Ofgem has broken cover over major changes to network charging and access.
The regulator is trying to ensure that the way businesses and households are charged for using the grid is reflective of the costs their actions cause.
It admits that distributed generators are exploiting loopholes in the current arrangements, and wants to force “developers to respond to signals that reflect the economic reality, not the peculiarities of the regulations”.
Ofgem therefore plans a Significant Code Review to redesign charging and access arrangements, and needs to finish the redesign to coincide with the next set of price controls for network operators, in 2022/23.
The regulator indicated it aims to better define access rights and choices within the review. However, it will likely leave some elements of access reform to the networks themselves, such as continuing to providing different sorts of flexible connections, and enabling companies to trade curtailment and constraints with one another where they might ordinarily have to stop exporting generation.
Letting industry deliver some aspects of change would allow the regulator to concentrate on core reforms to transmission and distribution charging.
Ofgem said it may look at creating a new zonal charging structure for distributed generation. At present, distribution system charges (DUoS) treat generation as negative demand. So generators tend to get paid, even if their generation isn’t beneficial to the system. That may change, with Ofgem mooting zones that are demand-heavy or generation heavy, with distributed generation charged – or credited – accordingly.
Ofgem dropped further hints about killing off the current Triad system within the consultation.
The regulator said while the Triad regime has merit, it may also be introducing uncertainty, as predicting Triad periods becomes increasingly difficult, and causing distortions due to the differences in the way small and large generators are treated and charged.
For generators, Ofgem may move to treat charges for both distributed generation and transmission in the same manner, which could see distributed generators lose another chunk of income.
For demand customers, Ofgem said options could include moving away from charging based on demand during Triad periods to fixed time of use windows, such as the bands used for DUoS charges.
Households and EVs
The regulator also plans to look at making households pay more reflective charges for network use.
While Ofgem said it does not plan to make any changes that affect basic household usage of electricity, its proposals would affect, for example, electric vehicle users.
If they are willing to charge their cars outside periods of network constraints, they could reduce network charges and connection costs. If not, they will pay more.
See the consultation here.