Network Access Consultation July 2018
A response to Ofgem’s
Network Access Consultation of July 2018
Ofgem published in July a paper on reform of access to the UK
electricity network, and charging for its use (1). (Earlier posts: 27th July
and 6th August).The paper called for detailed responses to a list of questions.
The following is part of a submission addressing more generally the issues
involved. It begins with comments from two members of the Regen organisation,
Poppy Maltby and Merlin Hyman:
‘Poppy Maltby said that “A key limitation of Ofgem’s
approach is that it focuses just on efficient use of the network. There is no
objective in this work around decarbonisation and clean growth...” (2). Merlin
Hyman wrote that “Ofgem’s focus is on efficient use of the network to minimise
customer bills. Sensible enough in itself but rather a narrow goal.” (3).
The tension between the goal of decarbonisation and that of
protecting vulnerable consumers is the focus of this paper, which takes the
viewpoint of community energy. While Ofgem (1) does refer to decarbonisation at
a number of points, its main emphasis seems to be on the customer. Elsewhere,
however, Ofgem’s commitment to decarbonisation is made clear:
“The Authority‘s principal objective is to protect the
interests of existing and future consumers in relation to gas conveyed through
pipes and electricity conveyed by distribution or transmission systems. The interests of such consumers are their
interests taken as a whole, including their interests in the reduction of
greenhouse gases and in the security of the supply of gas and electricity
to them.” (Italics added). (4)
The wider legal obligations of the UK with regard to
decarbonisation can be found in references (5) and (6).
Hyman states that the “most obvious concern for distributed
generators is that Ofgem is proposing that they should pay TNUoS charges for
the transmission network, which they are currently exempt from.” This leads to
the question of whether the growth of distributed generation should be constrained
in the economic interests of consumers and how this might impact upon the UK’s
decarbonisation target.
In a 2017 paper (7) on transition pathways the authors note
(p.441) that
“Energy policy in the
United Kingdom has moved over the last decade from an emphasis on climate
change mitigation towards considerations of affordability and security of supply.”
The paper examines a set of UK low-carbon transition
pathways which were used to explore “what is needed to realise a transition
that successfully addresses the so-called energy policy trilemma, i.e. the
simultaneous delivery of low carbon, secure and affordable energy services.”
(p.473). A successful transition is seen to demand a portfolio of balanced measures,
which include community energy schemes with distributed generation from wind
and solar sources, over the whole period to 2050.
On this view, it is important to recognise the long-term
contribution to successful transition which community energy schemes can make,
and not hamper their development or threaten their survival by regulatory
measures arising from the economic austerity of recent years. Ofgem may feel
unable to adequately address all aspects of the ‘energy policy trilemma’
without changes to domestic electricity charges extending beyond its present remit.
Barrett and Owen (8) discuss the regressive nature of the
present levies on energy supply, arguing that the burden they place on the
poorest households should be removed by funding energy policy from income tax
instead of by levies. A similar argument could be made in favour of a
progressive scale of unit energy charging. Such changes might give Ofgem more
room to address its obligations regarding decarbonisation, though presumably
the changes would have to be implemented by Act of Parliament.’
Ofgem: Office of Gas and Electricity Markets
TNUoS: Transmission Network Use of System
References
(1) “Getting more out of our electricity networks by
reforming access and forward-looking charging arrangements”, Ofgem, July 2018,
available at https://www.ofgem.gov.uk/system/files/docs/2018/07/network_access_consultation_july_2018_-_final.pdf
(2) Member update: “Ofgem proposes changes to how we pay for
the grid”, Poppy Maltby, 24 July 2018.
(3) “Ofgem’s proposals for network charging should make
everyone take notice” Merlin Hyman, Regen, 1 August 2018, available at https://www.regen.co.uk/ofgems-proposals-for-network-charging-should-make-everyone-take-notice/
(4) “Electricity and
Gas Supply Market Report”, Ofgem, September2010 (appendix 5, section 1.4, p.19)
available at https://www.ofgem.gov.uk/ofgem-publications/38231/electricity-and-gas-supply-market-report-september-2010.pdf
(5) “Clean growth strategy”: Department of Business, Energy
and Industrial strategy, 2017, last updated 16 April 2018, available at https://www.gov.uk/government/publications/clean-growth-strategy
(6) “Climate Change Act 2008”, The Committee on Climate
Change, available at
(7) “Realising transition pathways for a more electric,
low-carbon energy system in the United Kingdom: Challenges, insights and
opportunities”
Chilvers et al., 2017, Proc IMechE Part A: J Power and
Energy 2017, Vol. 231(6)
(8) “Poorest households hit hardest by UK climate change
charges despite using least energy”, John Barrett and Anne Owen, March 2, 2018,
The Conversation
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