Ofgem plans to remove last resort EV charging role from DNOs

Ofgem has launched an informal consultation on its plans to remove the provisions within distribution network operators’ licences allowing them to act a “provider of last resort” for electric vehicle (EV) charge points.

The provisions in question, which the regulator originally suggested removing in its RIIO ED2 final determinations in December, permit DNOs to own, developer, operate or manage EV charge points as a backstop if no other party can be found to do so at a reasonable cost and in a timely manner following a tender process.

Since the provisions were added to the licence in 2021, Ofgem said there have been significant policy and regulatory developments, which mean DNOs may not be suited to acting as charge point operators even as a provider of last resort.

The regulator said DNOs are currently unlikely to have necessary business infrastructure to take on the role which, among other things, may involve ongoing maintenance of hardware and software, price setting and the provision of customer service.

Developing these capabilities would incur additional costs which would be added customers’ bills. The same costs would not be incurred by existing industry participants which already have them. Ofgem said this view is also held by the majority of DNOs.

The provider of last resort provisions have never been invoked and there is no specific funding mechanism within the current ED1 price controls for DNOs to recover the associated costs. Ofgem did propose to introduce such a mechanism as part of the ED2 price controls beginning in April but subsequently decided against this based on responses to its draft determinations.

The regulator said it believes that either local authorities or the Office for Zero Emission Vehicles would be better positioned to put in place arrangements for appointing provider of last reports if necessary.

Ofgem noted that the government is planning to introduce an obligation on local authorities to develop and implement local charging strategies as part of its own EV infrastructure strategy published in March last year. It said the government has also announced £1.6 billion of funding to support charging infrastructure since 2020, of which £450 million will be used to support local provision through the Local EV Infrastructure Fund.

The deadline for responses to the consultation is 23 April.