Ofgem has rejected, in its current form, a modification to the Smart Energy Code (SEC) which is designed to improve smart meter data sharing between energy retailers and third parties.
The modification, MP219, is intended to allow third parties to access energy consumption data without obtaining the customer’s unambiguous consent, which proposer Matthew Roderick, founder and chief executive of digital services company n3rgy, says brings the rules in line with GDPR.
Yet Ofgem has pushed back on the proposals, saying that it is unable to form an opinion based on the evidence submitted by the SEC Panel, a move which Roderick believes will impact the number of customers participating in the demand flexibility service (DFS) this winter.
In a letter to Smart Energy Code Panel chair Angela Love, the regulator’s head of retail market operations Michael Walls explained the reasoning behind the decision to send back the SEC’s final modification report (FMR).
This included the fact that Ofgem considers it has not been provided with:
- A sufficient level of evidence regarding the issues that the modification is trying to resolve;
- The impacts on Data Communications Company (DCC) network traffic;
- An understanding of how the current processes are insufficient, and;
- How the safeguards for consumers provided by the current process will be protected if this modification is implemented
He added: “Given the significance to the consumer protections these changes are affecting, we would expect to see them in a more developed manner in an updated FMR to ensure that there is a specific obligation on employing parties to notify energy consumers prior to the Other User accessing their consumption data. However, within the FMR, the changes to the PCF (privacy controls framework) are noted in draft form. We do not believe they have been sufficiently developed to inform our decision-making.
“In addition to this, we would also like to see detailed explanations of how any type of unauthorised access to this data is handled and how ultimately this will be reported on. An example would be where an energy consumer has switched suppliers and is no longer covered under the agreement.
“We would like to fully understand how this type of scenario would be handled and when it would be reported to the energy consumer, Information Commissioner’s Officer (ICO), SEC Panel and the Authority. We need to fully understand how the consumer is protected in this modification from start to finish.”
Walls ended the letter by suggesting that after addressing the issues highlighted, and revising the FMR, the SEC Panel should resubmit it to the regulator for a decision “as soon as practicable”.
Speaking to Utility Week in response to the decision, Roderick expressed his dismay with the outcome.
He said: “It’s quite disappointing, as this modification would simply allow standard and accepted GDPR mechanisms to be supported. That is, the mechanism for the Data Controller – in this case the energy supplier – to be consented through the end consumer to employ a third party that processes data through a Data Processing Agreement. That’s effectively all it is. That standard mechanism is enshrined in GDPR, but conversely is being denied within the UK’s current energy system regulation. Indeed, the primary purpose of this modification was to get the energy system regulation to align with GDPR and that has now been pushed back by Ofgem.”
Roderick warned that without MP219 in place, consumers will be “forced to jump through a series of unnecessary hoops” to prove their identity.
He added: “That’s essentially the challenge we’re facing now. Whilst consumers can still feasibly participate in the DFS without this modification taking effect, it just makes the process a lot more difficult for them.
“As we know, energy consumers don’t like jumping through complex, industry-specific hoops which they see as pointless; they’ll just give up and not bother. But if we make it really easy for them to say yes, and are still compliant with general data protection laws, then there can be significant savings or cash back available to them through schemes such as DFS. That’s not to mention the benefits available to the system as a whole through enabling greater consumer participation.”
An Ofgem spokesperson said: “Ofgem has not rejected the proposal but asked for further information so we can ensure any changes are in the best interests of consumers. Once we have this information, we will continue the application process.”