Elexon’s response to consultation on code manager licensing and secondary legislation

Elexon reception

Elexon has published its response to the consultation by Ofgem and the Department for Energy Security and Net Zero (DESNZ) on code manager licensing and secondary legislation. 

The joint Ofgem and DESNZ consultation proposes the high-level contents of the licence for code managers and includes proposals for secondary legislation to support Ofgem’s code manager selection processes.  

This latest consultation,  (which closed in May,) followed Ofgem’s consultation on implementing the industry code governance reforms set out in the Energy Act 2023, which Elexon responded to in April.  

Elexon supports supports code bodies to be licensed, under a forward-looking framework to support new market arrangements as the sector transitions to Net Zero.

Our views on the consultation 

Code Manager Selection

  • Elexon supports the proposal that selecting current code bodies would be the best option, where the existing code administrator is performing well
    We also support the general factors identified as selection criteria (speed of delivery and value for money).
  • However, the experience and expertise to meet the eligibility criteria (currently a ‘subsection’ of the speed of delivery criterion) should be regarded as a separate factor, and adequate weighting should be given to it.
  • We believe that the benefits of granting a licence on an enduring basis far outweigh the potential risks. An enduring licence will provide longer term certainty and stability for both the code manager, the stakeholders, and the energy industry, which is already enduring a significant amount of change.

Light touch licencing regime

  • The code manager licensing arrangements should be light touch, and outcomes based. This will help to support code managers to take on additional roles in future, should they choose to do so.

Forward-Looking Framework

  • The new arrangements must be forward-looking and adaptable to the changes that will affect the sector in the coming years. This includes Market Wide Half Hourly Settlement (MHHS) and reforms that will result from the Review of Electricity Market Arrangements (REMA).

Not-for-profit requirement

  • Elexon supports the proposal that licensed code managers will be required to carry out their core regulated business on a not-for-profit basis as this will ensure they will focus on the best outcomes under the code.

Best practice

  • Best practice among code bodies which is proven to be working well should be retained.

Setting the Budget for Code Managers

  • Elexon is supportive of the proposal that Code Managers will set their own budget ahead of the year. However, the proposed licence condition looks overly detailed and prescriptive, and we will engage with DESNZ and Ofgem to discuss alternative budget timeframes and share our views on the licence being ‘light touch’.

Code manager incentivisation

  • We agree with the proposal that performance incentives will be reputational, without revenue at risk.

Role of the Stakeholder Advisory Forums (SAFs)

  • We support Stakeholder Advisory Forums playing a role in code body processes. More clarity is needed on what the Stakeholder Advisory Forum’s (SAF) role will be in the decision-making and appeal process for changes to code rules.

Financial and Operational Controls

  • Elexon believes that our existing annual business plan process which sets a first-year budget and gives indicative numbers for the second and third years, and consulting on the plan with stakeholders would continue to provide an excellent framework for the control and ambition of the licensed activities.

Code Maintenance and Modification

  • Elexon supports Ofgem’s proposal of including a standard licence condition that requires code managers to have in place and maintain the relevant code. The code manager will be responsible for the governance of the code, and we believe that our governance processes for the BSC have been  efficient since the BSC went live in 2011.

Conflicts of Interest and Independence

  • Elexon would prefer a more flexible approach that is not overly restrictive of licensed activities. We welcome Ofgem’s option of exemptions, but we would prefer a process that allows Ofgem to approve exemptions without needing a licence change, or potentially even a BSC Modification, to support effective processes that enable efficiency.
  • We think it is important that code managers have flexibility to respond to the changing electricity market in a more agile way, which will support more innovation. We believe that Ofgem could include a condition in the licence to expressly authorise a code Manager to provide services other than the licensed activity.

Read our response in full

Elexon’s response to consultation on code manager licensing and secondary legislation

Next steps

Under the original timescales for the consultation, the next steps will be for the Government to publish a response including a summary of the responses received. Later this year the Government then planned to publish a full set of draft licence conditions, and associated policy proposals for consultation.  

Given Prime Minister Rishi Sunak’s announcement on 22 May, calling for a general election on 4 July 2024, we also note that milestones within the original timeline envisaged by Ofgem and DESNZ may change due to the general election and pre-election period.. 


Contact Information

Communications Team
[email protected]


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