Reviewing the Consolidated Segmental Statements

Decision

OFG1163

Reviewing the Consolidated Segmental Statements – Our Decision

Publication date: 1 February 2024

Contact: Andrew Milligan

Team: Retail Financial Monitoring

Email: [email protected]

This document sets out our decision to revise the licence conditions requiring publication

of a Consolidated Segmental Statement (CSS). The effect of these modifications is to

expand the CSS reporting obligation to cover a wider proportion of the domestic and

non-domestic market, providing greater transparency of supplier profitability.

These modifications to the Standard Licence Condition (SLC) 19A of the Gas and

Electricity Supply Licences and SLC 16B of the Electricity Generation Licence will take

effect from 29 March 2024.

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

The text of this document may be reproduced (excluding logos) under and in accordance

with the terms of the Open Government Licence.

Without prejudice to the generality of the terms of the Open Government Licence the

material that is reproduced must be acknowledged as Crown copyright and the

document title of this document must be specified in that acknowledgement.

Any enquiries related to the text of this publication should be sent to Ofgem at:

10 South Colonnade, Canary Wharf, London, E14 4PU.

This publication is available at www.ofgem.gov.uk. Any enquiries regarding the use and

re-use of this information resource should be sent to: psi@nationalarchives.gsi.gov.uk

Decision –  Reviewing the Consolidated Segmental Statements – Our Decision 
3 
Contents 
Reviewing the Consolidated Segmental Statements – Our Decision ........ 1 
1.  Introduction ...................................................................................... 4 
Context and related publications ........................................................... 4 
Our decision-making process ................................................................ 5 
Decision-making stages ................................................................... 5 
Implementation .............................................................................. 6 
General feedback ............................................................................ 6 
2.  Decision to modify the CSS licence requirement ................................ 7 
What did we consult on? ...................................................................... 7 
Summary of stakeholder feedback and our decision ................................. 7 
Aims of the CSS ............................................................................. 7 
Supplier Thresholds ......................................................................... 8 
Generation and ‘Other’ Activities ...................................................... 11 
Auditing ....................................................................................... 12 
Reporting and Transition Period ....................................................... 13 
Next Steps ........................................................................................ 16 
Appendices ........................................................................................... 17 
Appendix 1 – Licence Condition Modifications ....................................... 18 
Gas SLC 19A: Financial Information Reporting........................................ 18 
Electricity SLC 19A: Financial Information Reporting ............................... 21 
Electricity Generation SLC 16B: Financial Information Reporting ............... 24 
Appendix 2 – Revised CSS Guidelines.................................................... 26 
Revised Guidelines for preparing the CSS .............................................. 26 
Appendix 3 – Templates ........................................................................ 33 
CSS template after reconciliation adjustments. ....................................... 33 
Template displaying reconciling items to the statutory accounts ................ 34 
 
   

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

1. Introduction

Section summary

This section sets out the context for our decision and informs stakeholders about the

steps we have taken to arrive at our decision.

Context and related publications

1.1. The Consolidated Segmental Statement (CSS) licence condition was introduced in

2009 with the aim of providing a better understanding of the relationship between

the generation and energy supply business of vertically integrated companies by

reporting each business segment’s profitability separately. This was to address

concerns of vertically integrated companies cross-subsidising their supply

business with their generation activities.

1.2. In today’s energy market vertical integration is no longer a significant feature and

in recent years only four suppliers have been obliged to submit a CSS. It therefore

became necessary for us to review the licence conditions to ensure the CSS can

support our work in an evolving energy market.

1.3. On 25 August 2023, we published a policy consultation seeking views on our

proposals to revise Standard Licence Condition (SLC) ‘Financial information

reporting’, which requires publication of a CSS.

1.4. On 30 November 2023, we published a statutory consultation amending our

proposals in light of stakeholder feedback.

1.5. We are now publishing our decision, following the consultation process, to amend

the licence conditions which will expand the CSS reporting obligation to a wider

proportion of the domestic and non-domestic markets. This decision aims to

increase transparency of supplier company profitability which is key in monitoring

whether the market is working well for consumers and is also important in

building consumer confidence. Providing third parties access to this information

also allows them to hold challenge to both suppliers and Ofgem as regulator.

1.6. The CSS will be kept under review to ensure the requirements remain fit for

purpose.

Related Publications

• Policy Consultation (2023):

https://www.ofgem.gov.uk/publications/reviewing-consolidated-

segmental-statement-our-initial-proposals

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

• Statutory Consultation (2023):

https://www.ofgem.gov.uk/publications/reviewing-consolidated-

segmental-statements-our-final-proposals

• Links to suppliers’ Consolidated Segmental Statements under previous

SLC 19A condition:

https://www.ofgem.gov.uk/publications/energy-companies-consolidated-

segmental-statements-css

Our decision-making process

1.7. We have engaged with stakeholders throughout our decision-making process. We

issued a policy consultation with our initial proposals in August 2023. We then

issued a statutory consultation on proposed licence changes in November 2023.

1.8. Alongside these formal consultations we have engaged informally with

stakeholders, meeting bilaterally to listen to their feedback.

Decision-making stages

Stage 1

Stage 2

Stage 3

Stage 4

Stage 5

Stage 6

Policy

Consultation

open.

Consultation

closes.

Deadline for

responses to

Policy

Consultation.

Responses

reviewed and

Statutory

Consultation

published.

Statutory

Consultation

closes.

Deadline for

responses.

Responses

reviewed and

published.

Publish

modification

decision.

Revised licence

modification to

take effect (56

days after the

modification

decision).

25/08/2023

22/09/2023

30/11/2023

12/01/2024

01/02/2024

29/03/2024

Our Decision

1.9. Following stakeholder engagement, we have decided to make changes to

Standard Licence Conditions (SLCs) to expand the CSS reporting obligation to

cover a wider proportion of the domestic and non-domestic energy market.

1.10. Accordingly, this decision document is accompanied by Decision Notices to

modify:

• SLC 19A of the Gas Supply Licence

• SLC 19A of the Electricity Supply Licence

• SLC 16B of the Electricity Generation Licence by removal of licence condition

16B

• The Guidelines for submitting the CSS

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

Implementation

1.11. The revised licence conditions will come into effect on 29 March 2024 (56 days

after the modification decision is published). We expect obliged suppliers to

publish a CSS with their 2023 accounts no more than ten months after their 2023

financial year-end. For example, if a company has a December year-end, we

expect publication by October 2024. If a company has a March year-end, we

expect publication by January 2025.

Next Steps

1.12. Previously CSS data was published within several indicators on our Data Portal

however this was paused as the CSS data was no longer representative of the

market. Following this decision to expand the CSS obligation to cover a wider

proportion of the domestic and non-domestic market, we will aim to restore

publication of indicators and scope additional indicators where we see a benefit to

consumers and/or third parties.

1.13. Our decision aims to increase transparency of supplier profitability and ensure

consumers are treated fairly. We will keep our decision under review to ensure

that the CSS meets our objectives and is proportionate in doing so.

General feedback

1.14. We believe that consultation is at the heart of good policy development. We are

keen to receive your comments about this report. We’d also like to get your

answers to these questions:

1. Do you have any comments about the overall quality of this document?

2. Do you have any comments about its tone and content?

3. Was it easy to read and understand? Or could it have been better written?

4. Are its conclusions balanced?

5. Did it make reasoned recommendations?

6. Any further comments

1.15. Please send any general feedback comments to [email protected].

Ofgem Data Portal:

https://www.ofgem.gov.uk/data-portal/overview

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

2. Decision to modify the CSS licence requirement

Section summary

We outline our decision to modify the CSS licence requirement, following our

consideration of stakeholder feedback to the 2023 statutory consultation.

What did we consult on?

2.1. This decision paper is following our CSS statutory consultation published in

November 2023 where we set out our final proposals to revise the CSS licence

conditions. Our proposals considered four key changes relating to removing the

requirement to hold a generation licence, lowering the domestic and non-domestic

threshold levels, removing the audit requirement and to request an additional

column reporting on ‘other’ activities separate to the supply or generation

business.

2.2. We received a total of 15 responses to our CSS statutory consultation. We have

considered stakeholder responses and have responded through our decisions as

detailed below.

Summary of stakeholder feedback and our decision

Aims of the CSS

Our November 2023 Statutory consultation proposal

2.3. We proposed to keep the CSS within licence conditions and lower the thresholds

to increase market coverage in both the domestic and non-domestic market. This

aims to increase transparency in the energy supply market and capture

information that is representative and proportionate in terms of the number and

type of suppliers.

Stakeholder Feedback

2.4. Two respondents noted that their financial information is available on Companies

House and there is no further insight to be gained from the CSS for Ofgem,

consumers or third parties.

2.5. One stakeholder mentioned they do not see how the CSS would aid consumer

understanding and suggested a wider campaign of education would be better

placed to increase public confidence in the retail energy market.

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

Decision

2.6. We have decided to keep the CSS licence condition in place and expand to cover a

wider share of the domestic and non-domestic markets. This will result in

inclusion of suppliers who previously were not obliged to publish a CSS, making

visible to the public.

2.7. The CSS includes financial information on the supply business separate to any

other activities, which is not always the case for statutory accounts on Companies

House. Further, the CSS is split between fuel type and the domestic and non-

domestic supply business allowing consumers and third parties a view of

profitability for different energy supply market segments.

2.8. The CSS should be provided at a Group level where applicable, and this supports

our aims of providing transparency of supplier profitability, rather than the

licensee level which is provided in Companies House. Many suppliers hold multiple

licences, and a CSS at Group level will allow a view of how the different entities

integrate for oversight of a company’s supply business profitability in its entirety.

2.9. We will continue to publish a list of supplier CSS publications to our website, for

the public and industry’s ease of access, aiming to encourage engagement and

confidence in the energy supply sector.

Supplier Thresholds

Our November 2023 Statutory consultation proposal

2.10. We proposed to remove the requirement for a supplier to hold a generation

licence to be a Relevant Licensee under the CSS licence condition, as vertical

integration is no longer a significant feature of the market.

2.11. We proposed to use a static threshold figure for the domestic and non-domestic

market. We proposed to lower the domestic threshold level to 50,000 or more

meter points in either gas or electricity.

2.12. For the non-domestic market, we changed our proposal to use a static threshold

instead of a threshold based on market share of supply volumes. This allows

suppliers to internally monitor when they fall under the threshold for CSS

submissions. Using a static threshold measure preserves the confidentiality of

supplier pricing unlike using volume of supply to calculate market share. We found

that using volume of supply could capture suppliers with only a few customers

and could show potentially commercially sensitive information. We found 10

meter points, in either gas or electricity, currently provides coverage of around

90% of the suppliers in the non-domestic market and meets our aim of collecting

CSS data which is broadly representative of the market. We noted that thresholds

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

may be periodically reviewed if market changes result in the CSS submissions

becoming unrepresentative, and any changes would be made following

consultation.

Stakeholder Feedback

2.13. In response to supplier thresholds, feedback from stakeholders revealed varying

perspectives. Many of the respondents were in favour of the thresholds, with

some noting the move to a static threshold for the non-domestic market is more

straightforward. One respondent agreed this will capture most of the non-

domestic market and will enable transparency.

2.14. Some respondents expressed concerns, emphasising the disproportionate impact

of CSS on small suppliers. One proposed a solution by suggesting a reduction in

the burden through the removal of duplicate information from RFI's.

2.15. On the contrary, another respondent advocated for the absence of any threshold,

suggesting the application of CSS to all suppliers.

2.16. One stakeholder recommended the non-domestic threshold count should exclude

meters which supply to any affiliate business and suggested introducing an

additional test based on the annual volume of supply to prevent capturing small-

scale businesses.

Decision

2.17. In line with proposals in the statutory consultation, we have decided to remove

the requirement for a supplier to hold a generation licence to be a Relevant

Licensee under the CSS licence condition. We have decided to lower the domestic

threshold level to 50,000 or more meter points in either gas or electricity. For the

non-domestic market, we have decided to lower the threshold to 10 or more

meter points in either gas or electricity.

2.18. Following stakeholder feedback, we are clarifying here, and have decided to clarify

in the guidelines, that the non-domestic meter count may exclude meters which

supply to the company itself or any affiliate. Where meters supplying the company

itself or any affiliates are excluded for the purposes of the Relevant Licensee

thresholds and this would result in the Relevant Licensee thresholds not being

met, the company should apply to Ofgem for a direction that the CSS requirement

does not apply and Ofgem will consider whether in the circumstances it is

appropriate to grant such a direction. Such applications should include the number

of meters and details of meters being excluded by emailing [email protected] so

that this information may be verified as appropriate. We have decided to provide

the ability for suppliers to apply for and ability for Ofgem to consider and

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

grant/refuse such a direction in the SLCs in support of this. Examples of when

such a direction might be considered are given in the Guidelines. The use of this

process will be kept under review to ensure the requirements remain fit for

purpose.

2.19. We have decided that suppliers will become obliged to submit a CSS if they reach

the threshold in the last month of their financial year.

2.20. We expect suppliers to internally monitor where they sit in relation to the

thresholds and publish a CSS when required. We will internally monitor suppliers

against Relevant Licensee thresholds using data regularly sourced from Xoserve

and Distribution Network Operators (DNOs)., However, we will not be publishing a

list of obliged companies on our website as the responsibility to publish a CSS sits

with the Relevant Licensee.

2.21. Following feedback, we have decided not to include a minimum supply volume

threshold to prevent capturing small-scale businesses. However, we have decided

to introduce the ability for a supplier to request a direction that the CSS condition

does not apply for our consideration of an exemption on a case by case basis, for

example instances as set out in this decision document and in the Guidelines.

2.22. The CSS aims to view profitability across the supply sector, and for this reason we

are requesting CSS publication at the Group level where applicable. This may

include suppliers and affiliates with non-traditional supply businesses, for example

emergency supply. Where a supplier operates solely for non-traditional supply,

and has no affiliate with a traditional supply business, a supplier may apply to

Ofgem for a direction that the CSS requirement does not apply which will be

considered on a case by case basis.

2.23. We’ve determined this will not impose significant burden on suppliers as these

thresholds will include companies who will be publishing statutory accounts to

Companies House, as is required by private and public limited companies. The

information requested within the CSS will provide a top-level view of companies’

energy supply profitability with the split between gas and electricity as well as

domestic and non-domestic suppliers improving transparency within the market.

There are reporting requirements currently in place where companies provide

detailed financial information to Ofgem and this should aid with their preparation

of the CSS in its new reduced format.

2.24. We intend for the CSS to be complementary to our other monitoring activities.

While we cannot guarantee that some areas will not overlap, the CSS is distinct in

that it provides actualised financial information which is linked to statutory

accounts and undergoes an audit process whereas, for example, RFI’s include live

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

and forecasted data. We aim to limit regulatory reporting and are continually

working to streamline RFI’s where possible.

2.25. We aim for changes to the CSS requirement to be enduring and we aim to capture

information that is broadly representative and proportionate in terms of the

number and type of suppliers. Our decision will achieve this and allow us to collect

data on suppliers as they grow and, at the same time, strike the right balance

between the burden placed upon smaller suppliers and market coverage.

Generation and ‘Other’ Activities

Our November Statutory consultation proposal

2.26. Following feedback to the August Policy Consultation

, we proposed to remove the

inclusion of ‘other’ activities within the CSS. In addition, we proposed to remove

the existing requirement to report on generation activities.

Stakeholder Feedback

2.27. All stakeholders who responded on this point agreed with our proposal to remove

generation and ‘other’ activities; asserting that focusing solely on publishing

energy supply activities adequately reflects market changes since the 2021 CSS

review

, aligning with the goal of increased transparency. One respondent cited

this as a positive step that avoids costly system changes and addresses concerns

about commercially sensitive information.

2.28. One respondent noted their agreement with the removal of the request for

information on transfer pricing policies and methodologies.

Decision

2.29. Our decision is to remove the requirement to report generation activities in the

CSS template. Therefore, the CSS will only capture the energy supply business of

a supplier. Subsequently, we will not be requesting statements on transfer pricing

policies and methodologies.

2.30. This decision considers feedback received and recognises that the market has

changed significantly. The purpose of the CSS is to ensure transparency in the

Ofgem Policy Consultation (2023):

https://www.ofgem.gov.uk/publications/reviewing-consolidated-segmental-statement-our-initial-

proposals

Ofgem Statutory Consultation (2021):

https://www.ofgem.gov.uk/publications/final-proposals-and-statutory-consultation-reviewing-

consolidated-segmental-statement

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

market, and we believe that information on the energy supply related activities

will provide the transparency required.

Auditing

Our November Statutory consultation proposal

2.31. We proposed to remove the auditing requirement and request the CSS be

reconciled back to statutory accounts which undergo a separate audit process.

We confirmed that we may require an audit in some circumstances, e.g. if we had

reason to think the CSS hadn't been properly prepared.

Stakeholder Feedback

2.32. In response to the proposed removal of the audit requirement and aligning

reporting timelines with statutory accounts, feedback from numerous respondents

indicated overall agreement. However, two respondents sought clarity on defining

triggers for ad-hoc audits and their potential scope.

2.33. A stakeholder called to lower the bar for requesting ad-hoc audits to elevate CSS

preparation standards, while three respondents expressed concerns about

reconciling CSS requirements with statutory accounts. Specifically, they pointed

out discrepancies in EBITDA level information and the domestic/non-domestic

split, suggesting that requirements should reconcile back to the relevant entity

rather than group accounts.

2.34. One respondent highlighted the challenge of implementing consolidation for non-

consolidated financial accounts, requesting a transition period. Another

respondent proposed Ofgem’s removal of the requirement to include fuel-cost

splits, arguing that this adjustment would make CSS more comparable.

2.35. Finally, one respondent advocated for a clear and comprehensive explanation of

how revenues and profits should be reconciled with licensee statutory accounts,

emphasising the need for both numerical and written statements for

transparency.

Decision

2.36. As proposed in our 2023 statutory consultation, we are removing the auditing

requirement and request the CSS to be reconciled back to statutory accounts. We

may require an audit where we consider the CSS may not have been properly

prepared. This could be due to, but not limited to, data quality or where we

consider there may be omissions or errors. We do not believe the costs involved

in an ad-hoc audit should be a deterrent for Ofgem to further investigate whether

the financial information published is accurate and robust.

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

2.37. Suppliers should be able to reconcile back to total figures in their statutory

accounts. We require the CSS to be reconciled with any audited accounts for their

business. We also require a clear reconciliation table with explanations to be

provided detailing how items have been reconciled, and this can be at group or

entity level. An example reconciliation table is provided in Appendix 3. We believe

there is adequate time for suppliers to set up reporting processes given that the

publication is required at the latest 10 months after their financial year-end.

2.38. We have decided to remain with the split between fuel costs in the CSS as this is

in line with our aims of transparency on current and future market conditions.

There are many consumers who do not have access to gas, and whose interests

are in the electricity market.

2.39. We require the revenues and profits to be reconciled to audited accounts and

have provided guidance on how this can be done in Appendix 2. We request that a

written statement is also provided in conjunction with a reconciliation table which

should include explanatory notes to support the reconciliation.

Reporting and Transition Period

Our November Statutory consultation proposal

2.40. Following stakeholder responses to our August Policy Consultation, we proposed

to change the publication deadline from four months post year-end to nine

months post year-end to align with statutory accounts. We proposed not to

include a transition period as we proposed to simplify the CSS by removing

generation and ‘other’ activities reporting, and we consider that this provides

sufficient time to prepare the report.

Stakeholder Feedback

2.41. Many respondents supported our proposal to align CSS publication with statutory

accounts. One respondent specifically mentioned they agree with no transition

period.

2.42. One respondent noted that we had not accounted for public companies who must

submit statutory accounts 6 months post their financial year-end.

2.43. One respondent argued the obligation is to publish a CSS, and not to submit to

Ofgem directly as referred to in the statutory consultation.

2.44. While one respondent endorsed the reporting timelines, they suggested licence

conditions should offer flexibility to accommodate extensions granted by

Companies House.

2.45. Another respondent requested clarification on whether a relevant licensee should

report figures for any affiliate that does not hold a supply licence. They also

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

requested clarification on whether an affiliate which has a supply licence who does

not reach any threshold is to be included in the CSS.

Decision

2.46. Following stakeholder feedback, and to simplify the approach, our decision is for

the CSS to be published no later than 10 months after the financial year-end. This

was our original deadline as per the statutory consultation. This allows enough

time for the submission to be reconciled with the audited statutory accounts which

is 9 months after the company’s year-end. This will allow suppliers to keep their

auditing processes in place and provide assurance that the CSS submission is

accurate.

2.47. We acknowledge public companies submit their accounts six months after the

company’s year-end. However, we have decided to maintain the CSS publication

deadline as ten months after the company’s year-end for both private and public

limited companies. Suppliers are welcome to publish a CSS earlier than the

deadline if it is reasonably practicable do so.

2.48. We are requesting the CSS template, as well as being published to that company’s

website, is provided to Ofgem in an excel file via email to aid with our data

processing, as per the Guidelines in Appendix 2. We may in future request upload

to a secure portal instead. We have wider powers which support the requirement

to submit information to Ofgem when and in the form requested (e.g. SLC 5.1).

2.49. In cases where there is a Companies House extension, we may consider whether

an extension is appropriate on a case-by-case basis (SLC 19A.3(b) allows Ofgem

to specify another date) rather than an automatic extension in the case of a

Companies House extension.

2.50. Further, we are remaining with our proposal from our 2023 statutory consultation

and not allowing a transition period for the first year.

2.51. Where a supplier reaches the threshold criteria in at least one of the four market

segments; domestic gas, domestic electricity, non-domestic gas or non-domestic

electricity, they will be required to report on supply activities for all segments

where applicable.

2.52. Where a supplier holds multiple supply licences and reach the threshold for one

licensee, they will be required to report on supply activity across all licensees. For

example, for a supplier which reaches the threshold criteria in one commodity (for

example electricity) and has an affiliate company supplying gas which does not

reach the threshold, they will be required to include both company’s supply

activities within the CSS. To add, affiliates without a supply licence are not to be

included as part of the CSS. We have also noted this within the guidelines.

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

2.53. To clarify, where a supplier holds multiple supply licences, they should publish a

single CSS for the Group accounts.

Decision Summary

2.54. We summarise our decision for revising the CSS requirements below. The changes

fall into five principal areas.

• Supplier Thresholds: We have removed the requirement for a supplier to

hold a generation licence in order to be obliged to publish a CSS. We have

decided to lower the domestic threshold level to 50,000 or more meter

points in either gas or electricity. For the non-domestic market, we have

decided to lower the threshold to 10 or more meter points, with the ability

to exclude those meters which supply to the company itself or any Affiliate.

The company will be obliged to publish a CSS where they reach the

threshold in the final month of their financial year. Companies will be

expected to internally monitor where they reach the threshold/s.

• Generation Reporting: We have decided to remove the generation

reporting segment of the CSS.

• Audit requirement: We have decided to remove the audit requirement,

however we may require an audit where we consider the CSS may not

have been properly prepared. The CSS should be reconcilable with

statutory accounts. A clear and full explanation of the reconciliation to the

company accounts must be provided, as to how revenues and profits

reconcile to the Relevant Licensee’s audited figures. A numerical table

must also be provided to demonstrate the reconciling items, we have

included a suggested template in the Guidelines.

• Reporting: We have decided to extend the reporting timeline of the CSS

publication to ten months after the company’s financial year-end. Where a

supplier holds multiple supply licences and reach the threshold for one

licensee, they will be required to report on supply activity across all

licensees and or affiliates in a Group level CSS, as per the Guidelines.

• Transition Period: We have decided to remove the transition period for

the first year of reporting.

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

Next Steps

2.55. Previously CSS data was published within several indicators on our Data Portal

however this was paused as the CSS data was no longer representative of the

market. Following this decision to expand the CSS obligation to cover a significant

proportion of the domestic and non-domestic market, we will aim to restore

publication of indicators.

2.56. One such indicator is an energy bill breakdown which is a crucial part of our role

in ensuring consumers are informed and have access to information regarding all

the components that make up their bills. Concerns about the costs that make up

consumers bills are ever present and, whilst the Price Cap represents the

breakdown of a notional efficient supplier, we need independent and accessible

information to publish a breakdown of energy bills. The CSS provides a

breakdown of actual supplier costs which better serves customers. We may

develop additional indicators where we see a benefit to consumers and/or third

parties.

2.57. Our decision aims to increase transparency of supplier profitability and ensure

consumers are treated fairly. We will keep our decision under review to ensure

that the CSS meets our objectives and is proportionate in doing so.

Ofgem Data Portal:

https://www.ofgem.gov.uk/data-portal/overview

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

Appendices

Index

Appendix

Name of appendix

Page no.

Standard Licence Condition Modifications

Revised CSS Guidelines

Templates

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

Appendix 1 – Licence Condition Modifications

Gas SLC 19A: Financial Information Reporting

19A.1 The Relevant Licensee must prepare and publish on its Website a Consolidated

Segmental Statement in respect of information relating to the revenues, costs and

profits of its activities in the generation and supply of electricity and/or the supply

of gas to any premises taking account of the Guidelines.

19A.2 Where applicable, the Relevant Licensee must prepare and publish the Consolidated

Segmental Statement referred to in paragraph 1 in conjunction with any Affiliates.

19A.3 The Relevant Licensee must, in conjunction with any Affiliates, prepare and publish

a Consolidated Segmental Statement

a. as soon as reasonably practicable and no later than four ten months after

the end of the Relevant Licensee’s financial year; or

b. no later than a date specified by the Authority, which can be no earlier than

four nine months after the end of the Relevant Licensee’s financial year.

19A.4 Subject to complying with this paragraph the Relevant Licensee may, for the

purpose of preparing the statement pursuant to paragraph 3, prepare and compile

the information according to the licensee’s annual accounting procedures. The

Relevant Licensee must include in every such statement an explanation of:

a. how it defines the terms revenues, costs and profits.

b. how the revenues and profits can be reconciled with its UK statutory

accounts.

c. or how, 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) in accordance with Generally

Accepted Accounting Principles (GAAP)) published in Group accounts; and

d. its transfer pricing methodology and how this relates to the revenues, costs

and profits information published; and

e. where individual business functions are captured in the Consolidated

Segmental Statement, as specified by Appendix 2 of in the Guidelines.

19A.5 The Relevant Licensee must ensure that the information prepared and made public

pursuant to paragraph 19A.3 includes the cost of fuel used to generate electricity

and its share of revenues, costs, profits and volumes of Joint Ventures and

Associates.

19A.6 Subject to complying with Paragraph 19A.5 the Relevant Licensee must ensure

that all the information prepared and made public pursuant to paragraph 19A.3 is

in all material respects consistent with the information prepared pursuant to

paragraph 19A.4 and the information is presented with a clear and full

explanation.

19A.7 The Relevant Licensee must, for the purposes of ensuring the transfer pricing

methodology is appropriate and up to date:

a. keep transfer pricing policies and procedures under review; and

b. ensure that the supporting information that supports the transfer pricing

policies remains appropriate and up to date.

19A.8 The Relevant Licensee must notify the Authority as soon as reasonably practicable

of any material changes to transfer pricing policies.

19A.9

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

a. The Authority shall prepare Guidelines in relation to the requirements of this

condition and may modify, in whole or in part, the Guidelines following

consultation with the Relevant Licensees.

b. The Authority shall modify the definition of Consolidated Segmental

Statement as described in Appendices 1 and 2 of the Guidelines in

accordance with section 23 of the Act.

19A.10 Except and to the extent that the Authority otherwise consents, the Relevant

Licensee must include in the Consolidated Segmental Statement a report from an

Appropriate Auditor that gives an audited opinion as to the extent to which the

Relevant Licensee has properly prepared the Consolidated Segmental Statement in

accordance with this licence condition and the Guidelines. Where the Authority

considers that the Relevant Licensee has not properly prepared the Consolidated

Segmental Statement in accordance with this licence condition and the Guidelines

and template, it may require the Relevant Licensee to commission and submit a

report from an Appropriate Auditor or to submit a report from an Appropriate

Auditor which it has already commissioned.

19A.11 The Relevant Licensee may apply to the Authority to request a direction that this

condition 19A does not apply and must provide any information required by the

Authority in support of such application for consideration of whether to grant or

refuse such an application.

19A.12 For the purposes of this condition:

“Affiliate”

“Appropriate Auditors”

“Associate”

means any holding company or subsidiary of a holding

company of the Relevant Licensee, in each case within

the meaning of sections 1159 and 1160 of the

Companies Act 2006.

means

(a) in the case of a licensee which is a company within

the meaning of section 1 of the Companies Act

2006, a person appointed as auditor under Chapter

2 of Part 16 of that Act.

(b) in the case of any other licensee which is required

by the law of a country or territory within the

European Economic Area to appoint an auditor

under provisions analogous to Chapter 2 of Part 16

of the Companies Act 2006, a person so

appointed.

appointment as a company auditor under sections

1212 and 1216 of the Companies Act 2006, or in

relation to auditors appointed for financial years

beginning before 6 April 2008, a person who is

eligible for appointment as a company auditor

under sections 25 and 26 of the Companies Act

1989

means an entity, including an unincorporated entity

such as a partnership, over which the Relevant

Licensee has significant influence and that is neither a

subsidiary nor an interest in a joint venture.

“Consolidated Segmental

Statement”

“Guidelines”

means a statement as described in Appendices 1 and

2 of the Guidelines.

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

means the guidance and procedures in place for

preparing the Consolidated Segmental Statements.

“Joint Venture”

mean a contractual arrangement whereby the

Relevant Licensees and one or more parties undertake

an economic activity that is subject to joint control.

“Relevant Licensee”

means the holder of a supply licence granted or treated

as granted under section 7A (1) of the Act if

(a) it supplies, or it and any of its Affiliates jointly

supply:

(i) electricity to more than 250,000 50,000 or more

domestic customers based on number of meter

points; or

(ii) gas to more than 250,000 50,000 or more

domestic customers based on number of meter

points; or

(iii) electricity to more than 250,000 10 or more non-

domestic customers based on number of meter

points; or

(iv) gas to more than 250,000 10 or more non-

domestic customers based on number of meter

points, respectively: and

(b) it or any of its Affiliates is a holder of an

electricity generation licence granted or treated as

granted under section 6(1)(a) of the Electricity Act

1989.

“Website”

means a website controlled and used by the Relevant

Licensee or an Affiliate for the purposes of providing

information and communication.

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

Electricity SLC 19A: Financial Information Reporting

19A.1 The Relevant Licensee must prepare and publish on its Website a Consolidated

Segmental Statement in respect of information relating to the revenues, costs and

profits of its activities in the generation and supply of electricity and/or the supply

of gas to any premises taking account of the Guidelines.

19A.2 Where applicable, the Relevant Licensee must prepare and publish the Consolidated

Segmental Statement referred to in paragraph 19A.1 in conjunction with any

Affiliates.

19A.3 The Relevant Licensee must, in conjunction with any Affiliates, prepare and publish

a Consolidated Segmental Statement

a as soon as reasonably practicable and no later than four ten months after

the end of the Relevant Licensee’s financial year; or

b no later than a date specified by the Authority, which can be no earlier than

four nine months after the end of the Relevant Licensee’s financial year.

19A.4 Subject to complying with this paragraph the Relevant Licensee may, for the

purpose of preparing the statement pursuant to paragraph 19A.3, prepare and

compile the information according to the licensee’s annual accounting procedures.

The Relevant Licensee must include in every such statement an explanation of:

a how it defines the terms revenues, costs and profits.

b how the revenues and profits can be reconciled with its UK statutory

accounts.

c or how, 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) in accordance with Generally

Accepted Accounting Principles (GAAP)) published in Group accounts; and

d its transfer pricing methodology and how this relates to the revenues, costs

and profits information published; and

e where individual business functions are captured in the Consolidated

Segmental Statement, as specified by Appendix 2 of in the Guidelines.

19A.5 The Relevant Licensee must ensure that the information prepared and made public

pursuant to paragraph 19A.3 includes the cost of fuel used to generate electricity

and its share of revenues, costs, profits and volumes of Joint Ventures and

Associates.

19A.6 Subject to complying with Paragraph 19A.5 the Relevant Licensee must ensure that

all the information prepared and made public pursuant to paragraph 19A.3 is in all

material respects consistent with the information prepared pursuant to paragraph

19A.4 and the information is presented with a clear and full explanation.  

19A.7 The Relevant Licensee must, for the purposes of ensuring the transfer pricing

methodology is appropriate and up to date:

a keep transfer pricing policies and procedures under review; and

b ensure that the supporting information that supports the transfer pricing

policies remains appropriate and up to date.

19A.8 The Relevant Licensee must notify the Authority as soon as reasonably practicable

of any material changes to transfer pricing policies.

19A.9 (a) The Authority shall prepare Guidelines in relation to the requirements of this

condition and may modify, in whole or in part, the Guidelines following consultation

with the Relevant Licensees.

Decision – Reviewing the Consolidated Segmental Statements – Our Decision

(b) The Authority shall modify the definition of Consolidated Segmental Statement

as described in Appendices 1 and 2 of the Guidelines in accordance with section

11A of the Act.