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August 4, 2013

Ofgem proposes new change to transmission charging methodology

UK energy regulator Ofgem has proposed a change to transmission charging methodology for calculating what generators pay to use the electricity transmission network across the country.

By Ranjith Dharma

Nri energy

UK energy regulator Ofgem has proposed a change to transmission charging methodology for calculating what generators pay to use the electricity transmission network across the country.

The new methodology is anticipated to be effective starting 1 April 2014.

The intention behind changing the methodology is to facilitate the timely move to a low carbon energy sector and at the same time maintaining an efficient supply of electricity across the UK’s high voltage network.

Ofgem said the proposed methodology will also take into consideration the type of generator and how it uses the network to transmit power to parts of the network where the demand is located.

The regulator considers that the modification would better reflect the costs placed on the high voltage system by all forms of generation, including new kinds of generators, situated at various points on the network.

"The proposed methodology will also take into consideration the type of generator and how it uses the network to transmit power to parts of the network where the demand is located."

The proposed methodology would lower the transmission charges for the Scottish Islands than may have been expected if the methodology was not changed, but still remain higher than the mainland due to the cost of building and running the sub-sea links.

The proposal is anticipated to narrow the difference in generation tariffs between the north and south of Britain.

According to Ofgem, tariffs in the north will decrease, while tariffs in the south will increase relative to the status quo.

In a press statement Ofgem said, "Our view is supported by the modelling analysis submitted to us by industry which suggests that between 2020 and 2030 consumer bills could increase to £8.30 each year lower than under the current methodology."


Image: The new methodology is anticipated to be effective from 1 April 2014. Photo: courtesy of FreeDigitalPhotos.net.

Nri energy

 

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