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08 January 2018
On Monday 6 November, Ofgem published updates on two interrelated reviews in relation to electricity network charging, intended to inform discussions with stakeholders on their subject matter:
In addition, Ofgem announced on Monday 6 October that it has been served with a judicial review claim in respect of its recent decision in respect of the reduction of the benefits available to embedded generators.
We have previously published detailed analysis on the TCR (see here and here). The recent TCR update relates to Ofgem's intended reforms of "residual" network charges. By way of a brief reminder on this issue:
Ofgem's update moves the TCR forward in two key ways:
The primary concern which Ofgem seeks to address in the course of this project is the inadequate market signalling available to potential network users on when, where and how to connect. Options for access to grid connections are limited; transmission and distribution network operators' various forward-looking charging methodologies are inconsistent in how well they reflect operators' costs. The working paper sets out a broad range of options which might address these issues, including the following:
As the two network charging reviews discussed above progress, Ofgem is now also defending a judicial review challenge in relation to its decision last month to adopt Workgroup Alternative 4 to CUSC Modification Proposals 264 and 265 (seehere and here). This decision is set to have the effect of significantly reducing the benefits available to small distribution-connected generators through the residual network charging regime. The challenge is brought primarily on the basis that
Ofgem held stakeholder workshops in Glasgow and London last month on the TCR. Further stakeholder engagement is envisaged in early 2018 before a consultation on the proposed policy outcomes of the TCR is published in summer 2018.
In relation to network access and forward-looking charges, Ofgem is assembling task forces, including industry participants, for the holistic consideration of the options proposed. The output of these task forces, expected to culminate in final recommendations by April 2018, is intended to form the basis of wider stakeholder discussions.
The judicial review challenge, brought by Peak Gen and seven other companies, has been granted permission to proceed to trial. The trial is expected to start in early 2018.
For further information on this topic please contact Robert Lane, Munir Hassan, Sarah King or Louise Dalton at CMS Cameron McKenna Nabarro Olswang LLP by telephone (+44 20 7367 3000) or email (email@example.com, firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The CMS Cameron McKenna Nabarro Olswang LLP website can be accessed at cms.law.
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