(MM) Wholesaler 'Check' Reads
Updated: Apr 26, 2019
This is part of our Missing Market series for suggested additional transactions and actions
Self-supply and the risk of self-reading
I’ll take James Acaster’s advice and preface with “Just playing Devil’s Advocate”... (see his 'Repertoire' show on Netflix). And this is in no way referencing any of the current self-suppliers in the market. It is more a theoretical point, having heard concerns on this in a few quarters now.
The hypothesis
Ok, so the premise is this: a wholesaler should be able to read a meter at a self-supply property if it feels it is necessary to do so and submit that to the central systems for use in Settlement.
The context
Most of the time, retailers (whether standard or self-supply) provide reads to MOSL's central system, CMOS. Wholesalers provide reads when they do certain work - such as install, removal, disconnection and reconnection - but they are not required or even allowed to provide cyclical, 'non-event' reads. Retailers may read the meters themselves or take customers' own reads. There are standards of service around the frequency and timeliness of doing so. For self-supply retailers, retailer and consumer are the same organisation, clearly.
What's the problem?
The prevailing wisdom is that self-suppliers tend to be high consumers and hence have a lot of scope to save. Consumption reduction is thus expected and that, of course, is a good outcome all round. Add to that the opportunity to pay wholesale prices, it makes perfect sense, right?
But it has always been true that fewer units consumed means lower overall cost.
Yes, the competitive market may increase the quality and diversity of usage management services but if you stand to save, say, 100000s of litres each year, the economic case for actively managing consumption was always there before and without April 2017.
The risk is this: if a self-supplier consistently understates its readings it can reduce its wholesale charge, with no intermediary agency and no real threat of switching that might expose the issue (except in portfolio businesses where sites are divested from time to time). Reduction is expected and hence understating usage may not sound any alarm bells.
Any other site can do that of course but it would probably need some kind of retailer support over the long-run. Would anyone do this? Perhaps its unlikely at a corporate level but there may be some ‘rogue’ sites in a group, especially one with something akin to a franchise model.
What's the idea?
That wholesalers take a read if they believe consumption to be ing understated - and be allowed to submit that for use in Settlement.
Clearly, going to the effort of taking a read incurs cost and should not be an habitual thing by wholesalers but if they do suspect something in this space, should they not have the opportunity to do something fairly simple about it? There would need to be some rules around this and probably with a minimum lapse period since its last check, of course.
There are calls for wholesalers to submit reads whenever they have them but perhaps this specific case could be considered for use in settlement even if certain other wholesaler 'non-event' reads get treated as being for information only.