The decision to direct NGET’s financial incentive on dispute resolution relating to the Electricity Market Reform
Decision,
Correspondence and other
Publication date
Industry sector
- Transmission Network
- Generation and Wholesale Market
Electricity Market Reform (EMR)
This letter sets out our decision to direct the value of Electricity Market Reform (EMR) Dispute Resolution Incentive for 2016/17. We also set out our decision on the value of the customer and stakeholder satisfaction survey incentive for 2016/17.
The dispute resolution incentive adjusts the licensee’s revenue depending on how many of the Reviewable Decisions made by the licensee are overturned by Ofgem. The dispute incentive relates to decisions on both the Capacity Market (CM) and Contracts for Difference (CfDs), but no Prequalification for CfD took place in 2016/17, and therefore no applicable CfD disputes arose from decisions made by NGET.
In 2016/17, we overturned ten of NGET’s Reconsidered Decisions relating to Capacity Market Prequalification. These ten decisions were grouped into two substantive Prequalification dispute issues. The first overturned Prequalification decision applied to two Capacity Market Units (CMUs). It related to NGET’s misapplication of the CM Rules in respect of the Early Capacity Auction (ECA). The second overturned decision applied to eight CMUs and was on the grounds of procedural fairness in the DSR Transitional Auction (TA).
The total potential dispute resolution incentive value for 2016/17 is ±£150,000, with ±£100,000 allocated to the T-4 and TA, and ±£50,000 to the ECA. Under the incentive, in both categories, one overturned decision results in £0. As there was one overturned decision for each category, both of these terms equal 0. Therefore, NGET’s overall disputes incentive performance for 2016/17 is £0.
The decision letter also outlines the value of the customer and stakeholder satisfaction survey incentive for 2016/17. The incentive has a total value of ±£300,000 for the Capacity Market. In 2016/17 NGET’s average score was 7.31, a slight decrease from the 2015/16 baseline of 7.46 (out of a maximum of 10). Under the incentive, a shortfall from the baseline score means a loss of incentive income. As a result, based on the incentive calculation, the Authority has determinated in 2016/17 NGET loses £54,545 on the customer and stakeholder satisfaction survey incentive.