Ofgem to probe competition in electricity connections market

The energy regulator will push forward with plans to investigate potentially uncompetitive behavior in the electricity connections market, which could ultimately result in a referral to the Competition and Markets Authority by the year’s end.

On Tuesday afternoon Ofgem called for evidence on whether there is efficient competition in the connections market following “continued concerns” about the sector, Ofgem said.

The regulator explained that not all new connections to the distribution network are made by electricity distribution network operators (DNOs) so there is competition for some of the so-called ‘contestable work’ required.

But over the past three years the incumbent monopoly providers have failed to prove to the regulator that independent providers were getting a reasonable share of the market in connecting distributed generation and new demand.

“We consider that the process has, to some extent, improved the state of competition in the
Market,” Ofgem said.

But further action is required because the industry as a whole passed the competition test for just one third of the market segments over the 2010 to 2013 period in which Ofgem has been investigating the sector.

The call for evidence will remain open until the end of July, after which time Ofgem will review the submissions and announce what action will be taken by the year’s end.

The most dramatic action could involve a referral to the CMA, but the results of the probe could warrant a license change or enforcement action against specific companies.

“A well-functioning market for connections to the distribution network should benefit us all – connections that are timely and cost-effective help the economy to grow and help to decarbonise the energy we use,” Ofgem said.