WIREDGOV

• Certain transmission assets will be subject to competitive tendering – ultimately creating better value for consumers
• National Grid will have an enhanced role to identify and assess investment in the transmission network
• Changes will help improve GB’s transmission network as the country aims to reduce carbon emissions and replace aging infrastructure

Ofgem has yesterday announced new competition arrangements for some of GB’s electricity transmission network. Competitive tendering for new, separable, high value onshore transmission assets will benefit consumers through cost savings and innovation.

Ofgem also plans to bring in improvements into how network infrastructure is planned and regulated. As GB’s system operator, National Grid is responsible for coordinating the flow of electricity through the transmission network. It will now have extra responsibilities to identify the future needs of the onshore and offshore network, and to consider the value of more interconnection to other countries. This will help ensure that the network is planned and operated in an efficient, economical and coordinated way. This will lead to lower network charges to help keep consumer bills down. 

The announcements mark the conclusion of Ofgem’s Integrated Transmission Planning and Regulation (ITPR) project. Ofgem will now engage with stakeholders as it develops the tendering arrangements for  onshore transmission assets, with the aim of being able to run the first tender in 2016 or 2017. 

Ofgem expects changes to the system operator’s role to be in place by summer 2015, following a consultation period. 

Martin Crouch, senior partner for transmission, said yesterday: “GB’s transmission network requires substantial investment over the next decade. Our decision today, to open competition for some onshore transmission assets and providing the system operator with more powers in network planning, will ensure the system is fit for purpose, and that consumers are getting value for money.”

Notes to editors

1.    Decision

Find out more information in our decision statement

2.    Background

Ofgem launched the ITPR project in 2012 to review the existing arrangements for planning and delivering the onshore, offshore and cross-border electricity transmission networks in GB. The aim was to ensure that transmission is developed in an efficient, coordinated and economic manner, with the right investments made to protect existing and future consumers.

Under the current price control, strategic wider works projects could be subject to competitive delivery.

3.    Interconnection 

For interconnection, Ofgem has decided it will keep a developer-led approach as well as open further application windows under its new cap and floor regime. 

Through cap and floor, if developers’ revenues exceed the cap, then revenue above the cap is returned to consumers. If their revenues fall below the floor then consumers top up revenues to the level of the floor. Consumer gains and costs are passed on through the network costs element of their energy bills. Developers are protected by the revenue floor from the full financial risks of the project, while consumers are protected by the revenue cap from underwriting excessive profits.

Find out more information in our factsheet on interconnectors. 

For further press information contact:

Dafydd Wyn:        020 3263 9943
Lisa O’Brien:        020 7901 7426

Out of hours media contact number:  07766 511470

• The energy network: how it works for you - Video
• Integrated Transmission Planning and Regulation
• integrated transmission planning and regulation itpr project final conclusions