UK Power Networks Services has applied to Ofgem for a distribution licence to create an Independent Distribution Network Operator (IDNO).
If successful, it would be the second time an existing electricity network has set up an affiliated IDNO, following the creation of Optimal Power Networks by SSE in 2020.
UK Power Networks Services, the commercial arm of UK Power Networks (UKPN), has applied for the licence under the name Energy Infrastructure Networks Limited. Ofgem is currently considering the application.
IDNOs design, develop and operate local electricity distribution networks under licences granted by Ofgem, typically for new housing or commercial developments. Unlike distribution network operators (DNOs), they are not restricted to certain geographies and can bid for work across the UK. While regulated by Ofgem they are covered by a relative price control as opposed to the RIIO framework.
There are currently 15 active IDNO licences, including ESP Utilities, Vattenfall and Leep Utilities.
Nicola Pitts, executive director of the Independent Networks Association (INA), told Utility Week she was not opposed to network-affiliated IDNOs but stressed that Ofgem must ensure the market remains competitive.
She said: “It’s really important that there is a level playing field and that any IDNO set up as part of an existing DNO is a wholly separate entity.”
She added: “Developers vote with their feet and what is really attractive about partnering with an IDNO is that they are fleet of foot and can fit with the timescales of the development. So there is a high bar for prospective new entrants.”
A spokesperson for UKPN confirmed the application had been submitted but said the company could not comment further while it was being considered by Ofgem.