Professor Phil Taylor, Director of the Newcastle University Institute for Sustainability, considers the impact of the recent ruling by the Competition and Markets Authority (CMA) on the Northern Powergrid appeal against Ofgem’s 2015-2023 electricity distribution price control.
A new era of regulation has dawned in the energy market, following the recent CMA ruling on appeals against Ofgem’s recent price controls. The Northern Powergrid appeal is the first time a distribution network operator has appealed a judgement by Ofgem, and the CMA ruling is hugely significant. From now on, network operators and suppliers will feel more able to challenge the regulator to justify its decisions and demonstrate a strong evidence base for the approach it takes.
What is more, the judgement also demonstrates the need for a technically competent regulator. The ground for complaint that was upheld by the CMA, relates to Ofgem’s calculations of the potential savings available to Northern Powergrid and other distribution network operators through the use of smart grids and other technological innovations. At present, this remains something that is not well understood outside academia.