Ofgem publishes letter on network charging reforms for the GB electricity market
Ofgem has published an open letter outlining its initial approach to reforming network charging signals to align with the UK government's recent decision to retain a single, but reformed GB-wide wholesale electricity market in its 2025 Review of Electricity Market Arrangements (REMA) summer update. The letter sets out how network charges (including use of system and connection charges) could be leveraged to send effective locational signals that drive generation investment in line with future spatial energy and network plans. This would involve: (1) reducing constraint costs by incentivising generation assets to locate where there is planned network spare capacity; (2) improving investability by making network charges more predictable; (3) promoting more efficient siting of demand and storage projects; and (4) transitioning to a reformed charging regime for existing assets.