Large power companies will have less influence on some industry rules in future after Ofgem agreed changes to the way the rules are governed – two years after proposals for the change were first put forward.
Rules for connecting and using power plant are set out in the ‘Connection and Use of System Code’ (Cusc) and changes to the code are considered by an elected panel from the copanies involved (along with one consumer representative). New entrants have argued that teh arrangement gives the large incumbents too much power to set the rules and exclude innovation. In part that is because large incumbents can fund a staff member to serve on the panel, but there are also structural issues: although panel members are elected, large companies with subsidiaries who are members of Cusc in their own right effectvely have more votes.
Now Ofgem has passed a change proposed by UK Power Reserve. Overall, companies will have no more than four votes and there will be more transparency aroud the panel members. Ofgem decided against replacing two of the seven panel members with independents from outside Cusc companies, arguing that woudl mean two fo seven members woudl effectively appointed by National Grid ESO.
The Cusc is just one of more than a dozen industry codes each with its own change process. This particular Cusc modification has been in process for two years, illustrating the slow process of changing industry rules that has been identified by parties across the idustry – and by the CMA – as a major barrier to creating an innovative power industry that responds to changing times. Proposals for wholesale change are under active discussion (see below) and a joint consultation on the way forward is expected from BEIS and Ofgem alongside the Energy White Paper due ‘this summer’.
Further reading
Which companies own which power plants? Search and sort data on UK power assets via New Power’s online Database. Free access for subscribers
Elexon proposal would reduce industry codes to three
The energy industry should have a one-stop code shop
Industry governance: building a new model
Industry code bodies – download our quick guide
Code adminstrators facing major industry change call on Ofgem for leadership
Interview: Catherine Mitchell, Professor of Energy Policy, University of Exeter
New ‘DSO entity’ will underpin Europe-wide standards, but UK will be a rule taker