Supplier cost clauses should not be limited to the System Marginal Price (SMP) as various other wholesale market factors influencing the overall cost should also be taken into account, independent electricity suppliers have agreed in a related public consultation procedure completed yesterday.
Previously, RAE, the Regulatory Authority for Energy, proposed the implementation of a standardized SMP as the only permissible clause, the objective being to simplify consumer price comparisons of supplier offers.
Though independent suppliers do not want their supply term clauses limited to the SMP, they acknowledge this factor remains relevant under the current system, ending mid-way through 2020 with the arrival of the target model.
Suppliers believe some time will be needed for observations concerning the SMP’s replacement, including day-ahead market prices.
Also, the target model’s new markets will bring about significant supply cost changes that cannot be calculated at present, suppliers noted in the public consultation procedure.
Though PPC has asked that its contribution to the public consultation procedure not be published, the utility’s opposition to the cancellation of a CO2-related clause it applies is already widely known.