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21 January 2019
On 18 December 2018, Ofgem published its decision to launch a Significant Code Review ("SCR") into the electricity network access and forward looking charging arrangements(the "Electricity Network Access Project") (the "Decision"). The Decision sets out the scope and guiding principles for the SCR, along for a timeline for the process. This article sets out the key points from the Decision.
Ofgem is reviewing the charges levied by electricity network businesses through a number of workstreams, as we have recently set out here. The three separate workstreams are:
The Electricity Network Access Project concerns: (i) charges and processes for connection to electricity networks; and (ii) the "forward-looking" aspects of transmission and distribution network use of system charges, based on the future impacts of a connection on the network operator's costs. For more information on the project, see our previous updates here and here.
Modifications to electricity industry codes (including the Connection and Use of System Code, the Grid Code, the System Operator Transmission Owner Code, the Balancing and Settlement Code, the Distribution and Use of System Agreement and Distribution Network Operators' own connection charging methodologies) are approved, but not administered, by Ofgem. Administration of code modifications is carried out by the various code administrators, including National Grid ESO, Elexon and the Distribution Network Operators. An SCR is a mechanism by which Ofgem can facilitate a holistic review and catalyse and fast-track wide-ranging changes to industry codes in a coordinated and consistent manner.
The aims of the SCR include:
Taking the aims of the SCR into account, Ofgem set out in its Decision the following guiding principles against which to assess the options developed under the SCR:
To achieve these objectives, the Decision stated that Ofgem will consider potential code changes in relation to:
The Decision excludes the following issues from the scope of the SCR:
Ofgem proposes to:
Ofgem will direct industry participants to propose the relevant code modifications identified by the SCR rather than driving them through itself. The resulting code modifications are anticipated to be progressed for approval in 2021 and implemented in 2022-23.
For further information on this topic please contact Robert Lane, Munir Hassan, Sarah King or Louise Dalton at CMS Cameron McKenna Nabarro Olswang LLP by telephone (+44 20 7367 3000) or email (firstname.lastname@example.org, email@example.com, firstname.lastname@example.org or email@example.com). The CMS Cameron McKenna Nabarro Olswang LLP website can be accessed at cms.law.
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