The energy system is going through a radical transformation – we are generating and using electricity in different ways, in different locations and at different times. These changes have resulted in an increasing number of households and businesses having their own generation.
In addition, electricity storage has also become more common, coupled with a rise in uptake of heat pumps and electric vehicles. When Ofgem sets charges, it has a duty to protect the interests of current and future consumers. Ofgem considers the existing approach to reflect costs of the network in the charges consumers pay to be increasingly problematic. The rapid pace of change in the energy sector means the issues with the existing charging structure are likely to cause further distortions over time. Ofgem is concerned that the current charging framework for recovering the costs of building, maintaining and operating the system does not reflect the system we have today. Ofgem is, therefore, taking action to address network charging arrangements to ensure they work in the interests of current and future consumers as a whole.