The regulator has rejected a pan-UK sharing of charges (so-called socialised charging) in favour of an adjusted version of the current system based on regional charges.
Scottish Power’s chief corporate officer, Keith Anderson, said: “The proposals do not go far enough. Ofgem’s proposed rejection of socialised charging would still result in conventional electricity generators located a distance from the GB centre of demand continuing to face high locational transmission charges.”
While accepting the regulator’s proposals as “a step in the right direction”, an SSE spokesperson said: “SSE’s preferred solution to transmission charging has always been the “socialised” model.”
A National Grid spokesperson said: “We do not believe that the current regime is unfair or has inhibited the growth of renewables in Scotland – 12GW of connection agreements for new generation say otherwise – but it is the right time for a fundamental review of the framework given all the huge changes in the industry.”
Ofgem argues that socialisation of charges would drive up industry costs and add to customer bills. An improved version of the current investment cost-related pricing would, Ofgem said, cut costs by about £122 million by 2020 with small increases up to 2017. But socialised pricing would, the regulator calculated, add £2.8 billion, largely in transmission and constraint costs, over the same period.
This article first appeared in Utility Week’s print edition of 13 January 2012.
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