A legal challenge to Ofgem’s decision to reduce the payments made to small embedded generators (EGs) when producing energy at peak has been dismissed.
Following a consultation in March 2017, the regulator decided in June to act on concerns over the electricity transmission network charging arrangements for smaller EGs, including the exemptions and payments collectively referred to as ‘Embedded Benefits’.
It had previously indicated that the ability of a supplier to use sub-100MW embedded generation to reduce transmission use of system charges, and for these to be paid to help others avoid them, is a distortion.
Ofgem decided to implement a proposal to reduce TNUoS Demand Residual (TDR) payments to smaller EGs to the level of avoided Grid Supply Point (GSP) costs as of 1 April 2018.
In October, Ofgem was served with a judicial review aimed at quashing this decision however following a hearing in April 2018, the court has ruled against the legal action.
In a statement released last week following the decision, Ofgem said: “Our view is that it is good news for consumers that the Court has upheld our decision.
“These payments cost customers around £370 million in 2016 alone and, without the changes following our decision, this amount would have increased further.
“The reduction in this payment will make sure costs are kept as low as possible for consumers.”