UK Power Reserve seeks reforms to industry panel

Peaking plant developer claims CUSC panel is dominated by employees of incumbents

Peaking plant developer UK Power Reserve has proposed a series of reforms to the election process for the Connection and Use of System Code (CUSC) panel.

The company claims flaws in the voting system have allowed the industry panel, which scrutinises modifications to the code governing the use of the transmission network, to be dominated by the employees of incumbents.

“The voting process as it is currently set out isn’t able to deliver a sufficiently diverse and independent panel and because of that it’s failing to represent the industry as a whole,” said UK Power Reserve head of regulatory affairs Michael Jenner, speaking to Utility Week.

The panel includes an independent chair, a secretary, appointed representatives from Ofgem, National Grid and Citizens Advice as well as seven elected members representing the CUSC signatories.

Out of the seven elected members, four are currently employed by big six energy companies, hailing from EDF Energy, Eon, SSE and Scottish Power. The remaining three are employed by Drax, First Hydro Company and the industry association Energy UK.

Each individual CUSC signatory is able to cast only one vote in the biannual election, but according to analysis by UK Power Reserve, the big six have control of over around a fifth of the overall tally via their various subsidiaries. 

“If you have a number of large companies that are able to register a lot of subsidiary companies as CUSC signatories that means they have much larger share of the vote,” said Jenner. “When it comes to voting that’s why the biggest companies have always managed to secure a person from their company on the CUSC.”

He said transparency is also a major issue: “It took us quite a while just to go through the CUSC signatory list to try and figure out which companies are under which parent company.”

To address the concerns, the firm has submitted its own code modification to the CUSC panel called CMP 285. Under the proposals, parent companies would be obliged to declare any CUSC signatories which they control, either directly or indirectly, and would be prevented from casting any more than five votes in total. 

At least three of the panels members would have to be “fully independent” and not employed by any of the CUSC signatories, and at least two would have to have experience of working in a distributed generation company. Panellists would be unable to serve consecutive terms and a minimum of 60 per cent of CUSC signatories would be required to vote for election results to be binding.  

“The reforms are looking to make it transparent and clear how many votes each company has to make it fair and increase participation, so we’ve got truly independent people on that panel, who are representing all parts of the industry and can give the best outcome for consumers”, said Jenner.

Asked whether it was incumbent on smaller companies to make a greater effort to participate in process, given that they already control a significant majority of the votes, he responded: “I would definitely agree. I don’t think anyone’s ever done some analysis like this before that actually shows the issue.”

However, he argued that the lack of involvement is partly the result of disillusionment with the voting system, with many companies sceptical about their ability to influence the outcome in meaningful way.

“Just look at the last eight to ten years. The same companies have been on it, very often with the same person… There’s been a disengagement from industry because of that.”

“A big part of this is awareness raising, which we’ve never seen before,” he added.

Ofgem has the final say on any code modifications, but Jenner conceded it will be uphill struggle to get the proposals adopted, especially when they will first have to be reviewed by the very same panel which they seek to reform.

“If you’re a big six party, then the CUSC is so important. It’s absolutely crucial because it determines how you can make your money, how you can maintain your dominance and how you can stop your dominance being eroded.

“I would expect a huge amount of pushback. It’s going to be a battle, no question about it.”

He said similar changes might be worthwhile for other code panels too: “If there is a model which can be seen to be more independent, more transparent and enhances the outcomes for consumers then why wouldn’t you want to roll that out to all panels?”

The CUSC panel will meet today (28 July) to decide whether the modification should be considered by a working group. UK Power Reserve is hoping to get the changes implemented by January 2019 so they are in place for the next panel election in July 2019.

A spokesperson for Ofgem commented: “We note that the CUSC panel will consider CMP285 at its meeting on 28 July and that it is proposed the modification is sent to the authority for decision in April 2018.

“We take the views of panel members and the CUSC working group into account, however our final decisions on whether to approve change proposals are only made after we have carried out our own independent assessment.

“We do this by considering the proposal against the relevant objectives of the code and our wider statutory duties.”

Utility Week has approached the big six energy companies for responses to UK Power Reserve’s proposal. No comment was availble at time of going to press.