Reforms to code arrangements allow us to keep up our work to improve services

By Peter Stanley, Elexon Chief Executive.

Ofgem announced the next steps for the much-awaited reforms to the energy code arrangements at the end of January. The Energy Act 2023 conferred on Ofgem a new strategic oversight role to support the Government’s energy policy priorities, backed up with powers to license code managers. The code managers will coordinate and prioritise changes across the codes, responding to strategic direction statements that Ofgem will publish annually from 2025.

Ofgem proposed a single electricity commercial code, and a single electricity technical code, and has stated that the Balancing and Settlement Code (BSC), the Retail Energy Code (REC) and the Smart Energy Code should each remain as standalone codes. The transitioning of the BSC and the REC to the licensed code manager regime will be prioritised in phase one of the new arrangements. Any central system that is related to a code will become a ‘designated central system’ as part of the reforms. We agree with this as Elexon is already ‘vertically integrated’ given we are a code manager and delivery body for the BSC central systems.

In summary, Elexon welcomes the reforms as overall we need to make the codes simpler for all energy stakeholders to navigate so that the codes are not a blocker to any company or person that wants to trial a new concept or deploy innovation.

Early transition will help us to deliver with more agility and speed

Elexon takes a proactive, inclusive and collaborative approach to managing the BSC. We believe that we already embody much of what is expected of the licensed code manager role. Being first in the queue to be licensed as a code manager is very positive for us. We can move quickly to align our objectives with Ofgem’s strategic vision, while still maintaining our accountability to our customers. The reforms give us an early opportunity to work with Ofgem to shape best practice, which can be applied to the licensing of the other code managers.

Having a light-touch, outcome-based licensing regime is good for our customers and the sector . We will have the autonomy to get on with improving our services and delivering our major programmes, such as Market-wide Half Hourly Settlement, at pace. We will also be on hand to provide swift support for the next stages in the energy transition, which include progressing digitalisation and implementing the REMA outcomes.

BSC Panel is a best practice model for the stakeholder advisory forums

Ofgem has further developed its views on replacing code panels with stakeholder advisory forums that have a fixed membership of impartial code party representatives, alongside paid members that are independent of industry.

Ofgem recognises the BSC Panel as a best practice model to follow, and we obviously support this option. It is the best way to make sure that Elexon retains access to vital industry expertise while providing consistent and balanced representation among electricity companies, consumer groups, academics and independent consultants.

Working to meet the expectations of a licensed code manager before the reforms are live

Ofgem’s consultation will close on 24 April and later this year it will consult jointly with the Government on secondary legislation and the licence conditions for code managers. Overall, the proposals provide the clarity and direction needed for finalising the reforms.

Ofgem expects that by the end of 2025, the supporting legislation and licence conditions will be in place, which will give code administrators and the industry time to prepare. Our commitment to BSC Parties is that where possible, we will start to align our ways of working towards Ofgem’s definition of a code manager before the reforms are live. This is so we can live up to expectations of the role for the benefit of all BSC stakeholders.

Contact Information

Communications Team
[email protected]


Please let us know if you cannot access this information or need it in an alternative format.
[email protected]