarding duration of holding a security deposit and associated matters was perhaps over prescriptive and can be removed. They would expect such matters to be spelt out in the contract with the consumer and be subject to the UTCCRs. NEA said that they had reservations about the removal of licence requirements regarding security deposits. In their view it was precisely because the gas and electricity industries, unlike other markets, provide essential services that this element of consumer protection should be retained.

Proposal: We consider that the gas and electricity industry is not sufficiently different to other markets where credit is offered and security deposits demanded to require sector specific regulation. These issues should be made clear in the contract between suppliers and customers. We propose to remove this obligation.

SLC: 45(7) Obligation: Any dispute arising under this condition between the supplier and a domestic customer may be referred by either party to the Authority.

The Authority shall determine any such dispute, following such practice and procedure as it considers appropriate.



REMOVE

Matched

Respondents’ Views: In the July consultation doc Ofgem proposed that it would be in customer’s interests for them to have access to an effective dispute resolution mechanism. At present, Ofgem performs this role, but we said that potentially this could be done by an alternative dispute resolution body such as the Energy Services Ombudsman (ESO). energywatch and NCC welcomed the proposed retention of this obligation. However, energywatch and NEA expressed alarm that Ofgem would consider the possibility of such a function being taken over by the ESO at this stage. energywatch said that the ESO had been in existence for limited period of time and was a totally untried and untested redress route. There were question marks against the potential impact on consumers given the (12-week) deadlock letter requirement. They argued that many situations required quick determination and they therefore would not want this function to be lost or transferred to another body without convincing evidence that the ESO can deliver as effectively as Ofgem. energywatch suggested that at this stage, and indeed for the foreseeable future, the removal of Ofgem’s ability to determine disputes would be an abrogation of Ofgem’s statutory duty to protect consumers and unjustifiable on the pretext of better regulation.

Proposal: We have given further consideration to this requirement and propose to remove it. Ofgem has never been required to make a determination under this provision and it is highly unlikely that retaining it would serve any purpose. If suppliers do not act reasonably, we would still be able to rely on our enforcement powers to secure compliance with the licence. If security deposits are an issue in the future, this could be dealt with by an industry ombudsman with relevant functions, particularly if a scheme underpinned by statutory requirements has come into effect. In those circumstances we could review whether we need to retain any licence condition in respect of security deposits.

SLC: 45(8) to (12)

Obligation: These paragraphs provide for the assignment of security deposits from one gas supplier to another together with the other rights and liabilities for the customer's contract.

REMOVE

Not matched

Respondents’ Views: Respondents supported Ofgem’s proposal to remove these obligations. SSE commented that this was something that suppliers would include in their contracts.

Proposal: These provisions do not occur in the electricity supply licence. Provision for the handling of security deposits should be clearly set out in contracts and inherited by the new supplier if the contract is assigned to them. This is a commercial matter for the old and new supplier to resolve. We propose to remove these provisions.

SLC 46: Termination of Contracts on Notice

SLC: 46(1)(a), (2), (3) and (4)

Obligation: Under SLC 46(1)(a) a supplier shall not enter into a domestic supply contract unless the domestic supply contract contains a term allowing the customer to terminate such domestic supply contract at any time by providing a valid notice of termination. SLC 46(2) defines a termination notice as being valid where it is given at least 28 days in advance of the date on which it is to take effect and where, not later than that date, the requirements of SLC 46(3) are satisfied. The requirements of SLC 46(3) are that either- a) another gas supplier commences a supply of gas to the premises; or b) the premises are disconnected or the supply of gas is cut off because the domestic customer at those premises has ceased to require a supply. SLC 46(4) requires that each domestic supply contract shall provide that a notice of termination which is not valid shall not be effective to terminate such domestic supply contract.



REMOVE

Not matched

Respondents’ Views: Several suppliers expressed concern about the proposal to remove from the licence the right of customers to terminate domestic contracts by giving 28-days notice. ScottishPower said that this would have potentially negative implications for competition primarily due to the adverse impact on direct selling activity which would become rapidly uneconomic if large volumes of customers were tied to long term contracts and termination fees. They said that customers would fail to remember that they have entered a fixed-term contract with a specific notice period and termination fee. This will create confusion and operational difficulties for both the gaining and losing supplier. Consumer groups also opposed the removal of these obligations. energywatch said that removal had not been demonstrated to be in consumers’ interests and there was no evidence that this would pave the way for innovative contracts. They said that the 28-day contract should form the basic contract that should be on offer to all consumers. More innovative offerings could be developed alongside this, not instead of it. Removal of this obligation would encourage suppliers to offer restrictive terms which are rarely open to negotiation. NEA was sceptical about the suppliers’ argument that the 28-day rule had inhibited their capacity to market energy services contracts. They said that it would be helpful if Ofgem or the ombudsman issued guidance indicating the factors that will influence any test of ‘reasonableness’ and that a timetable for speedy resolution of customer complaints about notice periods should be established. USwitch did not support removal as it may cause significant difficulties in aligning the cancellation of existing contracts and commencement of new contracts. Confusion about contract termination could mean that suppliers would be unable to manage the transfer process and lower switching rates as the market becomes too complex and consumers were put off changing supplier. Parties who opposed the removal of this obligation generally said that it was vitally important for customers to be made aware of termination provisions prior to entering into contracts. Centrica, E.ON and SSE welcomed the removal of the 28 day rule. SSE said that it would allow suppliers to develop innovative offerings for customers and increase competition.

Proposal: Ofgem proposes to remove this obligation from the licence. We consider that suppliers should be free to develop innovative contracts of fixed lengths or that have an indefinite term which are terminable after giving a reasonable period notice. This obligation was linked to the standard conditions that were in effect at the opening of the domestic market to competition. At that time, a supplier was permitted to object to a customer transfer where the contract had not expired or been terminated. This provision was subsequently removed from the standard conditions. The contractual mechanisms to mitigate supplier risk are those open to providers of goods and services in other markets. In particular, suppliers are permitted to seek termination fees (for fixed term contracts only), security deposits or innovative payment mechanisms. Our proposal to remove the requirement for domestic supply contracts to be terminable on 28 days notice will require the removal of the associated obligations set out in SLC 46(1)(a), (2), (3) and (4) (note that the text of SLC 46(4) differs between electricity and gas, but deals with substantially the same point that contracts would not terminate where an objection is made even though a termination notice is given). The law is likely to require that a reasonable period of notice be given to terminate a contract. What is reasonable notice will depend on the circumstances of each case. There may be cases in which such notice will be more or less than 28 days’ notice.

SLC: 46(1)(b) Obligation: The licensee shall not enter into a domestic supply contract unless the domestic supply contract contains a term allowing the customer to

terminate at any time subject to paragraphs SLC 46(6) and (7), paying to the licensee on demand a termination fee.



REDRAFT


Matched

Respondents’ Views: In the July consultation Ofgem proposed that the requirement for suppliers to include terms relating to termination fees in domestic supply contracts, subject to the retained exceptions set out under SLC 46(6), should be retained. However, we said that the reference to SLC 46(7) should be removed as the restriction on the value of termination fees is proposed for removal. ScottishPower agreed that any reference to SLC 46(7) should be removed from the licence but did not support the retention of a requirement to include terms relating to termination fees where applicable. They argued that a supplier would need to include such terms if it wants to be able to rely on them upon termination of the contract. SSE said that it was in suppliers’ interests to provide customers with this information regardless of whether it was a licence obligation to reduce the scope for complaints and future disputes. They said that there was no evidence to show that, if this was no longer a licence obligation, suppliers would not provide this information in their contracts. Good Energy, E.ON and Centrica agreed that the obligation should be retained with the caveats set out by Ofgem in the July Initial Proposals.

Proposal: Ofgem continue to consider that suppliers should be able to charge termination fees in certain circumstances. The exceptions to these circumstances are set out in SLC 46(6) (with proposed modifications, discussed below). As noted below this obligation will need to be redrafted to remove the reference to the limit on the value of the termination fee set out in SLC 46(7). We propose to retain the requirement for suppliers to include terms relating to termination fees in domestic supply contracts where applicable. Such contracts are required to be in writing and we would expect them to be sent to customers to provide clarity on the termination fee arrangements.

SLC: 46(5)(a) Obligation: A termination fee shall not be demanded of a domestic customer where the domestic supply contract was terminated under any provision

of standard condition 47 (Termination of Contracts in Specified Circumstances);

REMOVE

Matched

Respondents’ Views: In the July consultation Ofgem proposed that this obligation should be removed from the licence. This would remove the licence restrictions on a supplier charging a termination fee if a customer terminated a contract without sufficient notice where they ceased to own or occupy premises. Given the other restrictions that are proposed to be retained in the licence this will only apply to customers on fixed term contracts. energywatch agreed that consumers, who entered into a fixed term contract and then chose to end that contract, should accept the consequences of that action. However they were concerned that customers who left premises and ended a fixed term contract were not always acting on a premeditated choice, for example, those forced to move because of house repossession, transfer to hospice or care home, etc. They may be in a vulnerable state and this should not be exacerbated by the possibility of having to face a termination fee. energywatch said that they would prefer suppliers to be obliged to have regard to SLC 35 (on dealing with customers in difficulty and detecting ability to pay) in determining whether a termination fee is appropriate. NEA said that it was unclear why Ofgem has decided to allow termination charges to be made when customers on fixed term contracts move house. They noted that a customer who was evicted

Proposal: SLC 47 sets out circumstances where domestic supply contracts terminate where they cease to own or occupy premises. We do not consider that suppliers should be prevented by the supply licence from seeking termination charges from customers on fixed term contracts who cease to own or occupy the relevant premises. Electricity does not, in this circumstance, appear to be sufficiently different from other products or services that may be contracted for at premises. Customers are free to consider the merits of the contract offered to them and the impact of termination fees and the likelihood of moving premises before entering into a contract. Where a customer moves premises they could potentially seek to enter into arrangements with suppliers at new premises to mitigate such charges. We propose to remove the prohibition on suppliers charging termination fees where a customer terminates their contract by ceasing to own or occupy their premises.



or whose home was repossessed could have financial hardship compounded by such a charge. ScottishPower said that suppliers should be able to charge termination fees in some circumstances, however this should be governed by general contract law and did not require sector-specific legislation. They considered that this obligation should be removed. Good Energy, E.ON and Centrica agreed that the obligation should be removed.

SLC: 46(5)(b) Obligation: A termination fee shall not be demanded of a domestic customer where the domestic supply contract was a domestic supply contract of

indefinite length and was terminated other than during a fixed term period.

REDRAFT


Respondents’ Views: There were mixed views on the 3 proposals Ofgem made in July in relation to this obligation. These proposals were: • Retain the general prohibition on termination fees for indefinite

contracts • Allow the Authority to specify certain circumstances where

termination fees could be charged for indefinite length contracts • Relax the prohibition on charging termination fees for fixed

term so that they are applicable to contracts of less than 12 months.

Professor Littlechild said that the prohibition of termination fees for indefinite term contracts seemed to be a draconian response to the uncertainty over whether Unfair Contracts legislation sufficiently protected customers and further detailed involvement by the Authority should be avoided. E.ON, Centrica and SSE did not consider that any part of this obligation should be retained. E.ON said that it was only a matter of degree how far suppliers have to hedge energy costs at the time of sale, between different types of contracts. There is therefore a similar exposure if market prices fall, whether the customer was on a fixed term period or not. SSE said that such an obligation was overly prescriptive and limited contract innovation between suppliers. If a customer believes that a termination fee was unfair, SSE argued that this could be referred to the Energy Ombudsman. ScottishPower commented that the proposal to allow the development of fixed term contracts of less than 12 months to which termination fees could be applied was a positive step that will give suppliers greater flexibility when devising new innovative products. energywatch opposed the use of termination fees for any indefinite term contracts and argued against the Authority being able to specify certain circumstances where this should be allowed. They were concerned that Ofgem had not given examples of what such circumstances could be; rather Ofgem had given an example of how disputes could be remedied i.e. by an ombudsman. energywatch

Proposal: We continue to consider that customer interests would be best protected by continuing to prohibit termination fees for contracts of an indefinite term, in our view, as there is a lack of certainty about when a termination fee would be disproportionately high under the UTCCRs for a contract of an indefinite term. We therefore propose that termination fees should be prohibited for contracts of indefinite length and those which have both a fixed term period and a indefinite term period and have been terminated during the indefinite term period. In our view it would be appropriate to include a provision within the licence that would remove the prohibition on the charging of termination fees in the circumstances designated by the Authority. A potential example of this could be where a statutory ombudsman was in effect and had the scope to resolve disputes over the reasonableness of the termination fee. We continue to consider that definition of a fixed term contract (a specific period of more than 12 months during which the principal terms may not be varied other than with the customer's agreement) should be relaxed to allow suppliers and customers to agree fixed contract terms of less than 12 months to which termination fees could apply.



Matched

was concerned that termination fees would create a barrier for consumers to changing supplier. energywatch disputed the Authority’s ability to create a definitive list of the circumstances in which it would be possible to charge, for example, how would a customer’s subjective decision to switch based upon poor customer service be dealt with. If Ofgem is suggesting that the Energy Services Ombudsman should be the arbiter, then energywatch would strongly question how Ofgem could divest itself of a prime statutory duty to protect the interests of consumers by handing such a role to an untried and untested scheme.

SLC: 46(5)(c) Obligation: A termination fee shall not be demanded of a domestic customer where the supplier notifies them, under SLC 44(6) (Notification of

Terms), of a unilateral variation of the domestic supply contract and the customer gave notice of termination in accordance with paragraph 7 of that standard condition


Matched

Respondents’ Views: E.ON said that the obligation should be amended so that a termination fee should only be prohibited if there was a material change in the principal terms. They said that suppliers should not be discouraged from bringing other contract changes to customers' attention under SLC44(6). energywatch, Centrica, Good Energy and ScottishPower agreed that the provision should be retained. ScottishPower questioned the wording of the obligation and commented that a notice of termination will only be valid where another supplier takes over supply of the premises or the premises are disconnected.

Proposal: Ofgem proposes to retain this obligation. SLC 44(7) allows a customer to transfer supplier and avoid a unilateral variation to their contracts in defined circumstances. As described above for SLC 44(6) and (7) we propose significant enhancements here to clarify how a customer can avoid the change to their contract terms. We do not considered that it is appropriate for suppliers to levy termination fees following a unilateral variation of terms (in accordance with the terms of the contract) and where the customer has provided termination notice as described in the proposed modified arrangements and switches supplier. In such an instance there would otherwise be an imbalance of rights where the customer is seeking to terminate the contract early in response to an unforeseen unilateral variation by the supplier and the termination fee levied by the supplier may unfairly prevent the customer from seeking better prices and terms from another supplier. In answer to the point raised by E.ON, this provision will continue to only apply when there has been a unilateral variation of the terms of a contract to increase the price or otherwise to the significant disadvantage of the customer. We consider that it is this test of materiality that is important rather than specifying in the licence which terms are being unilaterally changed. In response to the point raised by ScottishPower, the arrangements for customers being able to terminate a contract to avoid a unilateral change to their contracts terms (including price) are proposed for amendment. They have been significantly enhanced to clearly set out the circumstances where the unilateral contract change will not apply. The revised wording requires that a termination fee will not be chargeable following a unilateral change and where the customer has moved to another supplier within the timescales set out in the revised licence condition.

SLC: 46(5)(d) Obligation: A termination fee shall not be demanded of a domestic customer where the domestic supply contract was a domestic supply contract to

which SLC 47(3) (Termination of Contracts in Specified Circumstances) applied and the licensee did not, before entering into it, take all reasonable steps to draw the attention of the customer to the effect of the terms set out at that paragraph



REMOVE

Matched

Respondents’ Views: In July Ofgem proposed that this obligation should be removed. This had broad support from respondents.

Proposal: This obligation is linked to SLC 47(3). As set out below, we are proposing that SLC 47(3) should be removed from the licence. If this is done then any requirement for SLC 46(6)(d) falls away and this obligation can be removed.

SLC: 46(6) Obligation: Where a termination fee is payable, it shall be of an amount not greater than that which the licensee may in all the circumstances

reasonably require.

REMOVE

Matched

Respondents’ Views: There was broad support for Ofgem’s proposal to remove this obligation. energywatch acknowledged that the fairness of the amount of a termination fee appeared to be covered by the UTCCRs and therefore there may be no need to have a licence condition that duplicates that.

Proposal: We propose to remove this obligation from the licence. Ofgem considers that the limits imposed on the amount of a termination fee, particularly by the UTCCRs, are likely to provide sufficient protection to customers where termination fees are permitted i.e. for fixed term contracts. Under the UTCCRs, if, in terminating a contract, a customer is in breach of the terms of that contract, a termination fee that is a disproportionately high sum in compensation may be unfair. (The OFT have indicated in guidance about the UTCCRs that a requirement to pay more in compensation for breach than a reasonable pre-estimate of loss is one kind of excessive penalty.)

SLC: 46(7) Obligation: SLC 30 (Debt Blocking) shall not apply in relation to the supply of domestic customers.

REMOVE

Not matched

Respondents’ Views: Respondents supported the retention of the principle of this obligation.

Proposal: We propose to remove the need for this specific obligation through improved drafting. The proposed modified SLC 14 clearly sets out the different circumstances that suppliers will be permitted to block a customer transfer in the domestic market and the non-domestic market.

SLC: 46(8)(a) and (b)

Obligation: The current supplier shall not prevent a proposed supplier transfer for a domestic customer other than in the following circumstances – (a) for so long as the customer fails to pay charges for the supply of gas to those premises or any premises previously owned or occupied by him in respect of which such charges are payable which – (i) are due to the supplier and have been demanded in writing; and (ii) have remained unpaid for 28 days after the making of the demand; or (b) the proposed new supplier who has initiated the proposed supplier transfer has agreed with the supplier that the proposed supplier transfer has been initiated in error.


Not matched

Respondents’ Views: Respondents supported the retention of this obligation. E.ON said that the obligation should be redrafted. They argued that bad debt rates are increasing and it is also becoming increasingly clear that best practice in credit management is to act promptly (and sympathetically). They said that “A culture of '28 days to pay' is too long and objection should be permitted at the earliest of 7 days after a defined payment date, 7 days after a reminder or 28 days after a bill.”

Proposal: We propose to retain the current circumstances in which an objection may be made, but will keep them under review to ensure they operate in the best interest of customers. We do not consider that there is any evidence to support that the proposal made by E.ON is in customers’ interests. We consider that 28 days is a more appropriate period for customers to have received a bill, to have arranged for its payment, for that payment to be received by the supplier and for the supplier to have processed that payment. Shortening the time period to 7 days is also likely to increase customer complaints that they have been prevented from transferring unfairly by their current supplier.



SLC: 46(8)(c) and (10)

Obligation: The current supplier shall not prevent a proposed supplier transfer for a domestic customer where the customer states not to have entered into a contract with the proposed new supplier and has requested the supplier to prevent the proposed supplier transfer from taking place. Where this provision applies and the supplier has agreed to prevent a proposed supplier transfer at the request of a customer, the current supplier shall – (a) keep evidence of the customer’s request and reasons for the request for at least 12 months, and (b) at the same time as making the request to its shipper to prevent the proposed supplier transfer, inform the proposed new supplier that the objection has been raised at the customer’s request and of the reason given by the customer.

RETAIN Modified SLC 14.4 (part) and 14.7

Not matched

Respondents’ Views: Respondents supported the retention of this obligation. E.ON said that they were uncomfortable with domestic customers, who responded to winback activity, being put through the hassle of two changes of supplier, but accepted that a change to allow objection on the basis of contract is outside the scope of the supply licence review.

Proposal: We propose to retain these obligations in the licence to allow suppliers to prevent erroneous transfers when it is clear that the customer has not entered into a contract with an alternative supplier.

SLC: 46(8)(d) Obligation: The current supplier shall not prevent a proposed supplier transfer for a domestic customer other than where the consumer is bound by

the provisions of a contract with the supplier for the supply of gas at those premises which will neither expire nor, to the knowledge of the supplier, be terminated on or before the date of the proposed transfer, and that contract is of a kind specified in a direction issued by the Authority.


Not matched

Respondents’ Views: Those respondents that responded supported our proposal to retain this obligation.

Proposal: This condition is necessary to support the energy services trial and will be retained. See discussion below on SLC 46(15) and (16).

SLC: 46(9) Obligation: Where any of the circumstances referred to in SLC 46(8) apply the supplier shall at the same time as making that request to its shipper to

prevent the supply transfer, send notification to the customer that it has made a request to prevent the proposed supplier transfer, the grounds for the request and how the customer may dispute or resolve such grounds.


Not matched

Respondents’ Views: Respondents that responded supported our proposal to retain this obligation.

Proposal: We propose to retain this obligation. It is important to notify to the customer that an objection has taken place to that they can seek to resolve the reason for the block on their transfer. Because it is important that this information is received in a timely fashion so that the customer can seek to redress the reasons for the objection quickly, we propose to clarify it should be provided as soon as reasonably practicable. We believe that this is a more proportionate obligation than having to send the notice to customers at the same time that they request the shipper to make the objection on their behalf.



SLC: 46(11) to (14)

Obligation: Under SLC 46(11) the supplier shall not prevent a proposed transfer in relation to any domestic premises at which the licensee supplies gas to a domestic customer through a prepayment meter as long as the customer and the other supplier agree to the assignment of the charges which remain outstanding to the licensee. Under SLC 46(12) a statement of the arrangements for assignment of the charges (known as the ‘Protocol’) shall be prepared by the supplier in conjunction with other licensed gas suppliers and shall be submitted within two months after this condition takes effect in this licence to the Authority for its approval. SLC 46(13) states that the Protocol shall come into effect on February 2, 2004 or within four months of the grant of this licence, which ever date is later, and shall not be amended without the approval of the Authority. Under SLC 46(14) the supplier may prevent a proposed supplier transfer for so long as the charges assigned or to be assigned to the licensee in accordance with the ‘Protocol’ have not been recovered by the licensee from the domestic customer.


Not matched

Respondents’ Views: In the July consultation we proposed to remove obligations from the licence on PPM debt assignment where they were not necessary as they were adequately covered by the SPAA. Centrica, SSE, E.ON and ScottishPower agreed with Ofgem’s proposal. E.ON commented that, although the debt-assignment rules were underused by customers, the current campaign by consumer groups to reduce PPM costs highlights the importance of ensuring that there no obstacles to PPM customers changing supplier. energywatch did not support the removal of this obligation from the licence. They said that, despite the efforts of some suppliers, PPM was one of the most expensive methods of paying for energy especially for those consumers on low or fixed incomes. They said that there was merit in debt assignment and they were concerned that consumers had not sought to take advantage of this facility because of a lack of awareness or the complexity of the scheme itself. The fact that there has been a low take up, they argued, was not a reason for removing it from the licence. energywatch said that Ofgem should review the scheme and encourage suppliers to seek to improve consumer awareness and ensure that the scheme is as easy and accessible for consumers as possible. RWE npower did not agree that this obligation should be retained in any form. They said that, as so few customers had availed themselves of this process, they saw no reason for it to be continued, either as a licence condition or as part of the SPAA.

Proposal: In the July consultation we proposed to remove these obligations where they were adequately provided for in the SPAA. We have reviewed the obligation further and consider that a hook to prevent objections when there is agreement to assign PPM debt is required in the licence. The prohibition and permission to object is set out in the licence and this could not be overridden by a clause set out in the SPAA that deals with the protocol for PPM debt assignment. We propose that the detail of the PPM debt assignment process should reside in the SPAA.

SLC: 46(15) and (16)

Obligation: Under SLC 46(15) the Authority may issue a direction relieving the licensee of its obligations under SLC 46(1) to such extent and subject to such terms and conditions as may be specified in the direction. The Authority may amend the direction from time to time. SLC 46(16) sets out that SLC 46(8)(d) and (15) shall cease to have effect on 1 April 2006 (the “termination date”) unless prior to the termination date the Authority issues a direction providing for the continuing effect of these paragraphs. Any direction issued by the Authority may be subject to such terms and conditions as the Authority considers appropriate, and may be amended by the Authority from time to time.

REMOVE/ EXTEND

Respondents’ Views: Respondents generally agreed that this obligation could be removed. Centrica did not agree. They said that if any restrictions on when

Proposal: We propose to remove the ability of the Authority to issue directions relieving the supplier of their obligations under SLC 46(1). Obligations under SLC 46(1) on termination notice have been removed from the licence. On



Modified SLC 14.8

Not matched

termination fees can be levied, over and above those under normal consumer protection law, are to be retained then it would seem appropriate to retain the derogation provisions.

termination fees we have proposed a power for the Authority to direct the circumstances in which the restrictions imposed by the licence on termination fees will not apply. (See modified SLC 24.4.) The effect of SLC 46(16) is that the provisions under SLC 46(8)(d) for the Energy Services Trial have fallen away as of 1 April 2006. We propose to reintroduce the provisions of SLC 46(8)(d) in the modified licence. We propose to reintroduce this with a sunset clause so that the obligation will expire on 1 April 2008 unless, prior to the termination date, the Authority issues a direction providing for the continuing effect of that paragraph for a further period of time. Our proposal will allow the Authority further time to evaluate the potential benefits to customers of allowing them to enter into long-term contract, enforced through the objections process, to promote the use of energy efficiency measures.

SLC 47: Termination of Contracts in Specified Circumstances

SLC: 47(1) and (2)

Obligation: Under SLC 47(1) the supplier shall not enter into a domestic supply contract unless the domestic supply contract provides that it will terminate: a) on the date on which the domestic customer ceases to own or occupy the relevant premises, having given the supplier at least 2 working days’ notice of that date; or b) where the domestic customer has ceased to own or occupy the premises without giving the supplier such notice, on the first in time of: i) the second working day after the domestic customer has given notice to the supplier; ii) the next date on which the meter is due to be read; and iii) the date on which gas is supplied to the premises, by the licensee or another gas supplier, under a domestic supply contract or deemed contract with a person other than the domestic customer. Under SLC 47(2) requires that each domestic supply contract shall provide that, where terminated by virtue of a term included in the domestic supply contract in compliance with SLC 47(1), the domestic customer shall remain liable for any charges for the supply of gas until the date of termination.

RETAIN/ REMOVE


Matched

Respondents’ Views: Respondents generally agreed that this obligation should be retained in the licence. SSE however said that it was not necessary. They argued that it was in suppliers' interests to provide for this in their contracts with customers whether or not it was required as a licence obligation. In doing so suppliers would reduce the scope for future disputes and customer complaints.

Proposal: Ofgem considers that the contract should clearly specify circumstances under which it will terminate to provide clarity on the liability for the energy consumed. Such circumstances must include those prescribed by the licence but may include other circumstances agreed between the supplier and the customer. Apart from SLC 47(1)(b)(ii) and (iii) we propose to retain the provisions currently set out in SLC 47(1) and (2) to clearly set out customer liability for energy consumed where they cease to own or occupy premises. We propose to replace SLC47(1)(b)(ii) and (iii) with a more clear obligation for the contract to terminate on the date on which any other person begins to own or occupy the premises and takes a supply of gas at those premises.

SLC: 47(3) Obligation: Any domestic supply contract which –

a) provides for the licensee to supply gas for a specified period of more than 12 months; or b) contains an initial fixed term period (as defined in standard condition 31 (Interpretation of Section C)), shall provide that it may be terminated immediately by the customer at any time within 5 working days of the date of the domestic supply contract.



REMOVE

Matched

Respondents’ Views: Respondents agreed that this obligation should be removed. energywatch accepted that SLC 47(3) could safely be removed as it was less stringent than the current Distance Selling and Doorstep Selling Regulations. energywatch said that in practice it wanted to see suppliers embrace the spirit as well as the letter of such regulations and make consumers fully aware of these rights.

Proposal: The supply licence requires that fixed term domestic supply contracts of a period greater than 12 months or that contains an initial fixed term period (where the principal terms do not vary) of more than 12 months may be terminated within 5 days of the date of the contract being entered into. We believe that customers should have this right but consider it to be adequately covered by existing customer protection legislation (the Consumer Protection (Distance Selling) Regulations 2000 and Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987 (the “Doorstep Selling Regulations”)). We propose that this licence provision can therefore be removed.

SLC: 47(4) Obligation: Where a domestic supply contract is for both the supply of gas and the provision of goods or services:

a) any reference in SLC 46 (Termination of Contracts on Notice) and 47 (Termination of Contracts in Specified Circumstances) to its termination is a reference to its termination in respect of the supply of gas alone; and b) on its termination by virtue of any provision of SLC 46 and 47, the licensee may require the domestic customer to give any reasonable security for his future compliance with those aspects of such contract as relate to the provision of goods and services.

REMOVE

Matched


Proposal: We propose to remove the right of suppliers to demand security for the ongoing provision of other goods and services once the energy part of the contract has been terminated. It is not clear why this should be stated in the licence for the supply of gas. Further, the licence does not confer any particular sanction for the supplier in relation to the energy part of the contract should the customer refuse to pay security required for other goods and services (although this obligation would have linked to the standard licence conditions that were in effect at the opening of the domestic market to competition. At that time, a supplier was permitted to object to a customer transfer where the contract had not expired or been terminated. This provision was subsequently removed form the standard conditions). The UTCCRs may limit the amount of any security demanded by suppliers.

SLC: 47(5) Obligation: Where a domestic customer terminates a domestic supply contract or ceases to take a supply by way of a deemed contract with the

licensee for the supply of gas, the licensee shall not: (a) exercise any right to recover any meter owned by the licensee at, or by reason of, the termination of such domestic supply contract or the cessation of supply by way of a deemed contract, or (b) authorise any of its officers to enter the domestic customer’s premises for the purpose of removing any such meter (whether under paragraph 10 of Schedule 6 to the Act or otherwise), in the event that another gas supplier undertakes prior to the date of such termination or cessation to make an arrangement with the licensee on terms that the licensee receives such compensation (if any) as may be appropriate having regard to the value of the meter

REMOVE

Matched

Respondents’ Views: In the July consultation Ofgem considered that this obligation should be removed. Bizz Energy argued that at the moment the supplier does not worry about the provision of these essential services. They are provided on a rental basis on published terms. If the responsibility moves to the supplier, small suppliers would be put at a considerable disadvantage and it may even threaten the viability of their businesses. It would be potentially very damaging to a new supplier

Proposal: This obligation ensures that the licensee does not remove the meter where the consumer switches to a new supplier and the new supplier is willing to pay compensation related to the value of the meter. Arguably the scenario is dealt with by the regulation of the circumstances in which a disconnection can be effected, since removing the meter would result in a loss of supply. We discuss our current view that we do not need to retain a meter provision obligation in Chapter 6 “Metering Provision”. We therefore propose to remove the obligation. A supplier must ensure that a suitable meter is substituted in



if the provision of the hardware became their responsibility. Good Energy also disagreed with the proposal to remove the obligation and said that the old Supplier should not be able to remove its meter until the new Supplier has installed a replacement meter. Even if the meter installation/removal was arranged for the same day, it could still leave the customer with no supply for several hours. Removal of this obligation poses a risk to customer supply and to competition if stories hit the press of people losing supply when switching supplier. Centrica, E.ON, ScottishPower and SSE agree with the proposal to remove this obligation. ScottishPower said that a balance must be maintained to ensure that metering does not detriment retail competition, with customers being locked into exclusive metering arrangements. SSE said that they support the removal of this obligation as it was in their interests to ensure that the meter is substituted if the old supplier wishes to remove the meter.

place of a meter that the old supplier wishes to recover.

SLC 48: Marketing of Gas to Domestic Customers

SLC: 48(1) to (13)

Obligation: This condition sets out requirements for the sale of contracts to domestic customers. It deals with staff selection and training, contact with customers after contracting with them, compensation under complaints procedures, reporting on compliance, prohibition of advance payments, managements arrangements as well as arrangements for this condition to terminate on 31 March 2008 unless this date is extended by the Authority.

REDRAFT/ REMOVE Modified SLC 25.1 to 25.14

Matched

Respondents’ Views: In the July consultation Ofgem said that the marketing licence condition was out of scope of the SLR. We therefore did not request any specific responses on this.

Proposal: Ofgem have further considered the provisions of SLC 48 and are now proposing to make the following changes: • Update the language and style used in the condition so that it better

reflects that used in the modified standard conditions. • Amend SLC 48(10) to remove the prohibition on suppliers accepting

contracts from third party agents where the customer has paid for this service and where payments were received from customers prior to 27 January 1998. This provision was introduced in response to a particular set of circumstances where a third party agency had taken such payments with the promise of securing a preferable price with a licensed supplier. It allowed for the contracts of customers who had entered into such arrangements to be executed but to prohibit this practice going forward. The reason for this provision has therefore now passed. The general prohibition in SLC 48(10) will remain.

• Remove the requirements set out in SLC 48(7) to keep a record of compliance, in SLC 48(8) to provide a quarterly marketing report to Ofgem and energywatch and on request to any person and in SLC 48(9) to present the report in a prescribed format. Ofgem would only expect to require this information from suppliers in relation to an enforcement matter and would use its statutory information gathering powers to do so. energywatch have also confirmed that they would be content for the obligation to be removed.

SLC 48A: Transfers of Domestic Customers of a Supply Business



SLC: 48A(1), (2) and (3)

Obligation: SLC 48A(1) requires that the supplier shall not transfer all or part of their domestic supply business to another person unless: The Authority is satisfied that it will be transferred to another person that is (or will be) licensed and will have the technical and financial capability to comply with its licence conditions; and if the supplier’s licence has additional licence conditions which affect the transferred business, and in the opinion of the Authority are required to protect the interests of domestic customers, the new supplier has given the Authority consent to modify its licence in a similar way and the old supplier has given the Authority consent to modify its licence if necessary. In both instances, consent must be given within a time period that will allow the Authority to make the modifications to the licences prior to the proposed transfer date. SLC 48A(2) notes that this SLC does not prevent a supplier from transferring all or part of its business if it is also transferring its licence either generally or so far as relating to the premises in accordance with section 8AA of the Gas Act. SLC 48A(3) defines the term 'additional conditions'.

REMOVE

Not matched


Proposal: This condition was originally put in place in circumstances where suppliers had significantly different obligations in their individual licences. Notably, BGT had conditions which related to price control arrangements. Now that supply price controls no longer apply this condition is not required and we propose that it is removed. We consider that competition is now sufficiently developed that any original concerns about technical and financial capability of new entrant supplier there may have been at market opening are now no longer an issue.

SLC 49: Assignment of Outstanding Charges

SLC: 49 (1) to (4)

Obligation: This condition sets out detailed procedures for the circumstances when the new supplier will be required to accept the debt of a newly acquired customer and pay the value of the debt, less their reasonable administration costs to the old supplier where the old supplier has made reasonable efforts to recover this debt from the customer but has failed. Charges that are genuinely in dispute (excluding those that relate to the volume of gas shown on the meter register when the old supplier ceased to supply the customer) are not assignable and charges do not include those for the provision of a gas meter.

REMOVE

Not matched

Respondents’ Views: Respondents agreed that this condition should be removed from the licence. energywatch agreed that this should not be an obligation and that suppliers were capable of reaching bilateral agreements about whether these debts could be transferred.

Proposal: We propose to remove this obligation from the licence. Whilst some attempts were made to employ this condition at market start-up, it is not now used. Suppliers reported that it was administratively costly and not reliable. Suppliers who wish to use equivalent arrangements are free to consider bi-lateral agreements.

SLC 50: Modification of Provisions under Standard Condition 49 (Assignment of Outstanding Charges)

SLC: 50(1) and (2)

Obligation: SLC 50(1) provides that the Authority may remove the provisions of SLC 49(2) in relation to any particular class or case of customer where it is clear that the operation of the relevant provisions: a) does not significantly reduce the number of unrecovered debts otherwise to be expected; or b) involves expenditure in debt recovery which is less than the reduction in the value of unrecovered debts which it achieves. SLC 50(2) provides for the provisions of SLC 49(2) to take effect again if the circumstances change and the justification for the misapplication no longer remain.

REMOVE

Not matched

Respondents’ Views: Respondents agreed that these obligations should be removed from the licence.

Proposal: We are proposing to remove these obligations from the licence in line with the removal of the SLC 49 to which they relate.



SECTION D: SUPPLY SERVICE OBLIGATIONS SLC 51: Interpretation of Section D

SLC: 51(1) Obligation: This condition sets out a series of definitions that are used exclusively in Section D of the licence

REMOVE Respondents’ Views: This SLC was not commented on by

respondents. In the July consultation we commented that this licence condition would be considered under the next stage of the project which will review legal drafting issues

Proposal: We propose to remove this licence condition and the definitions contained within it as we propose to remove all of the licence obligations that are currently in Section D of the gas supply licence.

SLC 52: Regulatory Accounts

SLC: 52 (1) to (10)

Obligation: Where Part D of the licence is in effect, the licensee (and any affiliate or related undertaking) to maintain accounting and reporting arrangements which enable annual regulatory accounts to be prepared for each separate business and showing the financial affairs of each such separate business.

REMOVE

Matched

Respondents’ Views: Respondents considered that this obligation should be removed.

Proposal: For the reasons stated in the July consultation we propose that SLC 52 be removed from the supply licence. Suppliers are required to prepare annual audited statutory accounts under the Companies Act 1985.

SLC 52A: Change of Financial Year

SLC: 52A (1) to (6)

Obligation: Where Part D of the licence is in effect, the licensee may change the date from which, for the purpose only of the statutory accounts of the licensee, the current and subsequent financial years of the licensee. The condition also requires the licensee to procure the preparation of and delivery to the Authority of audited group accounts for its group of companies for each financial year.

REMOVE Matched

Respondents’ Views: Respondents agreed with Ofgem’s proposal to remove this condition. SSE commented that this was consistent with the proposal to remove SLC 52.

Proposal: SLC 52A is linked to SLC 52 which we are proposing should be removed. We therefore propose that SLC 52A is also removed from the supply licence.

SLC 53: Not used

SLC 53A: Not used

SLC 53B: Not used

SLC 53C: Not used

SLC 54: Not used

Appendix 7 - Detailed Gas Supply SLC Proposals and ...€¦ · Office of Gas and Electricity...

Documents

Transcript of Appendix 7 - Detailed Gas Supply SLC Proposals and ...€¦ · Office of Gas and Electricity...