Ofgem mulls action over DNO failure to open up electricity connections market

Ofgem is considering action on electricity distribution network operators (DNOs) over failures to open up the connections market to competition.

The incumbent DNOs had three years until 31 December 2013 to demonstrate to the regulator they were promoting competition across nine market segments. This involved showing that independent providers were getting a reasonable share of the market in connecting distributed generation and new demand. If successful, DNOs would be allowed to charge an unregulated margin on the relevant activities.

However, the industry as a whole has passed the competition test for just one third of the market segments, after Ofgem last week published decisions on the final tranche of applications.

SSE Power Distribution did not pass a single segment in its Scottish region and only one in its southern patch. Northern Powergrid and Scottish Power fared little better, with one or two passes in each of their areas. Western Power Distribution and UK Power Networks sat mid-table.

Electricity North West made the most progress, opening up the market in seven out of nine segments. The company stressed these segments accounted for 97 per cent of connections in the area. The two failures were in activities no DNO had managed to crack.

“We’re pleased to continue setting the benchmark enabling effective competition in seven out of nine segments,” said ENW head of market regulation Brian Hoy. “We have worked hard to open up the connections market in the North West, but recognise that not all customers across the country currently benefit from such healthy competition.”

Ofgem is due to set out how it will tackle the remaining gaps in competition shortly. Its options include a referral to the Competition and Markets Authority.