Wednesday 19 September 2018

Competition watchdog rejects appeal by SSE and EDF over transmission charges

The CMA decision comes two-and-a-half months after the case was originally opened in December.

SSE was one of the firms appealing against Ofgem's decision (Andrew Milligan/PA)
SSE was one of the firms appealing against Ofgem's decision (Andrew Milligan/PA)

By Kalyeena Makortoff, Press Association City Correspondent

The Competition and Markets Authority (CMA) has rejected appeals by SSE and EDF that would have resulted in consumers footing the bill for a £120 million rebate.

The firms were part of a dispute over the charges paid by electricity-generating companies for use of the transmission system, having argued that generators in the UK were paying more than allowed by the EU.

Had it been successful, it would have prompted a £120 million rebate from the National Grid.

The energy market is under close scrutiny and companies should be working hard to deliver a better deal for customers rather than seeking additional revenues that will add to customers’ bills Ofgem senior partner Andrew Wright

But Ofgem dismissed the request last November, having concluded that the maximum permissible levels had not been reached.

SSE and EDF then appealed to the CMA, with the main point of dispute being whether transmission charges for the cost of connections between offshore windfarms and the onshore grid were excluded from the EU cap.

The CMA found that the exclusion did apply and therefore there had not been a breach of the cap in question.

Ofgem senior partner Andrew Wright said the CMA’s decision was ultimately good news for consumers.

“If the modification had gone ahead, it is likely that the rebate would have cost consumers up to £120 million and led to further payments to larger generators in the longer term.”

SSE, meanwhile, said it was “disappointed” by the CMA’s rejection and would join EDF Energy in reviewing the decision “in detail”.

“Fairly applied charges benefit customers, companies and investors by instilling confidence in UK electricity market regulation,” an EDF spokesman added.

The CMA decision comes two-and-a-half months after the case was originally opened in December, shortly after the companies made their appeal.

“It is disappointing that SSE and EDF challenged our decision,” Mr Wright added.

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Offshore wind farm

“The energy market is under close scrutiny and companies should be working hard to deliver a better deal for customers rather than seeking additional revenues that will add to customers’ bills.”

It comes as legislation designed to cap “poor-value” energy tariffs for 11 million British households is introduced to Parliament on Monday, after a 2016 report by the CMA found consumers were contributing to £1.4 billion in excess profits to energy companies via standard variable tariffs (SVTs).

Prime Minister Theresa May said the Bill – which the Government hopes will become law before next winter – would “force energy companies to change their ways”.

The so-called Domestic Gas and Electricity (Tariff Cap) Bill would allow Ofgem to limit tariffs until 2020, with the option to extend the cap annually until 2023.

Press Association

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