Submission: Ofgem Targeted Charging Review

Submission to Ofgem Targeted charging review: minded to decision and draft impact assessment

Prof Catherine Mitchell, Richard Hoggett, Dr Becky Willis, Jess Britton

Energy Policy Group, University of Exeter

Summary

This is a submission to the Targeted Charging Review: minded to decision and draft impact assessment [1] from Catherine Mitchell of the University of Exeter’s Energy Policy Group and its Innovation and Governance (IGov) project[2].

Ofgem’s Minded To document comes to two preferred options: one related to fixed charges (the preferred outcome), and the other related to some form of capacity charge.

Much has been written about delivering an energy system transformation in the most cost effective way, which is also equitable and secure. And it is very clear that what a regulatory system should not do if it cares about equity or sustainability is put a generalised fixed charge in place.

By putting in place a fixed charge, it would be dis-incentivising those which have endeavoured to have an energy efficient home, with energy efficient electricity appliances and decarbonised heat; it would be undermining the necessary investment for a flexible energy system (electric vehicles, storage, solar pv); it would be undermining of business models which can provide more flexibility (demand side response); it would be undermining those technologies which can bring down total peak capacity needs, and therefore bring down the overall average price of electricity, as well as peak price of electricity; and it would be undermining innovation, vital for energy system transformation.

All of this is against Government policy, and the Secretary of States latest big energy speech[3], and yet it is the preferred option of this Minded To document.

We support neither option. We, IGov, would argue that a customer or person connected to a network should pay for the energy they use, but also the value that customer or person provides to the system should also be taken account of – both in a direct system sense but also in terms of its value for the transformation of the energy system to one that is sustainable, secure and equitable.

Overall, we view the Minded To document with disappointment.

You can read the full submission here: Exeter EPG response to Ofgem Targeted Charging Review – Feb 2019

[1]https://www.ofgem.gov.uk/publications-and-updates/targeted-charging-review-minded-decision-and-draft-impact-assessment

[2] http://projects.exeter.ac.uk/igov/

[3] https://www.gov.uk/government/speeches/after-the-trilemma-4-principles-for-the-power-sector