Review of the Market Concentration Model for Determining Directed Contracts Volumes
Today, 15th May 2024, the Regulatory Authorities (RAs) are notifying market participants of their intention to commence a review of the Market Concentration Model (“Concentration Model”) for determining Directed Contract (DC) volumes before the end of Quarter 3 2024.
An external consultant has been appointed to carry out the review of the Concentration Model. The Concentration Model is used by RAs to calculate the quantity of DCs to be offered to eligible suppliers in a DC round.
Currently, the DC quantities are calculated such that forecast market concentration in the SEM is below a certain HHI threshold. The RAs note the recent trend whereby increased interconnection has contributed to a significant reduction in the HHI levels prior to the allocation of DC volumes.
The RAs intend to publish a consultation paper in Quarter 3 2024 to progress the review of the Concentration Model. A review of the model will ensure that the way in which DC volumes are calculated is efficient, robust and reflective of the changing market environment.
The RAs welcome market participants’ comments and their view(s) of key focus areas for the review of the Market Concentration Model. Furthermore, the RAs are available to engage with market participants to discuss, on an individual basis, their initial view of key focus areas, prior to the publication of a consultation paper. All comments and views can be directed to Lisa Murray at the Market Modelling Group (mmg@cru.ie) and Timothy Steele at the Utility Regulator (timothy.steele@uregni.gov.uk) before close of business on Friday, 7th June 2024.