We are pleased to provide an early estimate of RECCo’s 2023-24 rebate, which is projected to be in the region of £9.5 million. The final value will be confirmed in our statutory audit, due to complete in Summer 2024. This rebate will be returned to Parties as a reduction against October 2024 invoices.
We achieved cost savings across our 2023-24 programmes
Our Forward Work Plan last year focused on:
- Ensuring REC Services are delivered on time, on budget and to the quality standard required and that there is a clear plan for their evolution and reprocurement as necessary;
- Delivery of REC components of the MHHS programme;
- Data and Digitalisation strategies including the facilitation of Consumer Controlled Data and Consent;
- Theft Reduction Strategy initiatives; and
- REC policy initiatives to support market development.
In line with our commitment to delivering economic and efficient services, we achieved savings in each of the above areas. Some of these were realised through cost savings in delivering our services and projects, whilst others were due to changes in project timelines. For example, certain Market Wide Half Hourly Settlement (MHHS) development work planned for the latter part of 2023-24 was deferred to 2024-25.
Moreover, we were diligent in our credit control processes. This involved making sure that all non-REC Parties using the REC services were billed for their usage, implementing proactive credit control to minimize unpaid debts, and recovering approximately £450,000 in service credits from service providers due to their non-adherence to performance standards.
We did not spend the budget allowances set aside for Consumer Consent and Smart Secure Energy System projects due to our commitment not to spend without industry and Ofgem’s mandate for broader projects. Over the coming months, we will share a detailed breakdown of the cost savings contributing to the £9.5m rebate.
Improving our Budget process
Each financial year, the REC Board agrees on a Budget through RECCo’s consultation with REC Parties. We work closely with our service providers to develop reasonable estimates of future costs. We are cognisant that we are spending industry and consumers’ money, and we have an obligation to deliver secure, scalable, adaptable services which are economical, efficient, and meet REC Service users’ needs. This must be balanced with maintaining sufficient resources to meet our financial liabilities and mitigate against any unforeseen changes in the year.
Our Budget process starts with a bottom-up approach, reviewed by the internal Executive team and the Finance and Audit Committee before Board approval. It is then subject to industry consultation and a right of appeal to Ofgem. This rigorous process ensures that our Budget is reasonable, appropriate, and thoroughly scrutinized.
For 2024/25, we have enhanced our budgeting forecast process to reduce the likelihood of underspend, with a greater focus on contingency planning. Looking to the future, we will continue to enhance transparency and improve our budget development process. You can find out more about these future initiatives here.
Accelerating the rebate process
As part of improving our budgeting process, and recognising the potential cash flow impact on Parties, we are committed to accelerating the rebate process in future years. For future years, if our in-year financial reforecasting indicates a likely underspend, we will reduce REC Charges for the remainder of the year accordingly. This ensures that any forecasted underspend is returned to the industry as promptly as possible.
Find out more
Get in contact
Please contact Brian O’Shea at brian@retailenergycode.co.uk for any further information.
