Ofgem has decided to reject a requested modification to industry rules which would have resulted in generators receiving a £120 million rebate funded by consumers.
Generators claim that their network charges in 2015/16 exceeded the €2.50/MWh cap on transmission charges paid by generators, which is set under an EU regulation.
On 8 March 2016, SSE submitted “CMP 261”, a modification to address this alleged breach by returning £120m to generators.
This rebate would ultimately need to be recovered from consumers via network charges.
Ofgem has rejected this modification on the grounds that most, if not all, so-called local network charges, which mainly relate to transmission links connecting offshore wind farms to the grid, should be excluded from this cap.
On the basis that these charges are excluded, the cap on generator transmission charges has not been breached.
The commission believes this decision to be the better interpretation of the EU regulation consistent with Ofgem’s statutory objectives and duties and in the long-term interests of consumers.