Access and Forward-Looking Charges Significant Code Review – Summer 2019 working paper

Publication date
6th September 2019
Information types
Policy areas

As part of our programme, in December 2018 we launched a Significant Code Review (SCR) into network access and forward-looking charging. The objective of the SCR is to ensure that electricity networks are used efficiently and flexibly, reflecting users’ needs and allowing consumers to benefit from new technologies and services while avoiding unnecessary costs on energy bills in general.

This is the first of two working papers we intend to publish this year, and consists of a suite of discussion notes setting out our current thinking –

  • Context and our approach to this Significant Code Review: we outline the range of reforms underway on network access and charging to support the transition to a smarter, more flexible and low carbon energy system. It also provides an overview of the approach we have taken to date and intend to take in the future to develop reforms prior to consulting on our draft conclusions and Impact Assessment in mid-2020.
  • Options for reform of access rights for distribution and transmission: we set out the options we are considering for better definition and choice of access rights, and our initial assessment of these options.
  • Network charges:
    • Options for improving locational accuracy of distribution charges: we explain some of the key framework questions underlying distribution cost models that we are considering, focusing particularly on what kind of signals should be sent through distribution network charges and the model(s) used to calculate these.
    • Charge design options for distribution and transmission charges: we set out further options with respect to the tariff structure of distribution network charges. We also explain options we are considering for transmission network charges, focusing particularly on different options for the design of transmission network charges for demand users.
  • Illustrative examples: we explain how the options we are considering could benefit different users of the system.
  • Linkages between options for reform: we describe our thinking on the links between the access rights, network charge design and cost models options that we are considering.
  • Linkages with procurement of flexibility: we identify the relative merits of different approaches for valuing system flexibility and describe how our proposals and procurement of flexibility will deliver better value from the electricity system.
  • Engagement with industry stakeholders: we provide an overview of the engagement we have undertaken with industry stakeholders, including information about interviews we conducted with suppliers and a summary of their responses.

We also intend to publish a second working paper later this year. The second working paper will consider the applicability of reforms to small users, distribution connection charging reform and the remaining focused areas of transmission network charging reform (transmission network charges for distribution-connected users and the Reference node).

We intend to consult on our draft SCR conclusions and draft Impact Assessment in mid-2020, with a decision on final conclusions and Impact Assessment early in 2021. We propose to implement all reforms in April 2023.

If you have any views on this working paper, please contact us at FutureChargingandAccess@ofgem.gov.uk.