Wholesale electricity transaction processing company, Elexon has signed a £40m, five-year outsourcing deal with Logica, which is expected to pass on operational cost savings to the retail electricity industry.
Elexon said the exact savings will not be clear until later in the year, when the positive effect of the upgrades to the communications infrastructure, database software, server hardware and operating system have been measured.
However, Elexon's chief executive Stuart Senior (pictured), said the percentage savings overall were expected to be in double digits.
He said the deal with Logica consolidates the operation and hosting the core elements of the balance and settlement code system under one contract with one service provider, making the services more efficient to manage.
According to Senior, in a first for Elexon, the contract with Logica has built-in operational cost reduction targets of five per cent year-on-year.
Elexon now plans to make further cost savings by replacing its legacy applications with more up to date software that is easier to update and maintain.
"Most of our applications are between 10- and 15-years-old, and it is costly and time consuming to make and test changes to these critical systems," said Senior.
He said Elexon would like to implement as much standard software as possible to reduce and even eliminate the use of bespoke applications.