The New Supply Electricity Market
For anyone who has ever tried to organise a new connection in the electricity market – where cables, wires and meters are laid for the first time and a new or renovated premise is ‘connected’ to the grid – they will know that the process is not simple, straightforward or stress free.
In light of this, Ofgem have pressed ahead with plans to investigate what they believe could be examples of uncompetitive behaviour in the connections market.
Coming hot on the heels of the announcement to refer the energy industry to the Competition and Markets Authority, Ofgem have threatened another formal CMA investigation if evidence suggests the need is there.
To this end Ofgem has urgently called for evidence as to whether there is sufficient and efficient competition in the new connections market.
The crux of the issue is the dominance that the regionalised distribution businesses have in the market.
In effect the most common course for any work on a new or existing electricity supply is requested from and undertaken by the relevant distributor, not always to the level of efficiency and timeliness that the customer expects.
Furthermore, those independent operators who bid for what is termed ‘contestable work’ e.g. that work which is not the sole preserve of the distribution businesses, are allegedly being failed by the market and unable to secure a competitive foothold.
Ofgem stated:
“We consider that the process has, to some extent, improved the state of competition in the Market.
“A well-functioning market for connections to the distribution network should benefit us all – connections that are timely and cost-effective help the economy to grow and help to decarbonise the energy we use”
Unlike the full market CMA investigation recently announced by Ofgem, any formal CMA connections investigation could focus on individual companies for their role in stifling competition.
Ofgem is canvassing opinion and evidence until the end of July.
In the meantime if your business has a need for connection or other work on its energy supply then Business Juice can help, our dedicated teams can take the hassle out of the project and engage you with the optimum provider for your business’ needs.