Utility Week

UTILITY WEEK | JULY 2022 | 27 Electricity of the most exciting and sensible forms of substitution." Jones described the legal separation of DSO functions as a "placebo" solution and said concerns over conflicts of interest could be adequately addressed through openness, transparency and external scrutiny. When asked by Ofgem chief executive Jonathan Brearley whether the company would make public disagreements between DNO and DSO parts of the business, Jones responded: "Yes, absolutely." Speaking to Utility Week following Ofgem's call for input, Northern Powergrid director of policy and markets Paul Glendin- ning says legal separation would "create additional costs for our customers to bear and reduce the significant benefit that an integrated DSO model delivers. "As a combined entity we are uniquely placed to leverage synergies between the system operation and network operation component of our business. Separation fur- ther risks impacting service for customers by removing clear accountability from one party for delivering, and maintaining quality of, an essential service at the local level. "Some of the features in the other models have merits," he adds. "However, given the enormous challenge of achieving net zero on time and at a reasonable cost to customers, we do not think it is appropriate for whole- sale institutional change at this time." Weighing up the benefits Scottish and Southern Electricity Networks (SSEN) has likewise expressed its opposition to DSO separation. In March, the company published a DSO action plan and an accom- panying report commissioned from NERA Economic Consulting, which concluded that any benefits from separation would be "neg- ligible" and likely outweighed by the 1-2% of avoidable additional expenditure that would be incurred through "more significant sepa- ration options". "To the extent that there are benefits associated with DSO separation, they arise from avoiding perceived conflicts of interest the integrated DSO-DNO may have to favour network solutions over alternatives provided by Distributed Energy Resources," the report explained. "However, we find these benefits are likely to be extremely small, mainly because regula- tory mechanisms already exist to mitigate any such conflicts of interest. We also find that DSO separation would interfere with achiev- ing net zero, by absorbing substantial time and resources needed to achieve net zero and make transition to net zero more costly." continued overleaf

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