The Government has now published its response to the Offshore Electricity Transmission Update. This response contains the final consultation on proposals for a regulatory framework for offshore electricity transmission networks before "Go Active". This represents the last opportunity to influence any change in the Offshore Transmission Owner (OFTO) regulatory framework prior to Go Active/Go Live. DECC will publish a statement finalising their proposal in early June. The deadline for submitting responses to this consultation is 6 May 2009 and the provisional date now set for Go Active is 24 June 2009.
There are a number of changes/clarifications in the paper and the following points are particularly notable:
1. Who can bid to become an OFTO?
The paper has surprised many by giving a clear steer that generators can bid to become OFTOs subject to having the risk of EU compliance by end 2012. Whilst unexpected, this is presumably helpful to generators although it seems likely that the timescale for Round 3 and Scottish Territorial Water (STW) sites means that by the time OFTO processes are running for many of those sites, the 2012 deadline will have passed. There is, however, the opportunity to bid for transitional projects which may be of particular interest to some developers. We understand that Ofgem have indicated that further efforts may be underway to influence the final language of the EU third package in this regard. It would be helpful to generators to have more clarity on this and whether or not it affects their risk assessment of the OFTO opportunity before early June (when DECC are due to publish their final statement on OFTO) given the timeline for transitional projects.
2. Zonal coordinated development of grid connections
The paper contains further muted support for a more strategic approach to zonal development – however, the "race to the beach" still exists and generators need to consider on what basis they would be willing to collaborate in connection with strategic grid connection when the queue issue remains. Notwithstanding the zonal approach of Round 3 and the added factor of STW sites (and even given the obligation on certain STW sites to collaborate) the regulatory framework is generally not designed to facilitate the type of collaboration suggested by Ofgem/DECC.
3. OFTO of last resort proposals
Whilst the greater detail in relation to the appointment of an OFTO of last resort will be helpful to OFTOs and onshore Transmission Operators, it is clear that the process of appointing an OFTO of last resort will be long winded and subject to challenge not least by the selected OFTO. There is no consideration given to the timescale implications of the detailed proposals and the impact on the generator whose project has been effectively abandoned by the OFTO.
4. What happens next?
The Government and Ofgem anticipate the key high level milestones and dates to be as follows:
- 3rd May 2009 - commencement of relevant sections of Energy Act 2004 and Energy Act 2008 to allow Ofgem to make regulations to enable the first round of tenders to begin shortly after Go Active.
- Early June 2009 - DECC/Ofgem statement on changes to proposals following this final consultation.
- 24 June 2009 - Go Active commencement of relevant sections of the Energy Act 2004.
- Summer 2009 - First tender is to begin.
- June 2010 - Go Live commencement of relevant sections of the Energy Act 2004 and Energy Act 2008.
This is the last chance to influence the framework and developers should make sure they take the opportunity to do so.
Review the full consultation on DBERR's website.