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Charging Futures Access & Forward-Looking Charges

On 18 December Ofgem launched their Significant Code Review (SCR) in Access and Forward-Looking Charging. The review aims to:

  • ensure that electricity networks are used efficiently and flexibly,
  • ensure they reflect users’ needs, allowing consumers to benefit from new technologies and services
  • Do this while avoiding unnecessary costs on energy bills

 

The SCR scope includes:

  • a review of the definition and choice of access rights for transmission and distribution users;
  • a wide-ranging review of distribution network charges (Distribution Use of System (DUoS) charges);
  • a review of the distribution connection charging boundary; and
  • a focused review of transmission network charges (Transmission Network Use of System (TNUoS) charges).

 

Timing: Ofgem aim to:

Publish working papers and other discussion materials – Summer 2019

Consult on its Minded-to-Decision and draft Impact Assessment – Spring 2020

Publish its decision and final Impact Assessment – Autumn 2020.

 

Stakeholder input

To help progress the review Ofgem has set up two new groups; The Challenge Group and The Delivery Group.

These groups will ensure that the SCR is carried out in an open and transparent manner, ongoing wider stakeholder input and focus the necessary expertise and network data to help develop and assess options, in a timely manner. More information on these groups, including Terms of Reference, Membership, Agenda, Minutes and other resources can be found here:

Challenge Group Home Page 

Challenge Group Resources

Delivery Group Home Page

Delivery Group Resources

 

SCR Secretariat

The Energy Networks Association (ENA) provides the secretariat function for both the Challenge Group and the Delivery Group. ENA brings unrivalled regulatory, commercial and technical expertise to support delivery of the SCR.  ENA Website here.

  • a review of the definition and choice of access rights for transmission and distribution users
  •  a wide-ranging review of distribution network charges (Distribution Use of System (DUoS) charges)
  •  a review of the distribution connection charging boundary, and
  •  a focused review of transmission network charges (Transmission Network Use of System (TNUoS) charges)
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Getting more out of our electricity networks

The UKs energy system is transforming. Smart technologies offer significant opportunities to adjust supply and demand at times and in places where Network capacity is limited. Ofgem are seeking to enable this transition in a way which delivers the best value for the end consumer through their Strategy for regulating the future energy system and Plan for a Smart, flexible energy system.

In November 2017, Ofgem started the process of looking at how electricity network access arrangements and forward looking charges need to change in-line with supporting delivery of these plans.

What are Access Arrangements and Forward-Looking Charges? image

What are Access Arrangements and Forward-Looking Charges?

Access Arrangements

These are rights a user has to access the electricity network. It comprises a connection from the user’s equipment to the wider network and an allocated capacity on that wider network. This capacity is the amount of power a user can demand or supply to their target market through the network.

Forward-Looking Charges

The elements of a charge to use the network that vary with certain behaviours and decisions a user makes. They seek to reflect and indicate to users how their behaviours can increase or reduce future costs on the network. In this way they aim to encourage efficient use of the network.

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What could change?

Ofgem's launch of a significant code review (SCR) marks the start of a process which seeks to implement wide-ranging and holistic reform in these areas. As part of this process Ofgem have decided to review:

  • access rights for small & large users with the aim of increasing the choice of arrangements,
  • how forward-looking charges on the distribution network can work to encourage efficient use of the system,
  • how charges to connect to the distribution network can work in-line with forward-looking charges to reduce barriers to connection whilst still sending a strong signal to efficiently use the network,
  • and how forward-looking charges on the transmission network can work to create consistent signals for generators connected across all levels of the network.

Any changes decided through this process would be implemented in either 2022 or 2023

You can learn more about what the Access and Forward-Looking SCR covers in our podcast with Ofgem which can be found here.

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How might any changes affect me?

Ofgem recently sought industry views through a consultation on what areas of access arrangements and forward-looking charges should be reviewed, with a view to being changed, going forward. During this period we ran a series of podcasts which sought the views and questions of different network users on the changes. Hearing the views of these network users will be a great place to start for understanding how you may be impacted going forward.

These episodes are called the 'Access series' of the Charging Futures podcast. This podcast can be found on iTunes, SoundCloud or wherever you normally listen to your podcasts by searching for Charging Futures.