Firms challenging Ofgem’s decision to make deep cuts to Triad export rates have been refused a temporary injunction to stop the decision from coming into effect from 1 April.
The companies sought the injunction ahead of the T-1 Capacity Market auction, which starts next week.
Lower Triad export payments will affect small generators’ CM bidding strategies. If they earn a lot for exporting power during times of transmission system stress (Triad payments), they can bid lower in the auction.
As it stands, they no longer have that advantage.
Owners of gas and diesel farms with contracts for delivery next winter and winter 2019/20 may also decide to offload them due to the regulatory intervention, according to consultants Aurora.
Ofgem has decided to cut Triad export rates by roughly a third this year, a further third in 2019 and again in 2020 to leave them between £3/kW and £7/kW, versus their current value, £45/kW.
The regulator argues it is fixing a market distortion which it says could potentially save consumers up to £7bn by 2034. Decentralised generators have questioned its analysis and approach.
The main hearing is scheduled for three days in late April 2018.
Update: Ofgem has commented on the decision:
“Ofgem welcomes today’s refusal by the High Court to grant an injunction to delay implementation of our decision on charging arrangements for smaller embedded generators. The Court’s decision is in the interests of customers.
“The application made by the claimants would have delayed implementation of our decision until April 2019, which we believe would cost customers approximately £500 million.
“Our focus is now on defending our decision in a substantive hearing scheduled for late April 2018.”