Utility Week

6 | 24TH - 30TH NOVEMBER 2017 | UTILITY WEEK Policy & Regulation This week Review of embedded benefits cut granted Request by eight companies is granted, but a date for the court hearing is yet to be set A group of eight companies, including flexible generation firm Peak Gen, have been granted their request for a judi- cial review of Ofgem's decision to cut triad avoidance payments. The appeal was lodged in October aer the regulator confirmed its intention to reduce the residual portion of the payments to a fraction of their current value. "Peak Gen Top Co, along with seven other companies which own or have interests in power generation, has been granted permission for a judicial review in respect of Ofgem's decision on embedded benefits," the company said in a statement. "This means the case will now be heard in court on a date to be set. In light of the ongoing legal action it would not be appropriate to comment further at this time." Ofgem has previously vowed to defend the cut, stat- ing: "Our decision stands unless quashed by the court." Small-scale generators embedded within distribution networks can receive triad avoidance payments by help- ing suppliers to reduce their Transmission Network Use of System (TNUoS) charges. They are able to do this because they are effectively treated as negative demand during the triad periods of peak demand used to set the charges. The payments form one of the financial advantages known as embedded benefits that are available to small- scale distributed generators. In June, Ofgem confirmed plans to slash the residual element of triad avoidance payments from around £47/ kW and rising, to between £3/kW and £7/kW. TG WATER UK and Wales agree power sharing deal The UK and Welsh governments are set to form an agreement over water that will see powers shared between the two. Currently, the UK government has the power to intervene if it believes devolved functions risk having a "serious adverse impact" on water resources, water supply or water quality in England. But Welsh ministers do not have reciprocal power. The protocol, which was laid jointly before the UK Parliament and the National Assembly for Wales last week, replaces the secretary of state's intervention powers with a reciprocal agree- ment between the UK and Welsh governments, which is expected to come into force on 1 April 2018. GAS CMA minded to free Centrica over Rough The Competition and Markets Authority (CMA) has provision- ally accepted a request from Centrica for the company to be released from historic commit- ments relating to the Rough gas storage facility. The request was made aer Centrica Storage announced plans in June to close the site because of concerns it had become unsafe and uneconomic. As part of the closure process, Centrica and Centrica Storage asked the CMA to free them from historic undertakings concerning the operation of Rough, which were introduced to ensure competition. These included the legal, financial and physical separation of Centrica Storage from the rest of Centrica, restrictions on Centrica's access to capacity, and commitments to non- discriminatory access to capacity for Rough's customers. A final decision will be published next month. ELECTRICITY Ofgem rejects £120m grid rebate request Ofgem has turned down a request from generators for a £120 mil- lion rebate to address an alleged overpayment of network charges. Generators claim recent levies have exceeded a cap on trans- mission charges set under an EU directive. The regulation limits average annual transmission charges for generators to €2.50/ MWh, but SSE argues the charges for 2015/16 exceeded this cap. In March 2016, the company submitted a modification to the Connection and Use of System Code (CUSC) called CMP 261, which would have resulted in a £120 million rebate. Two alterna- tive versions of the modification were approved by the CUSC panel at a meeting in June. How- ever, Ofgem has gone against the recommendations of the panel. Ofgem: has previously vowed to defend the cut Political Agenda David Blackman "The subsidy could end up costing households £30bn" Greg Clark's dance of the seven energy veils culminates in the industrial strategy, due to be published on 27 November. The past few weeks have seen a succession of announcements and reviews by the Business, Energy and Industrial Strategy (BEIS) secretary of state, kicking off with the Clean Growth Strat- egy and bookended by Monday's white paper, which is meant to provide a blueprint for the UK's post-Brexit industrial future. Low carbon lies at the heart bills. The latest estimate is that the subsidy for the project will end up costing households £30 billion over its lifetime. The PAC accuses the depart- ment of not knowing the extent to which British workers and companies will benefit from the project. The government has a vision for clean energy's role in deliver- ing a successful economy; when the dance is over, ministers need to demonstrate that there is substance to underpin it. of the white paper, with "clean growth" set to be one of the four "pillars" underpinning the strategy. This focus represents a big step forward from earlier this year, when Theresa May's former head of policy, Nick Timothy, crossed out the term from the Conservative manifesto. However, this week's report by the Public Accounts Commit- tee (PAC) on the Hinkley Point C nuclear project sheds light on how things are not sufficiently joined up at BEIS. The committee concludes there are "no plans in place" for maximising the wider benefits of a project that is being bankrolled by UK consumers' electricity

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