The Energy Networks Association (ENA), in its response to a Department of Energy and Climate Change (Decc) consultation, said redress should be capped at 10 per cent of turnover. Otherwise there would be “uncapped financial risk… that is inconsistent with the low-risk nature of energy networks”. That risk would increase with intermittent generation, leading to a higher cost of capital and consumers would pick up the tab.
If Decc decides to grant Ofgem uncapped powers, network firms want more powers to contest Ofgem’s decisions, as do suppliers.
Energy UK wants to see any redress power before it is laid before Parliament and said appeals should be ‘merits based’ as in other sectors. Redress should not apply to other market participants, said Energy UK. Npower too noted the swelling ranks of supplier counterparties under programmes such as Green Deal and Eco, and said “potential redress liabilities… would massively increase and deter market entry”. It added that “no case had been made for specific arrangements in the energy sector”.
Good Energy said small suppliers’ “recompense plus fines should be capped at 10 per cent of group turnover”. British Gas disagreed. It said further redress powers were “unwarranted” but if granted, should “apply to all suppliers irrespective of size”.
Northern Powergrid pointed out that network firms’ liability was limited by section 21 and section 25(3)b of the Electricity Act 1989. It said the simplest solution would be to just give Ofgem powers to direct part of any financial penalty imposed under the existing system back to consumers.
This article first appeared in Utility Week’s print edition of 3 August 2012.
Get Utility Week’s expert news and comment – unique and indispensible – direct to your desk. Sign up for a trial subscription here: http://bit.ly/zzxQxx