Important: De-aggregation of all Gas Supply Points – MOD0428 – UPDATE

What’s an aggregated gas supply?

Aggregated gas supplies are created when two or more meter points are joined together to form one supply point, and are billed and priced together. In the past, aggregation was generally allowed when meter points were used by the same person or business for the same purpose, and they shared the same postcode.

What’s changed?

In 2013 Ofgem, the energy industry regulator, announced that the rules on aggregated gas supplies were changing. From April 2014, no new aggregations could be created and by 01 July 2015, all existing aggregations will need to be split into single supply points. This process is known as de-aggregation. It is a mandatory and legal change that will impact all energy suppliers and all customers with an aggregated supply. This change is referred to in the industry as Modification 428.

Why is the change needed?

Some customers with aggregated supplies currently get reduced transportation charges as the more gas that’s used by a supply point, the cheaper the transportation charges tend to be per kWh. The industry believe this should lead to more cost-reflective transportation charges for all meter points and therefore for all customers.

What does this mean for gas accounts?

For multiple gas supply sites, each meter will have its own bill and its own standing charge. This could result in higher costs, more paperwork (as each supply will now be billed separately) and more work required at contract negotiation time.
Transportation charges typically represent around 16% of the overall bill, so they can be significant – especially when considered along with the volume discounts which could potentially be lost. The suppliers have assured us this is not an opportunity for a price hike but ultimately there will be winners and losers. The process of de-aggregating will cause problems to the suppliers systems and mistakes will inevitably be made, especially on longer term contracts where the impact is greater. Those that start as aggregated meters will have to change mid contract to de-aggregate meters so these will need to be monitored closely to ensure historical data and prices are correct. Some suppliers have suggested they will simply take the current standing charge and divide it by the number of meters initially making it clear and transparent for the remaining term of the current contract. We haven’t seen any evidence of this as yet though so we’ll wait to see if this becomes the adopted approach.

What’s happening now for Zenergi customers ?

For most of the suppliers it appears this project is still not even out of planning stage, however one of the “Big 6” Scottish and Southern have taken the initiative to implement the changes first and are forging ahead as we speak. Any new prices offered since the beginning of the year are including the de-aggregation and new standing charge costs and we are then being given dates for when the Invoices will be split out in their billing system. Unfortunately as with any change on this scale Scottish and Southern are experiencing some issues on individual accounts and in some instances suspension of bills has been necessary until it is all complete.

At Zenergi we have a plan in place to amend our system and processes, however none of this can be done until the supplier instigates the change so for once we are unfortunately having to be reactive but we have no choice. As soon as the new invoices are received we will separate out each meter, contract, price and invoice within our system and then commence bill validation as normal so this should not result in a delay of anything more than a couple of days from the time the supplier provides the information.

There is a chance each supplier will approach this differently based on the discussions we have had already, however once we know more and start to see the reality of it we will of course let you know. If you have any questions in the meantime or require some information specific to your site, your Customer Account Manager will be more than happy to help you of course