A group of companies developing and operating distributed generation has called on Ofgem to delay its decision on making dramatic reductions in ‘embedded benefits’ for small-scale power plants.
The decision is earmarked for 15 June. The Flexible Generation Group says it will “effectively force anyone buying electricity produced locally to pay for the cost of the national grid, even if the power has never been on the transmission system.” (See our briefing here.)
It wants Ofgem to delay the decision, “in light of the political uncertainty surrounding the general election result.”
Writing to Ofgem chief executive Dermot Nolan, the chairman of the Flexible Generation Group, Mark Draper, said: “A decision of this magnitude, which has such far-reaching consequences for how energy charges are levied and how competition in the market is developed, should not be made in the immediate aftermath of a general election.
“It is our belief that no decision should be taken before Ofgem has time to discuss with the new administration the impacts of the policy on wider energy objectives.
“A decision just one week after the country goes to the polls, with public attention focused on the formation of a new government, the implications of the result and possibly the appointment of a new Secretary of State, risks being viewed as a deliberate attempt by Ofgem to present the new administration with a decision before assessing it against the broader policy background.”The group, which includes Alkane Energy, Eider Reserve Power, Oxford Capital, PeakGen Power and Welsh Power, operates plants totalling around 800MW.
They believe Ofgem’s current governance structures give large energy firms undue influence over the reform process and changes in regulation, making it more difficult for new market entrants to compete, increasing prices to consumers and threatening security of supply.
Draper told the regulator that his group estimates the “uncertainty Ofgem has created has already halted the construction of generators and is deterring investment, pushing up prices, making future projects more expensive to finance and risking security of supply”.