Energy weekly highlights—6 June 2019

This week’s edition of Energy highlights includes the Office of Gas and Electricity Markets’ (Ofgem) review into whether the introduction of the cap on default and standard variable tariffs has impaired competition and its consultation on Scottish Hydro Electric Power Distribution’s (SHEPD) proposals to contribute to planned transmission links to Shetland, Western Isles and Orkney. We also cover the launch of guidance in relation to the Department for Business, Energy and Industrial Strategy’s (BEIS) new Rural Community Energy Fund (RCEF) and the Oil and Gas Authority’s (OGA) award of licences under the 31st Offshore Licensing Round. We provide updates on new content and look at some key upcoming dates for the diary over the next few weeks.

Electricity and gas market regulation and licensing 

Ofgem open review into whether tariff cap has impaired competition

Ofgem has opened a consultation into whether conditions are in place for effective competition in the domestic energy retail market. Ofgem seek stakeholders’ opinion as part of their review into whether the introduction of the cap on default and standard variable tariffs has had an impact on the conditions for effective competition. Under Domestic Gas and Electricity (Tariff Cap) Act 2018, Ofgem is obliged to review whether the introduction of the cap has had such impact or not by 31 August 2020, including a recommendation on whether the cap should remain in place for 2021. The consultation runs until 9 July 2019. See: LNB News 30/05/2019 34.

Ofgem: E Gas and Electricity, Economy Energy and Dyball Associates fined £870,000 for breaching competition law in relation to the supply of gas and electricity to domestic customers

On 30 May 2019, Ofgem announced that two suppliers, E (Gas and Electricity) Limited and Economy Energy, and energy software and consultancy service, Dyball Associates, have been collectively fined £870,000 for infringing Chapter I of the Competition Act 1998. Ofgem found that the companies breached competition law by preventing, restricting and distorting competition among energy suppliers by entering into an agreement to prevent Economy Energy and E actively targeting each other’s energy customers through face-to-face sales. See: LNB News 30/05/2019 28.

Ensuring Electricity Distribution Licence is suitable for all licensees—consultation

Ofgem has launched a consultation on its updated proposal for Electricity Distribution Licence modifications relating to the competitive deployment of storage, and licence applications from affiliates of existing distribution licensees. The consultation, which will close on 28 June 2019, gives stakeholders an opportunity to submit their views prior to Ofgem making a final decision. See: LNB News 04/06/2019 26.

Networks and connections

Power supplier proposes contributing to Scottish transmission links—consultation

Ofgem has launched a consultation on SHEPD’s proposals to contribute to planned transmission links to Shetland, Western Isles and Orkney. Alongside the consultation, which closes on 10 July 2019, Ofgem has set out its views on the proposals and supporting information. See: LNB News 30/05/2019 41.

Capacity Market (CM), balancing services and energy system flexibility

Government to introduce legislative changes to CM following consultation

BEIS has published its response to the consultation on proposals for further amendments to CM. The consultation ran between 7 March 2019 and 4 April 2019 and attracted 42 responses from CM providers, generators, interconnectors, suppliers, a local authority, non-governmental organisations and trade associations. See: LNB News 04/06/2019 18.

Renewable energy

Fund will provide £10m for renewable energy projects in rural areas

BEIS and the Department for Environment, Food and Rural Affairs (Defra) have published guidance on how to apply for RCEF—a £10m scheme supporting rural communities in England in setting up renewable energy projects. BEIS and Defra have explained that RCEF will provide support in two stages. The first stage will provide grants of up to £40,000 for a feasibility study for a project and the second stage will provide grants of up to £100,000 for business development and the planning of feasible schemes. See: LNB News 31/05/2019 19.

Oil and gas

OGA announces awards in 31st Offshore Licensing round

OGA has offered for award 37 license areas in the 31st Offshore Licensing Round. The awards cover over 141 blocks or part-blocks for 30 companies, ranging from super-majors to new entrants. The next Offshore Licensing Round will be launched in Summer 2019, providing exploration and field development opportunities in mature areas of the UK Continental Shelf. See: LNB News 04/06/2019 17.