Under the REC, we are required to progress a Theft Reduction Strategy on behalf of REC Parties.
While the Theft Reduction Strategy will be further developed as part of our overall strategy and forward work plan, some of the elements are already in place and have been migrated from legacy code arrangements. These are set out below together with some recent developments and an update on our current thinking.
The Energy Theft Tip-Off Service – ETTOS
The ETTOS is a service operated by Crimestoppers for members of the public to anonymously report suspected theft of gas and electricity by calling 0800 023 2777.
Public awareness of the tip-off line is promoted through the Stay Energy Safe brand, which highlights the inherent safety risks of tampering with gas or electricity meters or supplies, as well as the fact that it is a crime.
Alongside the tip-off line itself there is a public website with general information as well as details on how to report a suspected theft: www.stayenergysafe.co.uk.
Further to an earlier recommendation by the Theft Issues Group (which formerly met under the SPAA and DCUSA prior to Retail Code Consolidation), RECCo is trialling a radio advertising campaign to raise awareness of the Stay Energy Safe brand. The campaign will also be used to test the effectiveness of this route in driving more theft reports.
RECCo considers that the campaign could be complemented with increased efforts to raise consumer awareness of the support that may be available to them if they are in financial difficulties, in effect providing a safe and legal alternative to those who may be tempted to steal energy. Further details on the campaign will be shared in due course ahead of its launch.
What happens when a tip-off is received? Crimestoppers will match it to the relevant gas or electricity supplier. A report will then be sent to the supplier using a secure email portal. A separate email notification will be provided to a nominated contact at that supplier. Crimestoppers will engage with Xoserve, Gas Transporters and Electricity Distribution Network Operators as necessary to help identify the relevant energy supplier. It will also notify the relevant energy emergency telephone service if there is a safety concern.
Are any service enhancements in the pipeline? Crimestoppers have informed us that they are currently working on a solution to enhance the security for all the services they deliver, including ETTOS. This may require changes to the process in which service users will access reports. We are currently discussing the details with Crimestoppers to minimise disruption to the industry and expect that these changes will be made outside of the normal REC Change release process. We will provide further details on this as soon as possible.
We would like to say a big thank you to: Ian Main from Scottish Power, Jane Edge from British Gas and Paul Hart from UKPN. They helped us facilitate training sessions over October with the Crimestoppers team responsible for operating the service desk under the REC’s Energy Theft Tip-Off Service (ETTOS) service. The training was extremely valuable and will assist call handlers with the quality of reports generated and sent through to REC Parties.
Administration of the gas and electricity theft detection incentive schemes transferred to the REC with effect 1 April 2021. As the REC portal was not yet available at this time, Energy Suppliers were asked to hold onto their monthly reports until they could be submitted across the Portal. Those reports have subsequently been captured in the Performance Assurance Report Catalogue.
The following are therefore required to be submitted by 1 November via the REC Portal:
Further details on the theft incentive schemes are available on the REC Portal, including guidance on how to submit the reports: Energy Theft User Guide.
Has recent Supplier of Last Resorts (SoLRs) impacted the schemes? REC parties will be aware that a number of suppliers have left the market in recent months. However, this should not have a material effect on the operation of the scheme for most parties.
In accordance with Paragraph 5 of the REC Theft Reduction Schedule, where a portfolio of consumers is transferred to another supplier, whether through a trade sale or their appointment as a SoLR, there will be a corresponding adjustment to those suppliers’ theft targets. Any Confirmed Thefts will also be re-allocated to the incoming supplier and be included in the calculation of that supplier’s final position in respect of any incentive payment relating to the relevant scheme year.
Further RECCo initiatives
The REC requires RECCo to pursue a replacement for the former Theft Risk Assessment Service (TRAS), subject to industry consultation informed by a robust business case and project plan.
Earlier this year we commissioned an independent report on the options that might be available for such a service, intended to inform any subsequent business case we develop.
The results of that initial ‘discovery phase’ report were presented to a Theft Strategy workshop in March, the slides from which are available on the RECCo website here.
The ‘discovery phase’ report set out a spectrum of five options (which could each be further sub-divided) that may be available to RECCo based on the desired degree of service and technology transformation.
The anticipated cost of the options ranged from: <£1m to >£4m per annum, the latter of which was comparable with the cost of the former TRAS service.
Theft Estimation Methodology
Our initial plan had been to further progress the requirements gathering and business case for a narrower set of options for a service to replace the former TRAS, while in parallel developing a Theft Estimation Methodology that would quantify the scale of the problem and inform decisions later in the process.
However, given the persisting doubt about the ability of any of the proposed solutions to offer demonstrable value for money without a clearer understanding of the current scale and nature of the problem, we decided to develop the Theft Estimation Methodology ahead of any further commitment to replace the TRAS.
It is also expected that this Theft Estimation Methodology would provide a means of periodic evaluation, helping us to assess the efficacy of any measures taken to mitigate the problem of theft.
We issued a Request for Proposal earlier this summer with four submissions being taken through to evaluation by a panel made up of RECCo Executive team members and subject matter experts. The Panel concluded that Capgemini offered the strongest proposal.
The project will use four initial methods, all of which are expected to be utilised and developed progressively within an agile approach. You can find more detail on the approach on our website here. At a high level, the four methods include:
1Whole System Energy Balance (Aggregate) The aim of this method is understand the order of magnitude for potential volume of theft as a baseline sum of all energy fed into the distribution/transportation systems minus the sum of all reported consumption and modelled ‘Technical losses’.
2Network Centric Energy Balance (Granular) The aim of this method is to understand the order of magnitude for potential volume of theft in geographical segments. This involves comparing the energy entering and exiting a section of network, working at a more granular level.
3Prior theft incidents extrapolation (Segmented) The aim of this method is to identify patterns and drivers of theft to extrapolate for the entire network. This involves using historical records of theft detection (and suspicion) to extrapolate the likely volume of similar theft across the population. Key to this will be meaningful characterisation and segmentation of the theft incidents.
4Trend Extrapolation The aim of this method is to understand time-based effects in theft and propose forecasting methods for theft volumes. This will involve modelling hypotheses around the driving factors for energy theft to project how they are likely to affect volumes of theft.
The progress of this project is heavily dependent upon the provision of timely data. Therefore, although an agile approach is being taken, timelines may need to be adapted in light of progress. For more information on the content of the sprints, please visit the RECCo website.
Our aim is to ensure that at the end of this project there is a methodology and approach which relevant stakeholders can agree, and if followed will provide a robust quantification of energy theft. While there may continue to be differing commercial interests over the assumed volumes of theft and their source and responsibility for them, this should at least provide a firm basis on which to make future investment decisions on mitigating actions, and the mean of measuring their efficacy.
Subject to the timely sourcing of data to base the analysis, it is hoped that the project will deliver an interim estimate in time to inform our 2022/23 Strategy and Budget, and in particular the economic and financial case to pursue any new service or technology transformation.
Request for information
If your organisation holds data which you believe would be helpful to this project and which you would be willing share (subject to satisfying data protection requirements), or you would simply like further information on this project, please contact us at info@retailenergycode.co.uk.