Investigation into Central Networks East plc’s and Central Networks West plc's compliance with SLC 4D, SLC 12 and SLC 30 of the electricity distribution licence

Opened:
Sep 2009
Decision Proposed:
Feb 2011
Closed:
Apr 2011
Company:
Central Networks
Regulation Area:
Sectoral Regulations
Breach Area:
Network connections

The Gas and Electricity Markets Authority ("the Authority") has confirmed its decision to impose a financial penalty on Central Networks East plc and Central Networks West plc (Central Networks) for its failure to comply with obligations under its electricity distribution licence, specifically standard licence condition 4D ("SLC 4D"), standard licence condition 12 ("SLC 12") and standard licence condition 30 ("SLC 30").

The obligation on licensees in SLC 4D and SLC 12 is to provide offers for connection as soon as practicable/reasonably practicable and in any event within three months of receipt of an application which contains all such information as the licensee may reasonably require for the purposes of formulating the offer. SLC 30 requires a licensee to have available to itself such "resources, including management and financial resources…as will enable it to…comply in all respects with its obligations under this licence".

Ofgem’s investigation concerned applications and offers for connection made between 1 July 2004 and 11 October 20102, and the monitoring systems that were in place at the time to ensure compliance with the obligations regarding connection offers.

The Authority found that:

  • Central Networks did not have monitoring systems in place sufficient to enable it effectively to monitor compliance with its obligations under the electricity distribution licence between 1 July 2004 and the time of the introduction of a new system for connections in January 2009, in breach of SLC 30;
  • There have been 14 instances where Central Networks has breached the three-month timeframe required in SLC 12 when the time of the contravention took place on or after 9 December 20083; and
  • There has been one case where Central Networks has breached the three-month timeframe required in SLC 12, and two cases where Central Networks has breached the requirement set out in SLC 4D, when the time of the contravention took place before 9 December 2008.

The Authority considered it appropriate to impose a financial penalty for these contraventions. The Authority decided to impose a financial penalty of £400,000 on Central Networks.

Further details can be found in the final penalty notice.