A group of peaking plant developers have sought an injunction to prevent Ofgem enacting a major cut to triad avoidance payments at the beginning of April.
The eight companies involved, including flexible generation firm Peak Gen, applied for a judicial review of the decision in October and were granted their request the following month.
In an update on the regulator’s website, Ofgem said: “The claimants have applied to the court for an injunction to prevent the decision taking effect as planned from April 2018.
“The claimants have asked the court to deal with this urgently, prior to the start of the T-1 capacity market auction on 30 January 2018.”
Ofgem said it is “resisting” the application. A court hearing is scheduled for tomorrow (23 January).
Triad avoidance payments are one of a number of so-called “embedded benefits” which are available to small-scale generators connected to – or embedded within – the distribution network.
They can receive the payments for helping suppliers to reduce their transmission charges and are able to do so because the power they sell is treated as net negative demand during the triad periods used to set the charges.
Transmission charges are split between forward-looking charges, which reflect the costs of grid reinforcements to accommodate additional loads, and residual charges, which are used to recover the sunk costs of the existing network.
Ofgem revealed plans in March last year to slash the residual element of triad avoidance payments from around £45/kW to just £2/kW. Despite fierce opposition from distributed generators, Ofgem confirmed the decision in June, revising the new level for the residual element of the payments to between £3/kW and £7/kW.
The regulator said triad avoidance payments give an “unfair advantage” to distributed generators – distorting investment decisions – and would otherwise rise to £70/kW in the coming years due to a feedback loop, whereby the payments become increasingly valuable as more generators connect to the distribution network in order to pursue them.