Structure of Electricity Distribution Charges - Initial decision
Consultation
- Upcoming
- Open
- Closed (awaiting decision)
- Closed (with decision)
Publication date
Industry sector
Distribution Network
This document provides Ofgem's initial decision on the regulatory framework for the structure of electricity distribution charges to apply from 2005 and its future development. The consultation on the structure of electricity distribution charges has included three documents and three public workshops, which have generated a wide range of views and extensive debate. Ofgem's initial conclusions were set out in June 2003. Respondents argued strongly for a predictable regime to be clarified quickly.
There were a range of views on what this regime should be and some concern over the feasibility of implementing wide-ranging changes by April 2005. In light of these comments, Ofgem has therefore modified the proposed approach.The clearest and most tractable problems with the current structure will be addressed for implementation in April 2005. A parallel process will be established for the development of a fuller solution which will allow for further discussion of alternative approaches and avoid overly rushed implementation of new and potentially uncertain models.
This document sets out the approach to implementing the interim solution and how the longer term arrangements will be developed. By April 2005: there will be a common connection boundary (ie scope of connection charges) for demand and generation; generators will no longer pay deep connection charges connection charges will only incorporate reinforcement up to one voltage level above the point of connection and then only on a proportionate basis; new generators will face use of system charges within a framework designed to avoid unnecessary unpredictability; distribution companies will be required to justify their approach to setting tariffs; and work will be under way on development of long-term models to set tariffs. Existing generators will not be required to pay distribution use of system charges prior to 2010. It is envisaged that a decision on the approach to charging for all users to apply in the longer term will be made in 2006. The approach set out in this paper is intended to cover the great majority of connections.
However, it is recognised that there may be exceptional cases that need to be treated on a case-by-case basis. An Implementation Steering Group has now been established to advise on the details of arrangements applying from 2005 and to begin consideration of longer term arrangements. Ofgem welcomes any comments on the decisions and proposals set out in this document or on the issues still to be resolved. Respondents are requested to provide comments by 22 January 2004.
Respond name
sp admin