Ofgem has accepted legally binding commitments from utility SSE, following a Competition Act investigation into whether its behaviour could have impeded competition for connecting new developments to its electricity distribution network in the south of England.
“As a result of accepting the commitments, Ofgem is closing its investigation with no decision made on whether or not SSE infringed competition law” Ofgem said in a statement.
Ofgem's investigation identified competition concerns regarding SSE’s behaviour in providing services needed for competitors to connect new developments to its electricity distribution network in the South of England.
These included “inconsistencies in providing essential services needed to allow competitors to compete effectively, including inconsistency in quotes,” Ofgem said, adding however that SSE has now “committed to putting in place new processes and procedures to make sure it provides these essential services to all parties on a consistent basis.”
These include: splitting operations within SSE’s connections business to separate the team that provides essential services to the connections market from the team that competes in the connections market; putting in place an improved IT system to prevent inconsistent quotes from being issued for the same site without justification; mandatory and regular competition law compliance training; and frequent, independent, third party auditing of and reporting on SSE’s compliance with the commitments.
Contacted by Gas to Power Journal, SSE said it “welcomes Ofgem’s announcement that it has decided to accept SSE’s legally binding commitments and close its investigation into aspects of the provision of non-contestable network connection services without any finding as to the legality or otherwise of SSE’s connection activities.”
“SSE’s commitments are designed to implement a number of operational changes to its connections business in order to address Ofgem’s competition concerns and help promote increased competition for electricity connection services for the benefit of customers" it said, adding that "these binding commitments require substantial changes within the operations of SSE’s connections business and its IT systems, processes and procedures.”
“The implementation of these changes is now being progressed and SSE will continue to work with Ofgem and the industry in order to develop greater competition in the connections market and deliver further improvements for connections customers" it added.
"Hundreds of thousands of connections are made every year as sites, such as new housing estates and business premises, connect to electricity distribution networks” Ofgem pointed out, stressing that “the whole market for providing these electricity connections is worth over £500 million per year in Great Britain, as independent companies compete against regional distribution network operators, such as SSE, to connect new customers to these networks.”
“Effective competition should help deliver cheaper connections, better customer service, and more innovative products” Ofgem said.
Since the investigation was opened, Ofgem has introduced a new Code of Practice and associated licence condition to force all electricity distributors to open up competition in the electricity connections market.
“Today’s decision reinforces these new rules to ensure that the company effectively addresses the issues raised during the investigation” it said, adding that “it helps open up the connections market to more effective competition.”