On 22 June 2012, Ofgem announced that it has received a Competition Notice from UK Power Network in relation to three licensed distributors – Eastern Power Networks plc, London Power Networks plc and South Eastern Power Networks plc. The Competition Notice serves as an application by UK Power Network to have price regulation lifted on competitive connection activities in six market segments: metered low voltage work; metered high voltage work; metered high voltage and extra high voltage work; distributed generation high voltage and extra high voltage work; unmetered local authority work; and unmetered private finance initiative work. Since 1 October 2010, in order to stimulate competition, distribution network operators (“DNOs”) have been permitted to earn a regulated margin of 4% above cost on connection charges in certain market segments where competition is considered viable. DNOs can also serve a Competition Notice if they wish to charge an unregulated margin, and this will be allowed if DNOs can demonstrate that they have passed a Legal Requirements Test and a Competition Test. Under the Competition Test, DNOs must demonstrate that the market for electricity connections in each relevant market segment is working effectively for customers. Ofgem is currently preparing a consultation document on UK Power Network’s Competition Notice, which it intends to publish by mid-July 2012. It will only lift price regulation if it considers that effective competition exists and consumers’ interests will be protected. Read more.
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Electricity price regulation: the Office of Gas and Electricity Markets announces UK Power Network’s desire to have price regulation lifted on competition connection activities in six market segments
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