Ofgem consultation (27 pages, PDF) on the implementation of its “decision” to force the 14 electricity distribution network operators in Great Britain to develop and use a “common charging methodology”.

In contrast to the common methodology options in the April 2008 consultation, the proposal is now that Ofgem will determine which common methodology will be used. This is to address the regulatory risk that respondents had identified in the April 2008 common methodology option.

Ofgem states that:

It remains our intention to progress the project through a collective licence modification following consideration of responses to this letter. Specifically, we propose to consider responses to annex 2 [which is a brief overview of various methods used or proposed in the industry] in determining the methodology for generator and demand charging across all voltage levels including reactive power and IDNO charging. In arriving at that decision we will hold discussions with the industry via a working group. We will follow this with publication of our decision and statutory consultation on the related collective licence modification. Our decision may also highlight shortcomings of the methodology which we would expect industry to address prior to 2010.

The timetable envisages that Ofgem would select a method in October 2008, and that the industry would then establish working groups to agree on the implementation and the details of future governance arrangements for the common methodology.

The current licence obligations for companies to keep their methodologies under review remains in force, yet Ofgem states that:

Given our decision to implement a common charging methodology we urge DNOs to focus now on common charging arrangements going forward. While we are happy to informally consider different methodologies during this consultation phase and are keen to see the full range of proposals before making a decision on a common methodology, we request that DNOs stop submitting formal modification proposals to us.

Substantial methodology modifications proposals from SP Energy Networks, EDF Energy Networks and Electricity North West are currently under consideration or consultation by Ofgem. The letter says nothing about the fate of these processes.

Four-week mid-summer consultation: Responses by Tuesday 19 August 2008.

ERGEG consultation (42 pages, PDF) on the treatment of electricity distribution and transmission losses. The paper discusses some general issues about the definition and allocation of losses (or their costs), and reports practices and statistics from various countries.

ERGEG is an EU comitology committee of the electricity and gas regulatory authorities in the EU countries (with some participation from EEA countries). The scope of the paper and ERGEG's reasons for consulting on network losses are explained as follows in the document:

ERGEG’s analysis of network losses gives an overview of national practices regarding the definition, procurement and financial recovery of network losses as well as on incentives for their reduction. Furthermore, it shows the best practices on network losses in Europe, by means of representative case studies from some Member States.

The analysis can serve as background for further discussions and the development of Guidelines of Good Practice on losses. The scope of the future Guidelines on Energy Efficiency in Electricity will be defined depending on the outcome of the ongoing ERGEG work on network losses mentioned above, on the implementation of the Directive on Energy End-Use Efficiency and Energy Services and other related issues, notably the “Green Package”.

The brief case studies in the document are from Austria, the Czech Republic, Finland, France, Norway, Portugal and Sweden. Of those, only Portugal requires suppliers to purchase their own losses; the other cases involve centralised procurement by network operators of electricity to cover losses.

Responses by Tuesday 30 September 2008.

Ofgem letter (3 pages, PDF) stating that it will not appeal a court ruling that it cannot approve any of the proposals for locational allocation of transmission losses in Great Britain (i.e. making Scottish and Northern generators bear a greater share of losses) because of timetable issues.

Ofgem notes that Balancing and Settlement Code parties can resubmit similar proposals to be considered on a fresh timetable, and promises to consult on possible changes to procedures to avoid the “inefficient and wasteful duplication of procedures without any obvious countervailing benefits” identified by the judge.

Ofgem consultation (55 pages, PDF) on proposals (228 pages, 16M PDF) to amend the Connection and Use of System Code (CUSC) for the transmission networks in Great Britain so that “renewable and low carbon generation” would be allowed to connect before the network investment necessary to accommodate it was complete. One version of the proposal would also have given renewable generation a continuing priority over other network users for the use of congested network resources.

Ofgem proposes to reject all versions of this proposal. Its main reason is that the carbon benefits of the proposal for earlier connections, whether valued at the Government's shadow price of carbon or at the EU ETS market price, would be lower than the additional costs of allowing new connections to operate without the necessary network reinforcement (these are the costs to National Grid, and eventually to consumers, of compensating both renewable generation and other network users for network congestion affecting their businesses).

An alternative ground for rejection is sketched but not fully developed in the document. Ofgem highlights the discrimination against non-low-carbon generation that the proposals entail, and suggests that it might be disproportionate to the carbon-saving objective because of

5.5 ... the possibility of better ways that may be capable of achieving the same aim of providing faster access to renewable generation yet would not discriminate unduly between classes of generator or incur the substantial cost increases that ultimately customers will be expected to pay.

The possibility in question is claimed to arise from Ofgem's transmission access review work (61 pages, PDF).

Responses by Thursday 28 August 2008.

Comment: Ofgem correctly treats the additional subsidies that additional/earlier renewable generation will receive through the renewables obligation as something to be netted off the shadow value of carbon abatement and the fuel cost savings in non-renewable plants (the latter is analysed as a wholesale electricity price effect). Its finding that the net costs are not justified by the carbon emission reduction might therefore be thought to reflect its finding (see e.g. this September 2007 paper) that the renewables obligation is an unduly costly way of subsidising carbon abatement. But examination of table 3 (after paragraph 3.46) shows that this is not the case: in Ofgem's analysis, the costs would still outweigh the benefits in all scenarios even if all renewables obligation payments were cut by a factor of 20. Franck

OFT decision (41 pages, PDF) to refer to the Competition Commission (under merger control legislation) the proposed Internet video-on-demand joint venture Kangaroo.

The putative joint venture partners are BBC Worldwide (the commercial arm of the BBC), ITV and Channel 4. The BBC's non-commercial iPlayer and the commercial broadcasters catch-up services would be unaffected.

The OFT's decision is partly based on a view that BBC Worldwide would be launching a commercial video-on-demand service using BBC archived content even if the joint venture is blocked:

106. Given the quality, volume and potential value of the BBC archive, it does not seem plausible to the OFT that the BBC's archive content would not be commercialised in the near-term, particularly given the recent and ongoing activity by ITV and Channel 4 in this regard – a view [...] held by industry participants, and was not disputed by BBCW before the OFT.

The Competition Commission has an inquiry page. Its first deadline for submissions is Monday 21 July 2008.

Law Commission consultation (187 pages, PDF) on remedies available against public authorities through the courts in England and Wales. This is to inform future Law Commission proposals for substantive changes to the law to be considered by the Government and Parliament.

The document includes a detailed review of the current position, in particular rights for damages under the Human Rights Act 1998 (just satisfaction), under European Communities law (for "sufficiently serious" breaches), and in tort.

The main provisional proposal is to introduce a new action for “serious fault”, limited to “truly public” activities. Serious fault would be similar to "sufficiently serious" in ECJ case law. A truly public activity would be something that cannot be done by private individuals. Pure economic loss would be recoverable.

The new action would replace ordinary tort law in respect of these “truly public” activities, and the torts of misfeasance in public office and breach of statutory duty would be abolished.

Responses (including “any further information from consultees on the quantitative and qualitative effects of imposing liability on public bodies”) by Friday 7 November 2008.

Ofgem consultation (40 pages, PDF) on EDF Energy Networks' proposals for changes to its methods for setting distribution use of system charges. Responses by Wednesday 13 August 2008.

Preliminary ruling (about 8 pages) from the European Court of Justice on a question referred by a Greek court about the applicability of EC competition law to the organisation of motorcycling competitions.

MOTOE, an organiser of such events, claims an infringement of Article 86 and Article 82 in a Greek law that seeks to make its activities subject to the consent of ELPA, the Automobile and Touring Club of Greece, which is the Greek representative of FIM, the international motorcycling federation.

The court ruled that ELPA was engaged in an economic activity, and was an undertaking subject to the EC competition law prohibitions. This was because ELPA was organising its own competitions (including commercial arrangements e.g. sponsorship and insurance), as well as claiming a regulatory role.

The court also ruled (subject to confirmation of dominant position and effect on trade by the Greek court) that competition law precluded a rule under which Government permission for competitions organised by MOTOE was subject to ELPA's discretionary consent.