The budget cost for delivering the REC for the 2021/22 Financial Year will be £0.38 per supply point.
Based on aggregate 56.8m gas and electricity supply points as reported for December 2020
REC Services include allowances for Code Manager mobilisation costs, Code Manager operational delivery costs, RECCo projects including TRAS2 and metering procurements and support of the development REC.
The budget reflects RECCo taking over responsibility for delivery of 14 services (shown as Transitioned Services below) which are currently contracted, and funded, through existing industry codes (i.e., MRA, SPAA and SMICoP). Parties should see a corresponding reduction in the budgets for those codes relating to these services for the period after Retail Code Consolidation (RCC) in September 21.
RECCo is working with Ofgem to finalise Switching Programme Support the budget allowance. This budget allowance provides funding for Programme Coordination and Licensed Party Assurance which are under the control of Ofgem. Also included are costs for supporting RECCo’s direct engagement with Switching Programme and RECCo taking on Party Under Integration responsibilities from MRASCo from RCC date.
A Contingency Allowance has been included to reflect the uncertainty of the operational environment. In accordance with the obligation for bottom-up budgeting, each budget allowance has been assessed to understand the degree of certainty of the budget cost estimates and an appropriate contingency allowance has been set. These range from 0% - 10%. The total Contingency Allowance included is 6.6% of the Budget (2020/21: 10%, 2019/20: 10%). As services mature in the coming years it is hoped that the level of contingency, as a percentage of the overall budget will reduce.
A Change Allowance has also been included to fund the consequential impact on REC service provider contracts because of external factors and/or industry-driven change. These could arise from multiple external sources including, but not limited to, the switching programme, enhanced REC obligations on transitioned service providers and Ofgem policy.
RECCo will continue to manage its costs prudently and as a matter of course, the Board will require a robust business case to support any proposed spend against the budget which it is not contractually bound to make. All substantive spends will be subject to competitive procurement. At all times, the Board will strike a balance between collecting funding from REC Parties which reflects the expected costs to be incurred in any quarter and ensuring that RECCo has sufficient resources to enable it to deliver its obligations.
Any underspend against Budget for the year will be refunded to Parties as a rebate.
REC v1.1 section 9.