New rules open up competition in connections to local power grids

Publication date
28th October 2015
Information type
Policy area

Owners of Britain’s local electricity grids will face new rules from 30 October 2015 forcing them to open up competition in the electricity connections market.

The electricity connections market is worth over £500 million per year with hundreds of thousands of connections made every year, for example, to new housing estates and business premises. Independent companies compete against Britain’s regional electricity distribution networks (DNOs) to connect new customers. Effective competition should improve the quality of service that customers receive and reduce the cost of connecting business to the grid. 

Over the last five years competition in this market has developed. However, in each region, DNOs are still the sole providers of several essential services needed to make connections. This limits competitors’ ability to control the delivery of their connections and can cause costly delays. Regional variations between services also create additional complexity for competitors.

To address this Ofgem has brought in the first ever code of practice for DNOs, which sets out what they must do to improve competition. DNOs must follow the code rules or they could face enforcement action from Ofgem. 

Maxine Frerk, senior partner, electricity distribution, Ofgem, said: “We want to see competition in the electricity connections market thriving. While some DNOs are helping to achieve this, many independent companies still face unnecessary delays and needless complexity.

“This has to stop and our code of practice will ensure that independent companies are treated fairly and consistently across the country. This means housing developers, businesses and other organisations will get real choice in who delivers their connections, leading to quicker completion and higher customer service standards.”

Dave Mitchell, technical director at the Home Builders Federation said: "Housebuilders welcome the introduction of the new code of practice and Ofgem’s attempts to improve the process of connecting up new build sites. Increasing the number of new homes being built and addressing the country's chronic housing crisis is a key the government target and already output is increasing. As the industry looks to drive further increases in supply, it is imperative that processes are in place to ensure the speedy and efficient connection of new homes to the grid."

Notes to editors

1. Read our decision to approve the revised Competition in Connections Code of Practice.

The development of the code follows a review we carried out into the connections market. Some DNOs, particularly Electricity North West Limited and Western Power Distribution have made progress in opening up the connections market in the areas they serve. But it is clear that a binding code is needed to ensure DNOs reduce the impact of their activities on competitors and improve the consistency of arrangements across Great Britain.

The code says DNOs must reduce the number of essential services that are only available from them. Where the DNO is required to provide these services, it must do so on the same basis to both its competitors and its own connections business. Crucially, the code requires DNOs to align the provision of essential services across the country.

The code requirements include:

Point of connection
To complete work an independent connection provider currently relies on the DNO to state the location on its network where the new connection can link to. Some DNOs are taking too long to determine the point of connection and provide technical information to help the competitor. 

The code states that for the majority of straightforward connections, the DNO must provide the same amount of technical information, on the same timescales, to a competitor as it would to its own connection business. The DNO must also allow the independent company to determine where it will connect – which will significantly speed up the process. 

Accrediting engineers from independent connections companies
DNOs must ensure that once an engineer is certified to work on or design a connection in one region, the accreditation and authorisation is applicable across Great Britain. Designs produced by independent engineers will also not have to be approved by the DNO. 

Inspection of connections work
DNOs must have in place an inspection and audit regime which is consistent for all connections they will adopt (both for where they have been responsible for the work or where an independent company has undertaken it). 

About Ofgem

Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.

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