The UK energy minister has set up a Consolidation working group to consider how smaller generators can cooperate together in order to compete in the new electricity markets. The group will be made up of smaller generators, the National Grid Co, balancing and settlement code participants, Ofgem and the Department of Trade and Industry (DTI) and DEFRA. Ofgem will facilitate the group and publish interim and final reports.
The working group is a response to the criticism that the UK’s New Electricity Trading Arrangements (NETA) have favoured large generators. Renewable and other smaller generators have found it more difficult to compete financially in the new market. The working group will focus particularly on obstacles which smaller generators face in colluding. According to the energy minister, Brian Wilson, “It will be pivotal in ensuring that smaller generators are put on a level playing field with larger generators.” The DTI has also asked consultants ILEX to attend meetings and prepare a report identifying and addressing the wider structural and regulatory developments which may affect obstacles to consolidation. This could include transmission access and losses arrangements, the extension of the England and Wales electricity trading arrangements to Scotland and measures to encourage embedded generation.
A consultation paper from the electricity regulator, Ofgem, has set out plans for including Scotland in NETA in order to create a single electricity market in Great Britain. According to Mr Wilson, Scottish households are paying an average of 9 per cent more for their electricity than customers in England and Wales and they have less choice over their supplier. Ofgem has indicated that it believes legislation is the most effective way to bring about a single Great Britain market and the government is now considering this suggestion.
