Ofgem has announced a new code of practice aimed at regional electricity distribution networks. The announcement was made at the end of October with the purpose of increasing competition in the UK connections market.
Ofgem say that the new code of practice should help to lower the cost of businesses connecting to the grid and add that the new measures should help to enhance the quality of service customers can expect.
Statistics from Ofgem show that the electricity connections market is worth more than £500 million and thousands upon thousands of connections are made on an annual basis.
Although many independent companies were already competing against the regional electricity distribution networks remained the only providers of a number of essential services that are required to make new connections. Due to the concerns that this was limiting competition in the field, Ofgem introduced its new code of practice at the end of October
Under the new code of practice, electricity distribution networks - or DNOs as they are known – will have to abide by a new set of guidelines that have been set out by Ofgem.
If the electricity distribution networks don’t abide by the new code of practice, then they could face action from Ofgem.
Commenting on the announcement, Maxine Frerk, senior partner, electricity distribution, Ofgem, said:
“We want to see competition in the electricity connections market thriving. While some DNOs are helping to achieve this, many independent companies still face unnecessary delays and needless complexity.”
Frerk added that the new code of practice would enable independent companies to compete fairly throughout the UK, and it will mean businesses and other organisations will now have a choice as to who delivers its connections.
Ofgem decided to implement the Code of Practice after carrying out a review of the connections sector. It found that while some companies were making an effort to improve competition in the connections market, to further improve competition it was going to be necessary to introduce a formal, binding code in order to ensure fairness to independent companies.
Home Builders Federation welcome announcement
The decision was welcomed by Dave Mitchell of the Home Builders Federation. Mitchell explained that as home builders are increasing the number of homes built to help address U.K.’s housing crisis, it was important these new changes had been introduced to improve the speed at which new homes are connected to the grid.