The electricity system operator (ESO) at National Grid has stated its desire to lower transmission charges on generators to €0.50/MWh as it seeks to establish which costs are covered by an EU-imposed cap.
To create a level playing field between generators in different states, the EU requires that transmission charges, excluding connection costs, be kept within the range €0-2.50/MWh.
In May, the ESO proposed a modification to the Connection of Use of System Code (CUSC) called CMP371 with the aim of clarifying exactly which costs should be excluded from the limit.
It followed Ofgem’s decision in November 2017 to reject a modification put forward by SSE that would have given a £120 million rebate to generators on their charges for 2015/16 to rectify an alleged breach.
There are three types of transmission charges on generators: wider locational charges , which reflect their impact on network costs depending on the zone in which they are situated; bespoke local charges, which reflect the cost of assets required to accommodate their individual connection; and residual charges, which are used to recover the sunk costs of the existing network.
Ofgem’s decision on whether to grant a rebate to SSE was dependent on which of these charges should be included within the limit. The regulator described the rules as “ambiguous”.
It said if all three were covered by the limit then SSE would be right that it had been breached. However, Ofgem instead decided that the local bespoke charges should be considered to be connection costs and therefore excluded.
SSE and EDF filed an appeal against the decision with the Competition and Market Authority but it was dismissed by the watchdog in February 2018.
CMP371 would update the CUSC to codify Ofgem’s interpretation of the limit, whilst also creating a mechanism to make ex-post adjustments to transmission charges to ensure they stay within it.
The ESO, which administers the CUSC, said it did not intend the modification to result in an increase in transmission charges on generators.
Accordingly, the body confirmed at recent meeting of the modification workgroup that it is aiming to lower generator transmission charges to €0.50/MWh, rather than just limiting them to €2.50/MWh.
Its notes from the meeting state that this would “create a level of consistency with other EU members that use this amount”.
The ESO also advised that the new rules would deem “all local circuits and substations as being assets required for connection”.
Following further consideration by the workgroup, the modification will be voted on by the CUSC panel before Ofgem makes a final decision on whether it should be adopted.