County Council Criticises Ofgem’s Proposed Cut to Energy Infrastructure

Oxfordshire County Council is strongly urging the Office of Gas and Electricity Markets (Ofgem) to withdraw its proposals to significantly cut planned investment and modernisation of energy infrastructure that will help people and organisations make the transition to greener energy.

The UK’s electricity system is set up in three parts: the generators, the distribution grids (which are split between national and local), and the end supply companies – to whom people pay their bills. Ofgem is conducting a consultation relating to the local distribution grid companies.

The local electricity grid companies, known as district network operators (DNOs), are in a monopoly position and, as a result, Ofgem approves their business plans for every charging period. With the next period (2023 – 28) Ofgem has released a consultation on what it is proposing to change to those draft business plans being submitted. They include short-term cuts in previously proposed levels of investment, which could lead to increased costs to the consumer in the long-term.

Three DNOs cover Oxfordshire: Western Power Distribution, which covers about 10 per cent of the county to the north around Banbury; UK power networks, which covers the areas around Thame and Chinnor; and Scottish and Southern Electricity Networks, which covers the rest of Oxfordshire.

Councillor Pete Sudbury, Oxfordshire County Council’s Cabinet Member for Climate Change and Environment, said: “We condemn the time and effort spent on a consultation that will have negligible impact upon bill payers, for whom the problem is in the order of thousands of pounds, while significantly disabling urgent and necessary modernisation.

“In light of the accelerating impacts of climate change and the clear and stark warnings from every reputable scientific body regarding the need to accelerate the energy transition, we must condemn, as reckless and foolish, any proposals that wilfully downgrade and slow that transition.

“We believe it is clear that cutting already inadequate investment in grid capacity to support future electrification of heat, transport, housing and employment growth will significantly impact Oxfordshire economically, environmentally and socially.

“No long-term cost impact assessment has been completed for this important decision. We estimate that the level of cost savings for householders will be minimal, around £10 per year, while the longer-term impacts will have a greater cost, especially to those on lower incomes. The October fuel cap will still be a staggering £3,549 per year.

“We have already seen several new commercial and residential developments experiencing prohibitively costly grid connection offers and delays. The work being delivered under the groundbreaking innovation project Local Energy Oxfordshire indicates the potential opportunities for flexible services and future needs of the transition from DNOs to district network service providers.

“With several electric vehicle companies, charging companies and supply chain organisations based within Oxfordshire, there is a direct impact upon the local economy from the proposals to provide a reduced number of EV connections.

“The Oxford Low Carbon Economy report estimated that seven per cent of the local economy was based upon the low and zero carbon industry, with the potential to add £1.35 billion to the local economy and an additional 11,000 jobs by 2030, with the correct policies. The proposed restrictions will have an ever further and growing constraining impact on the local economy and jobs.”

Oxfordshire County Council declared a climate emergency in 2019, as did the UK government. Working with other local organisations, the county council developed the Oxfordshire Energy Strategy and Pathways to a Zero Carbon Oxfordshire reports. Both allow a target of meeting net zero for the county by 2050 or earlier.

In its response to the Ofgem consultation, the county council has said it can find no evidence of any detailed assessment in which Ofgem has taken these factors into consideration when making its draft determination. The council considers that Ofgem would be failing to meet its duties and responsibilities if the proposal were approved given they include “to deliver net zero” and “ensuring a fair treatment for all”.

Councillor Sudbury added: “Electric vehicle uptake in the county is already well ahead of other areas (approximately 40 per cent share of new vehicle registrations in June 22, the highest rate in the UK) and we expect installation of heat pumps to increase significantly in the next five years. DNOs have regularly indicated the challenge for large scale uptake of EVs and heat pumps on low voltage networks, with several innovation challenges looking to directly address these areas.

“Climate impacts are already imposing very significant global and local costs. The requirement to decarbonise rapidly in this decade should be of the highest possible priority, to avoid much greater future costs and wider threats to our health, economic and social wellbeing.

“We have been clear to Ofgem that we think it is failing to meet its duties by making these proposals and we urge them to alter their plans.”