Further decision in respect of CMPs 317 and 327
Decision
- Publication date
- Industry sector
- Distribution Network
- Generation and Wholesale Market
- Supply and Retail Market
- Transmission Network
A further decision in respect of CMPs 317 and 327, following the Competition and Markets Authority's remittal to us.
We initially approved the Original Proposal of the amalgamated CUSC modification CMP317/327. This further decision reflects our view that no further amendments are required as a result of the remittal by the Competition and Markets Authority of that initial decision back to us.
31 May 2022:
Further decision in respect of CMP317/327/339
08 November 2022
In December 2020, Ofgem approved the Original Proposal in both CUSC Modification Proposals 317/327 and 339. Those modifications related to the provisions of the CUSC which seek to set charges in such a way so as to ensure compliance with Commission Regulation (EU) No. 838/2010 (as retained).
SSE Generation Ltd (and other related entities, ‘SSE’) appealed those decisions. The matter has most recently been heard at the Court of Appeal. On 8 November 2022, the Court of Appeal handed down its judgment.
We welcome the Court’s finding that we were acting within the law when we approved the original CUSC Modification Proposals and note that, whilst the Court allowed SSE’s cross appeal, it concluded that the Ofgem decisions are in line with the current operative law, being retained EU law. We are actively considering the judgment and the terms of the Order and will communicate any appropriate next steps as soon as is practicable. In the immediate term, we do not expect any party to raise further CUSC Modification Proposals in light of this judgment, nor do we expect any change to National Grid Electricity System Operator’s processes or forecasts. We have published today a letter setting out our priorities for electricity network charging over the winter period. For completeness, we note that any remedial actions and/or further appeal has the potential to disrupt these priorities or our timelines for delivery. We will continue to update industry as necessary as to the impact of this judgment on our areas of focus over the coming months.
It is disappointing that SSE has raised consecutive challenges to the Ofgem decisions, which, could ultimately be at the expense of consumers at a time when the market faces unprecedented challenges and consumers are under enormous pressure from managing their energy bills. Moving forward, we encourage industry to work hard to deliver a better deal for customers, rather than seeking revenues that will add to consumers’ bills. Ofgem will continue to act in the interests of consumers and work constructively with industry to deliver an energy system that works towards a low carbon future at least cost to consumers.
26 January 2024
We note that, on 5 December 2023, the Competition and Markets Authority (“CMA”) issued its final determination on costs and costs order in relation to the SSE code modification appeal 2021. The CMA has ordered that we must pay the CMA’s costs in full due to the CMA’s interpretation of the relevant provisions of the Energy Act 2004 meaning that it does not consider it permissible to make a “split order” as to its costs where (as here) the appeal failed on six out of the seven grounds advanced. We disagree with the CMA’s interpretation of these provisions and reserve the right to challenge any future costs order made by the CMA on the same basis in respect of any future code modification appeals heard by the CMA.
We note that, helpfully, the Department for Business and Trade is currently consulting on amending the relevant legislation to explicitly provide for split costs orders in CMA code modification appeals. We are hopeful that such changes are made in early course.