License Conditions

CSS Submission

Ofgem CSS submission can be viewed here:

Interpreting Financial Information 

1. ‘Revenue from sale of electricity and gas’ means electricity and gas sales for the respective retail supply segments. 
   • Flexitricity acts as supplier primarily to generation and storage non-domestic assets. These assets therefore, export as much or more than they import. Flexitricity do not supply domestic customers. 
2. ‘Direct fuel costs’ for supply includes aggregate electricity and gas costs. 
3. ‘Other direct costs’ includes primarily “Transportation costs” which captures Network costs such as DNO and transmission network charges, transportation costs, Balancing Services use of System charges (BSUoS), supplier levies such as Feed-in Tariff , Contracts for Difference, and Capacity Market,  environmental costs (including Renewable Obligation Certificates (ROCs), Carbon Emissions Reduction Targets (CERTs) and the Community Energy Savings Programme (CESP) and the transport element of RBD costs.  
4. Volumes are at the meter point (ie net of losses).
5. WACO E/G means the “Direct fuel costs” line divided by the “Volume” line, shown as £/MWh or p/th.
6. Meter Points are the average number of electricity and gas (MPANs and MPRNs) during the reporting year. This is calculated by combining monthly meter point counts and dividing by 12. 

Adjustments for Reconciling Items

7. ‘Other Revenue’ not covered above means revenue from other activities. In Flexitricity’s case, supply activity represents only a small proportion (in margin/EBIT terms) of the overall business. Therefore, costs relating to supply are limited to fuel costs and transportation costs. The majority of Flexitricity’s margin and revenue comes from delivery of what Ofgem describes as “other services” which are included in reconciling items. These revenue streams are primarily from wholesale trading, balancing mechanism, ancillary services and participation in the capacity market. It is these revenue streams that drive material business costs which are therefore also included in reconciling items. 
   • Flexitricity act as a supplier only in order to be able to sell the services of the assets Flexitricity supply into energy markets. 
   • Other revenue includes income of a project nature outside of normal operation and can be found below the main turnover total in the statutory accounts under “Other operating income”.
8. ‘Other direct costs’ within reconciling items  includes costs relating to other revenue streams defined above, Flexitricity also classify operating costs such as site communications and metering as direct costs.

9. ‘Indirect costs’ within reconciling items are primarily internal operating costs including salaries, office costs, IT and technology costs, financing and sundry expenses. Flexitricity do not apportion indirect costs between electricity and gas supply.

   Hedging

Ofgem have introduced tighter measures to ensure suppliers are taking an appropriate and proportional amount of risk on the domestic tariffs they provide to customers vs. their exposure to the market in backing off against those tariffs, understanding more deeply their financial resilience.

This has brought about the SoLR conditions and guidance:

20160631 - draft Guidance on supplier of last resort and energy supply (FINAL)GB10062016

Our exposure, as suppliers to non-domestic consumers only is that we offer a simple pass-through (imbalance) contract structure and do not face particularly price /market risk. We do not currently offer tariff driven contracts to customers.

On behalf of our customers, hedging is driven from asset backed principles, which means that we would only hedge when we consider the asset will deliver the volume and value against that hedge to ensure risk is minimised.