Ofgem consults on approach to ‘Gate 2’ power grid connection disputes

Ofgem is currently carrying out a consultation on how best to manage disputes arising from the reform of the grid connection process, ahead of issuing Gate 2 offers.

The consultation, which runs until 14 November, highlights the potential challenges the regulator is preparing for from bidders who are not issued with a Gate 2 offer and want to appeal the decision, and is intended to supplement existing guidelines around connection disputes. Those existing guidelines are now out of date, having last been updated in 2017. 

As such, disputes that can be referred to the regulator are currently limited under the Electricity Act 1989, and the terms of certain licence provisions. However, there could be delays for the regulator to intervene with bidders required to go through complaint and dispute resolution processes first before it can get involved.

Ofgem has further explained that “Where formal ADR [Alternative Dispute Resolution] routes, such as arbitration, are exhausted and reach an outcome, this will likely limit Ofgem's ability to reach a different decision under a determination.”

To land a Gate 2 offer, projects need to meet specific criteria related to their readiness – holding land rights or having planning consent for development – and strategic alignment – such as how they match up with the Clean Power 30 Action Plan or whether they already have a contract for difference in place.

Richard Dickman, an energy market regulation expert at Pinsent Masons, said the consultation looked to be an attempt by Ofgem to head off potential challenges once the offers were made.

“Ofgem appears to be trying to stem an influx of requests for it to determine a dispute, in part by clarifying what it can and cannot do with its powers,” he said.

This comes with Ofgem emphasising the need for disputes to be resolved through alternative means, such as the DNO / NESO complaint procedures, the CUSC dispute procedures or other ADR routes where available.

“But there is a risk these routes could end up overwhelmed depending on the offers process and parties need to ensure that Ofgem’s determinations process is not inadvertently unavailable to them if they are interested in it,” he said.