The consultation process for the development of the new regulatory regime for offshore transmission continues apace. The Department for Business Enterprise and Regulatory Reform (BERR) has published a first draft of regulations containing the legal framework for the methodology for determining how and to whom offshore transmission licences will be granted.

The draft regulations cover both the transitional regime (for existing projects) and the enduring regime (for new projects). BERR is seeking feedback on the scope and drafting of the proposed regulations by 5th September 2008.

Among other things the regulations:

  • Identify preconditions to be met by developers who want Ofgem to invite tenders for the appointment of an offshore transmission licence holder in respect of an (existing or proposed) offshore generation project; Detail the arrangements (including timing) for commencement of any such tender process;
  • Provide specific details of the process itself, including provisions dealing with invitations for expressions of interest, the determination of qualifying bidders, and the invitation to tender and tender evaluation process;
  • Require Ofgem to assess bids in accordance with pre-determined criteria and provide for the appointment of preferred and reserve bidders;
  • Specify the procedure for finalisation of the grant of the offshore transmission licence to the successful bidder; and
  • Identify circumstances in which Ofgem can cancel a tender process.

The regulations contain provisions dealing with the process for determining regulatory asset values in relation transitional projects (where the offshore transmission assets are constructed). They also outline the mechanism for recovery of Ofgem's costs of running a tender process (including the provision of security).