Ofgem’s decision on network charges could save electricity customers billions

Ofgem, the UK’s energy regulator, upheld a decision today relating to network charges.  This decision has been estimated to be worth a multi-billion pound sum to electricity customers.

Last year, Ofgem made a decision relating to payments to small power generators connected to the low voltage grid (so called “triad benefit”). These payments are meant to reflect the fact that, because they are located near centres of demand, such generators help avoid the need for more investment in the high voltage network.  However, based on work by Frontier, Ofgem concluded that the payments were too big, and that as a result, customers were overpaying, and small generators had an unfair competitive advantage compared to larger power generators.

Ofgem acted to change these payments in April 2018, but a group of embedded generation companies brought a Judicial Review against this decision.  This appeal has now been dismissed, meaning that Ofgem’s decision will stand.

Frontier, in collaboration with Lane Clarke Peacock, supported Ofgem throughout the process, including the Judicial Review, and regularly advises both companies and regulators on issues related to network charging.

For more information please contact Saskia Nett on s.nett@frontier-economics.com, or call +44 (0)20 7031 7000.

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