Ofgem update on power distribution structure of charges

Revised Ofgem proposals (48 pages, PDF) for future changes to the governance of the methods used to set the structure of electricity distribution charges in Great Britain. Ofgem proposes a licence obligation for the regional distribution network operators to continue developing a common charging method for HV and LV customers, to be implemented from April 2010, and a separate licence obligation requiring each operator to choose between a "LRIC" and a "FCP" method to apply at EHV levels from April 2011.

The method proposed by ENW does not appear to get any mention. According to Ofgem (which prohibited ENW's proposals in November 2008):

We have decided to restrict the DNOs choice at EHV level to either LRIC or FCP firstly because to date these are the only two EHV methodologies which we have had the opportunity fully assess, and secondly because we consider that having more than two methodologies will dilute the benefits of commonality and governance arrangements at EHV level.

The common charging method appears intended to apply to all HV and LV users, including embedded networks (IDNOs).

Reckon currently provides support to the regional distribution network operators on the development of a common charging method and model at HV and LV.

For further information or advice please contact Franck Latrémolière.

Filed under Electricity, Ofgem, Reckon LLP.

Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.

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