A group of claimants have failed in their bid to delay Ofgem’s implementation of drastic changes to Embedded Benefits payments.
Earlier this month a group of companies hoping to delay the onset of new rates for Embedded Benefits payments sought an injunction, however yesterday that application was refused by the High Court.
Last March Ofgem confirmed its intent to slash Embedded Benefits payments by as much as 95%. The changes would see them fall from the current rate of around £45/kW to ~£2/kW, a figure designed to reflect the estimated cost of investing in generating capacity at grid supply points.
That reduction would not be enacted overnight – they are to be phased in from 1 April 2018 to 2020 – the claimants sought to delay the start of the changes and requested an urgent decision pending the start of the T-1 Capacity Market auction which takes place at the end of this month.
However the claimants were unsuccessful at a procedural hearing held yesterday, and the regulator said it welcomed the court’s decision claiming it to be “in the interests of customers”.
Ofgem further claimed that it would have set back the implementation of the changes by a year at a cost of £500 million to consumers.
But the case is not over. A follow-up substantive hearing is now scheduled for late April 2018, during which Ofgem will have to defend its decision once again. Ofgem said its focus had now shifted to preparing for that case.
The proposed changes to Embedded Benefits are not without criticism, with many in the power sector claiming that they placed renewable generators “in the firing line”.