The Competition and Markets Authority (CMA) has dismissed an appeal by SSE and EDF Energy against an Ofgem decision on the transmission charges levied on generators.
The appeal was lodged after the regulator rejected a request for a £120 million rebate on the fees paid during 2015/16.
The companies argued the charges exceeded an annual cap of €2.50/MWh imposed by an EU directive. SSE submitted a modification to the Connection and Use of System Code (CUSC) in March 2016 which would have resulted in the return of the alleged overpayment.
Although two alternative versions of the modification were approved by the CUSC panel, Ofgem rejected the modifications in November last year on the basis that the cap had not in fact been breached.
The dispute arose from differing interpretations of an exemption within the EU directive for charges covering the connection of generation assets to the transmission network – mainly whether or not the exemption included the connection of offshore wind farms to the power grid.
SSE and EDF Energy appealed to the CMA to overturn Ofgem’s ruling in December. The CMA has now dismissed the appeal, saying the cap on transmission charges was not breached and Ofgem was entitled to reject the CUSC modifications.
Ofgem senior partner for energy systems Andrew Wright, said: “It is good news for consumers that the CMA has upheld Ofgem’s decision. If the modification had gone ahead, it is likely that the rebate would have cost consumers up to £120 million and led to further payments to larger generators in the longer term.”
“It is disappointing that SSE and EDF challenged our decision”, he added. “The energy market is under close scrutiny and companies should be working hard to deliver a better deal for customers rather than seeking additional revenues that will add to customers’ bills.”
A spokeswoman for SSE, said: “SSE is disappointed by the decision of the CMA to refuse the appeal lodged against Ofgem’s decision not to grant the CMP261 modification. SSE, together with EDF Energy, will now review the CMA’s decision in detail.”
An EDF Energy spokeswoman, said: “EDF Energy will look closely at the CMA’s decision about 2015/16 transmission charges. Fairly applied charges benefit customers, companies and investors by instilling confidence in UK electricity market regulation.”