Ofgem has seen off a legal challenge over cuts to embedded benefits.
The judgement was handed down this morning by Mr Justice Lavender, who rejected the application for judicial review.
Peak Gen Power had led a challenge to Ofgem’s decision to drastically reduce so-called embedded benefits, which have been a significant source of income for distributed generators.
The main element, the TNUoS residual (or Triad payment), will now be cut from £45/kW to around £3/kW over three years to 2020, which the regulator says could potentially save consumers up to £7bn by 2034.
Peak Gen and other peaking plant operators challenged its decision because they believed Ofgem’s analysis was flawed and because they bid for Capacity Market contracts in 2014 and 2015 based on the current level of embedded benefit. They wanted Ofgem to grandfather that rate to protect their incomes, with some arguing it represented retrospective action.
“Our view is that it is good news for consumers that the Court has upheld our decision. Ofgem will continue to take action that is in the interest of consumers and will robustly defend its decisions when challenged,” said the regulator in a statement.
See the regulator’s full statement here.
See the full text of the judgement here.