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Great Britain and Northern Ireland Regulatory Authorities Reports 2019

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Great Britain and Northern Ireland Regulatory Authorities Reports 2019 Great Britain and Northern Ireland Regulatory Authorities Reports 2019 Publication 31 July 2019 Contact: Aidan Stringfellow, Manager date: Team: Wholesale Markets Tel: 020 7901 3085 Email: [email protected] Regulatory Authorities Report pursuant to section 5ZA of the Utilities Act 2000 and section 6A of the Energy (Northern Ireland) Order 2003. The Great Britain (GB) report covers: • Developments in the GB energy markets in the calendar year 2018 and the first six months of 2019. In some cases, data is only available for a subset of this period (i.e. the 2018 calendar year only). Where this is the case, it is clearly stated. • The regulation and performance of the GB electricity and gas markets along the themes of network regulation, promoting competition, and security of supply. • Our compliance with the Electricity and Gas Directives on consumer protection and dispute settlement. Since GB energy markets have been fully liberalised and the regulatory structures in place for a number of years, this report is intended as an updated version of the submissions made since 2007. Finally, for further information on Ofgem’s wider activities, please consult our Annual Report. The 2017-18 Ofgem Annual Report is available at the link below.1 1 https://www.ofgem.gov.uk/about-us/corporate-policy-planning-and-reporting/annual-report-and-accounts Report – Great Britain and Northern Ireland Regulatory Authorities Reports 2019 Legal Basis All National Regulatory Authorities (NRAs) are obliged to report annually to the European Commission, in accordance with Directives 2009/72/EC (Electricity Directive) and 2009/73/EC (Gas Directive). The structure of the report is agreed at the Council of European Energy Regulators (CEER). Ofgem is the GB Office of Gas and Electricity Markets. It is governed by the Gas and Electricity Markets Authority (the Authority). The terms ‘the Authority’, ‘Ofgem’, ‘us’ and ‘we’ are used interchangeably in this document. The Northern Ireland National Report, from the Northern Ireland Utility Regulator, is in the second section of this UK Report. As the NRA for GB, Ofgem’s above annual reporting requirement is specified in section 5ZA of the Utilities Act 2000. The Utility Regulator’s equivalent requirement is specified in section 6A of the Energy (Northern Ireland) Order 2003. © Crown copyright 2019 The text of this document may be reproduced (excluding logos) under and in accordance with the terms of the Open Government Licence. Without prejudice to the generality of the terms of the Open Government Licence the material that is reproduced must be acknowledged as Crown copyright and the document title of this document must be specified in that acknowledgement. Any enquiries related to the text of this publication should be sent to Ofgem at: 10 South Colonnade, Canary Wharf, London, E14 4PU. Alternatively, please call Ofgem on 0207 901 7000. This publication is available at www.ofgem.gov.uk. Any enquiries regarding the use and re-use of this information resource should be sent to: [email protected] 2 Report – Great Britain and Northern Ireland Regulatory Authorities Reports 2019 Contents 1. Chair’s foreword .................................................................................... 4 2. Main developments in gas and electricity markets ................................. 6 2.1 Investment ...................................................................................................... 6 2.1.1 Interconnectors ......................................................................................... 6 2.1.2 Offshore transmission owners and tenders .................................................... 7 2.2 Wholesale Markets ........................................................................................... 7 2.2.1 Creating a more independent, future-proofed system operator ........................ 7 2.2.2 Security of supply ...................................................................................... 7 2.2.3 European Network Codes ............................................................................ 8 2.2.4 Wider European work ................................................................................. 9 2.3 Retail Markets .................................................................................................. 9 2.3.1 Price protection for domestic customers ........................................................ 9 2.3.2 Switching programme ............................................................................... 10 2.3.3 Electricity settlement ................................................................................ 10 2.3.4 Future supply market arrangements ........................................................... 10 2.4. Compliance and Enforcement .......................................................................... 11 3. The Electricity Market .......................................................................... 12 3.1 Network Regulation ........................................................................................ 12 3.1.1 Unbundling .............................................................................................. 12 3.1.2 Technical Functioning ............................................................................... 13 3.1.3 Network tariffs for connection and access .................................................... 18 3.1.4 Cross-border issues .................................................................................. 21 3.1.5 Compliance ............................................................................................. 26 3.2. Promoting Competition .................................................................................. 31 3.2.1 Wholesale markets ................................................................................... 31 3.2.2 Retail markets ......................................................................................... 39 3.3 Security of supply .......................................................................................... 52 3.3.1 Monitoring balance of supply and demand ................................................... 52 3.3.2 Monitoring investment in generation capacities in relation to Security of Supply ...................................................................................................................... 53 3.3.3 Measures to cover peak demand or shortfalls of suppliers ............................. 54 4. The Gas Market .................................................................................... 55 4.1. Network Regulation ....................................................................................... 55 4.1.1 Unbundling .............................................................................................. 55 4.1.2 Technical functioning ................................................................................ 57 4.1.3 Network and LNG tariffs for connection and access ....................................... 59 4.1.4 Cross-border issues .................................................................................. 63 4.1.5 Compliance ............................................................................................. 65 4.2 Promoting competition .................................................................................... 66 4.2.1 Wholesale markets ................................................................................... 66 4.2.2 Retail markets ......................................................................................... 70 4.3 Security of Supply .......................................................................................... 74 5. Consumer protection and dispute settlement in electricity and gas ..... 75 5.1 Consumer protection ...................................................................................... 75 5.2 Dispute Settlement ......................................................................................... 84 3 Report – Great Britain and Northern Ireland Regulatory Authorities Reports 2019 1. Chair’s foreword The foreword for the 2019 National Report is the first I have written as Chairman of Ofgem. I took over as Chair towards the end of the period this report covers and am excited to be taking on the role at what is a pivotal time for the GB energy sector. The past year was a period of uncertainty, which included the ongoing discussions on the future relationship between the United Kingdom and the European Union. While we cannot predict the final outcome of those discussions, it is important to stress Ofgem’s ongoing commitment to working with our fellow regulators in Europe. Over the coming years we will continue to act in the spirit of cooperation that we have always tried to bring to our engagement with our European counterparts. We continue to believe that an integrated and liberalised European energy market provides benefits for consumers. A large amount of our work is influenced by developments in Europe, and over the course of the year, Ofgem has worked towards the timely and full implementation of the European Network Codes and Guidelines. We have continued to work closely with industry to deliver a set of methodologies for the implementation of guidelines on Capacity Allocation and Congestion Management, Forward Capacity Allocation, and the Connection Codes. We also continued our activities towards the implementation of the Electricity Balancing Guideline Regulation, the Emergency and
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