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Transmission price control from 2007

This page is for information and links relating to Ofgem's review of the transmission price controls for National Grid Electricity Transmission plc, SP Transmission Limited and Scottish Hydro-Electric Transmission Limited for the period from 1 April 2007 to 31 March 2012. The review was conducted in parallel with that of National Grid's gas transmission price control.

Documents and events are listed in reverse chronological order through the review process.

12 October 2007: Ofgem invitation to contribute to an internal review of the process

30 March 2007: Final licence modifications

1 March 2007: Statutory consultation on licence modifications

19 January 2007: Second consultation on licence modifications

4 December 2006: Ofgem's final proposals

These proposals were accepted by the companies.

15 November 2006: Ofgem's consultation on draft licence modifications

25 September 2006: Ofgem's update document

The last major consultation before the final proposals. This reaches a decision on information quality/sliding scale incentives for capital expenditure, and includes additional evidence (but no updated proposals) on the cost of capital.

The 2112 end date for price controls quoted in Ofgem's press notice (3 pages, PDF) is presumably a typo.

26 June 2006: Ofgem's fourth major consultation: initial proposals

This includes detailed proposals for the allowed cost of capital.

30 March 2006: Ofgem's third major consultation

This focuses on incentives and reforms to network access arrangements.

1 February 2006: Ofgem consultation on capital expenditure

Consultation on the approach to determining the amount of future capital expenditure to be taken into account in the review. This letter notes the extent of uncertainty about future network enhancement and capital maintenance requirements, promises further development of the concept of forcing users to indicate a longer-term commitment to use network capacity, and invites responses specifically on incentives to "ensure that transmission companies finance their capital investment plans in a timely and efficient manner" and on the risk that investment may be undertaken for financial reasons (to maintain the regulatory capital value and depreciation allowances once pre-vesting assets have been fully depreciated for regulatory purposes) rather than in accordance with operational need.

15 December 2005: Ofgem's second major consultation

Ofgem consultation (168 pages, PDF) focusing on the arrangements for funding unpredictable investment requirements likely to arise from changes in gas sources and electricity generation patterns, including the impact of new renewable generation on the transmission network.

For electricity, the paper suggests that the current arrangements for approving investment in transmission networks may be replaced with a system based on long-term contractual commitments by transmission network users (e.g. generators), and invites interested parties to present "straw men" options for how such a user commitment regime may work. Despite this interest in making users commit to covering the investment costs that they impose on transmission companies, the paper does not appear to discuss the option of a system based on deep connection charges.

1 December 2005: Report on capital expenditure for interim price control

PB Power report (80 pages, PDF) on National Grid's capital expenditure projections for the 2006/2007 price control.

30 November 2005: Reckon proposed revenue adjustment scheme to address uncertainty in investment

Brief paper (5 pages, PDF) prepared by Reckon LLP as part of the review. The paper suggests a possible way of addressing uncertainty in investment requirements. The proposed scheme is designed to minimise the costs borne by consumers as a result of the need to reinforce transmission networks to connect new generators, particularly renewables. It seeks to limit the increased financial risks borne by companies, and the resulting financeability costs to consumers, whilst maintained the strong and consistent incentives for efficiency arising from an RPI-X price control coupled with a rolling pass through mechanism.

28 November 2005: Ofgem's proposals for interim price control

Final proposals (36 pages, PDF) for the 2006/2007 price control for National Grid's electricity transmission network business. The proposals include increases in the revenues allowed for tax and for future investment in asset renewals, together with a recovery of past over-spending on capital expenditure. Some elements of the settlement are explicitly exposed to the risk of being adjusted with retrospective effect as part of the ongoing review of transmission charges for 2007-2012. The deadline for National Grid to accept or reject the proposals is Friday 6 January 2006.

28 October 2005: TIRG

Draft guidance note (7 pages, 1M PDF) accompanying proposed transmission licence modifications for National Grid (23 pages, 2M PDF), SP Transmission (29 pages, 2.8M PDF) and Scottish Hydro-Electric (23 pages, 2M PDF) intended to provide a funding mechanism for network enhancement projects required to provide transmission capacity for new renewable generation plants. This proposal is limited to the four investment projects (Beauly-Denny, Scotland-England interconnector, Sloy and South West Scotland) identified in Ofgem's December 2004 final proposals (64 pages) as "clearly justified in terms of savings in constraint and other costs".

27 September 2005: Ofgem's initial consultation

Initial consultation (PDF, 62 pages) on the electricity and gas transmission price control reviews. New prices are scheduled to take effect from April 2007, and future major Ofgem publications are scheduled for December 2005, May/June 2006, September 2006 and November/December 2006. The document focuses on describing the background to the reviews and recalling the methods used by Ofgem in previous price control reviews.

See also

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Last changed by Franck at 10:18 AM on Sunday 24 February 2008.

Reference for this page:
Reckon Open "Transmission price control from 2007" 2008-02-24T10:18:27