Regional differences in energy network charges
This Debate pack has been prepared ahead of the Westminster Hall debate on Regional differences in energy network charges initiated by Ian Blackford MP on Tuesday 5 July 2016, 2.30pm - 4.00pm.
The Energy and Climate Change Committee reported on Energy Network Charges in February 2015.[1] They recommended that “the Government and Ofgem publish an evidence-based analysis of the advantages and disadvantages of introducing national tariffs for transmission and distribution network charges.”
Following this recommendation, Ofgem published their report Regional Differences in Network Charges in October 2015.[2] This set out the background of gas and electricity network charges, comparisons between the charges in each region, an assessment of how UK-wide charges would impact on consumers and an overview of the approach to network charges in other countries. Their conclusions are reproduced below.
In a recent PQ, and following the Ofgem report, the Government stated:[3]
Electricity network charges vary by region and reflect the costs of running the network in that area and the number of consumers that those costs are spread over. The Government does not plan to move to national network charging, as the current cost reflective approach helps to ensure efficient use of the network and keeps overall costs down for bill payers across Great Britain. In contrast, national pricing risks an overall increase in network costs by weakening each network company’s local accountability to its customers, as well as making charges less transparent. On 23 October 2015, Ofgem published a report on the regional differences in network charges, which found no compelling case from a regulatory perspective to move to a national network charge. The report is available at: https://www.ofgem.gov.uk/publications-and-updates/regional-differences-network-charges. The Government will continue to consider any evidence that is presented.
The Minister (Andrea Leadsom MP) gave evidence to the Energy and Climate Change Committee on 26 April 2016 when she commented on the issue.[4]
The Minster gave further detail in her letter to the Committee on 1 July 2016.
[1] HC Energy and Climate Change Committee, Energy network costs: transparent and fair? , HC 386, Sixth Report of Session 2014–15, 10 February 2015
[2] Ofgem, Regional Differences in Network Charges, 23 October 2015
[3] HC Deb 11 Apr 2016 PQ 32443
[4] Energy and Climate Change Committee oral evidence Q359 26 April 2016