UK government to allow network operators to charge assessment fees for connection requests

Out-Law News | 26 Sep 2017 | 10:17 am | 1 min. read

The UK's Department for Business, Energy and Industrial Strategy (BEIS) has announced that the businesses responsible for managing electricity distribution should be able to charge upfront fees for processing connection requests.

Distribution network operators (DNOs) incur a number of costs when customers make a request for connection to a network, including staff costs, surveys and site visits. Since 2008 they have not been able to charge customers for those costs where a connection offer was not accepted.

Both DNOs and customers have argued that there has a been a detrimental effect on connection customers because these fees could not be charged to all customers. Although DNOs recover their costs, stakeholders have argued that the lack of fees has encouraged repeat and speculative connection requests and some customers have used the process  to determine where network capacity is available rather than discussing their requirements with DNOs.

Last year the government gathered stakeholder views to assess whether to allow DNOs to charge assessment and design fees for all connection requests. It has now drafted a statutory instrument (40 page / 588KB PDF) in order to implement secondary legislation to make this possible.

The government said it believed allowing upfront fees would ensure a fairer sharing of costs between customers and help improve the efficiency of the overall connection process. It is now seeking comments on the proposed approach.

The statutory instrument will allow DNOs to charge upfront fees, but not require them to do so. The implementation of the regulations would come through regulatory mechanisms and governance processes.

Currently most DNOs do not charge fees to smaller connection customers and the government said operators should be able to continue to use their discretion as to when to charge customers for a connection request.

The government said an economic assessment showed that set-up and implementation costs would be less than £1 million and the change could result in up to £330 million of "freed-up and better deployed DNO resources", with benefits ultimately passed through to end users.

Comments are sought on the proposals by 2 November before the statutory instrument is laid before parliament.