The Authority proposes to modify the electricity distribution licence held by Western Power Distribution (WPD), SP Energy Networks (SPEN) and UK Power Networks (UKPN) (“the licensees”) by amending Special Condition CRC 14 (Distribution Charges: supplementary restrictions).
The reason why the Authority proposes to make this licence modification is to prevent the licensees being unfairly penalised for the under/over recovery of revenue related to the Authority’s decisions not to activate the Distribution Losses Incentive Mechanism (published 16 November 2012) and closing out the DPCR4 losses incentive mechanism (published 21 March 2014).
In our decision on closing out the DPCR4 losses incentive mechanism we stated, in paragraph 2.183, “We stand by our previous statement that any adverse impact or penalty arising as a result of the effect of the restatement of data or the anticipation of PPL values on a DNO’s under/over recovery position, will be dealt with on a case-by-case basis”. Given this decision, the proposed licence modification provides us with a mechanism to deal with any adverse impact before the licensees set their charges for 2015/16.
The effect of the proposed modifications is to provide for the value for the penalty interest rate adjustment (‘the PRt term’) applied to the licensees in any Regulatory Year to the over and under recoveries of revenue, to be set in a direction given by the Authority.
Before issuing any direction under the proposed modified CRC 14, we will first consult on any representations from the licensees for relief from the PRt term.
A copy of the proposed modification for each of the licensees and other documents referred to in this Notice have been published below.
Any representations with respect to the proposed licence modification must be made on or before 21 August 2014.