NEWS: Ofgem's recent consultation on Consolidated Segmental Statements

Ofgem announced on 21st May its intention to review the Consolidated Segmental Statements (CSS).

The CSS provides information on revenues, costs and profits of activities in the generation and supply of electricity and gas.

Under Standard Licence Condition 19A: Financial Information Reporting, suppliers with more than 250,000 customers are required to publish CSS. This applies to both domestic and non-domestic licensees. The new proposals seek to lower the threshold to 50,000 customers.

Condition 19A was first introduced in 2009 to improve the transparency of large supply and generation businesses and raise stakeholder confidence that the market was fair and competitive.

Currently, a relevant licensee must prepare and publish a CSS on its website either:

• Up to four months after the end of its financial year...
• Or by a specified date provided by Ofgem

In the CSS, the licensee must include an explanation of:

• How it defines the terms revenues, costs and profits
• How the revenues and profits can be reconciled with its UK statutory accounts
• If UK statutory accounts are not prepared or published, how the revenues and profits can be reconciled with audited figures (prepared under International Financial Reporting Standards) published in group accounts
• Its transfer pricing methodology and how this relates to the revenues, costs and profits information published, and
• Where individual business functions are captured in the Consolidated Segmental Statement

The licensee must ensure that the information prepared and made public includes the cost of fuel used to generate electricity and its share of revenues, costs, profits and volumes of Joint Ventures and Associates.

Ofgem has made the decision to review the process as the structure of the retail energy market has changed significantly since Financial Information Reporting was first introduced in 2009. New cost categories and amendments to the auditing arrangements have also been proposed, as well as moving the end of the reporting year from company’s year-end, to the end of March.

Ofgem has published a document on its initial proposals - Click the link here to view the document.

The deadline for responses to the consultation is 12th August.

A policy decision and statutory consultation is expected in November with a final decision planned for early 2021.

If ENSEK can support you in any way with responding to this consultation, or providing or preparing to provide CSS’s to Ofgem, then please do contact your Account Director, or get in touch with us here.