Ofgem has accepted legally binding commitments from SSE. This follows a Competition Act investigation into whether its behaviour could have impeded competition for connecting new developments to its electricity distribution network in the South of England.
Hundreds of thousands of connections are made every year as sites, such as new housing estates and business premises, connect to electricity distribution networks. The whole market for providing these electricity connections is worth over £500 million per year in Great Britain, as independent companies compete against regional distribution network operators, such as SSE, to connect new customers to these networks.
Effective competition should help deliver cheaper connections, better customer service, and more innovative products.
Ofgem’s investigation did identify competition concerns regarding SSE’s behaviour in providing services needed for competitors to connect new developments to its electricity distribution network in the South of England. These included inconsistencies in providing essential services needed to allow competitors to compete effectively, including inconsistency in quotes.
SSE has committed to putting in place new processes and procedures to make sure it provides these essential services to all parties on a consistent basis. These steps include the following:
- Splitting operations within SSE’s connections business to separate the team that provides essential services to the connections market from the team that competes in the connections market;
- putting in place an improved IT system to prevent inconsistent quotes from being issued for the same site without justification;
- mandatory and regular competition law compliance training; and
- frequent, independent, third party auditing of and reporting on SSE’s compliance with the commitments.
Ofgem considers that these commitments will fully address the competition concerns that have been identified.
As a result of accepting the commitments, Ofgem is closing its investigation with no decision made on whether or not SSE infringed competition law.
Since the investigation was opened, Ofgem has introduced a new Code of Practice and associated licence condition to force all electricity distributors to open up competition in the electricity connections market. Today’s decision reinforces these new rules to ensure that the company effectively addresses the issues raised during the investigation. It helps open up the connections market to more effective competition.
Ofgem is committed to making sure there is more effective competition in the electricity distributions network market, to benefit consumers. It will continue to monitor the market for new connections to electricity distribution networks. It will take action wherever it finds evidence of a potential infringement of competition law.
Notes to editors
SSE has two electricity distribution networks, one in the South of England and one in Scotland. The investigation only related to the distribution network in the South of England. However, SSE has committed to implement the commitments across both of its distribution networks.
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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