Ofgem cannot expect environmental NGOs to do its job in holding electricity distribution network operators (DNOs) to account on their environmental performance, warned Sustainability First (SF) in its response to Ofgem’s consultation on DNO draft determinations. The group said simple reporting in the recent price review period “had no or minimal impact” and it is unclear why Ofgem thinks that without financial incentives and penalties companies’ performance would be properly monitored. SF warned Ofgem that “With financial incentives in place for a large number of other aspects of company performance (from vulnerability through connections and DSO), not having such an incentive on the environment sends an unhelpful signal about the relative importance of this area.” What is more NGOs lack resources and “Ofgem cannot simply expect them to do its job for it”.
SF pointed out that environmental reporting included key aims such as decarbonisation. In that context it highlighted the issue of network losses, which already cost domestic customers £100 per year – a cost that could double in line with increased wholesale energy costs. SF said, “It is frankly astonishing that Ofgem is paying so little attention to better management of losses in the ED2 process given their very substantial contribution to the customer bill. From an efficiency standpoint this makes no sense whatsoever.”
It also highlighted the need for solutions to deal with SF6 – a gas 24,000 times as damaging as carbon dioxide – which is used in 200,000 pieces of equipment across the network.
Finally, it said that as DNOs evolve to become system operators “There still remain many fundamental and unanswered questions for net-zero delivery around DSO evolution, DSO ‘boundary’ issues with the ESO, and the overall DSO institutional role”. It said Ofgem had to work with BEIS and the Future System Operator to clarify basic questions.
Sustainability First also also hit back at Ofgem’s decision to reject network proposals for targeted energy efficiency measures, saying it is “of real concern given the current energy price crisis”. It said, “This is an instance where Ofgem does have the tools but has chosen not to use them”.
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