Electricity Connection Charges Regulation
The Department for Business Energy and Industrial Strategy (BEIS) has revised the Regulations in respect to Electricity (Connection Charges) Regulations (ECCR). The amended Regulation came into effect on 6th April 2017 and includes some significant changes to the 2002 version.
There will be a period for which both regulations are in place;
- For connections made prior to 6th April 2017, the 2002 Regulations will apply
- For connections made on or after 6th April 2017, the 2017 Regulations will apply
For the purposes of this guidance, connection means any new connection or augmentation to alter the capacity or characteristics of an existing connection.
To help you to understand more about the Regulations and whether they apply to you, please see the Q&A information below.
When a connection is made to the distribution network, it is important that the customer pays their fair share of the connection costs. In some instances, a connection may benefit from recently installed or upgraded network assets which were paid for by an earlier party. Where new or upgraded assets are used within a prescribed period, the ECCRs require us to charge the subsequent customer a proportion of the first connection expenses which we will use to reimburse the party that paid for the assets to be installed.
What is the prescribed period?
The ECCRs only apply when the subsequent connection is made within the prescribed period which begins from the date that the first connection. For the 2002 Regulations this is five years, for the 2017 Regulations this has been extended to ten years after the date that the first connection was made.
What are the main changes?
The key changes from the 2002 Regulations to the 2017 Regulations were to:
- Extend the scope of ECCRs to bring connections made by Independent Connection Providers (ICPs) within scope;
- Extend the scope of ECCRs to include connections between distribution systems (IDNOs);
- Oblige the Electricity Distributor to request a reimbursement payment in all cases where the condition is met;
- Extend the time limit within which the second comer payments are due from five years to ten years; and
- Clarified that network reinforcement paid for by the DNO, where there is an initial connection, is included.
There are five types of person that may be eligible for a reimbursement payment:
- The initial contributor of the first connection expenses who, at the time the subsequent connection is made, remains the owner or occupier of the connected premises or distribution system;
- A person who has previously made a second comer payment under the regulations and who, at the time the subsequent connection is made, remains the owner or occupier of the connected premises or distribution system;
- A person who has legally been assigned the right to receive the reimbursement payment from a previous eligible person and who, at the time the second connection is made, remains the owner or occupier of the premises or distribution system to which the first connection was made;
- An electricity distributor who has incurred first connection expenses which it has not previously fully recovered from any other person; or
- A person other than those listed above that has made a payment to a DNO or ICP in respect of first connection expenses.
How will a refund be identified?
Whenever we receive an application for connection, we carry out an assessment of your requirements to determine the most suitable location for connecting to the existing network. Our teams will check whether your connection makes use of network assets installed or upgraded for a previous connection and, if so, whether your connection has been requested within the prescribed period.
Where a potential refund is identified, we will notify you within your Connection Offer. Once you have accepted your Connection Offer, we will make enquiries to determine whether the previous contributor(s) remain eligible for a reimbursement payment and notify you of the outcome.
How is the refund value calculated?
The refund will be a proportion of the first connection expenses which takes account of your connection location and your requested capacity. Where the original connection was installed by an ICP, we do not have the authority to request actual cost information. We will request some information from the ICP on the works they carried out and make an estimate of the connection charge using our own connection charging methodology.
When network reinforcement is carried out, you will usually pay a proportion of the costs for those works under the Cost Apportionment Factor (CAF) with the remainder of the contribution being made by us. The CAF calculation is based on your requested capacity and you will not be entitled to any reimbursement of those charges.
Where reinforcement works have been carried out and you have not paid under CAF rules, for example; where you have triggered the £200 per kW rule for Distributed Generation, you may be entitled to a partial refund.
More information on how we charge for connections, including how CAF is calculated, can be found in our Connection Charging Methodology Statements.
When you accept your Connection Offer, you need only pay the connection charge in the first instance. Once we have identified any eligible parties for refund payments, you will be invoiced the relevant refund amount for those parties once your connection has been made. If your development includes multiple connections, we will invoice you once the first connection of your site has been made.
We must take reasonable steps to locate eligible parties who have previously paid towards a section of network we are using for your connection. However, if we are unable to identify an eligible party, we will write to you to confirm that no refund payment will be due upon completion of your connection.
If you have confirmed you are still eligible for a refund payment, we will invoice the subsequent customer once their connection has been made. Your refund payment and a confirmation letter will be issued at the earliest opportunity following receipt of the monies from the subsequent customer.
A copy of the Regulation is available to view online here.
A guidance document is currently being developed by Ofgem in consultation with the industry and will be published once available.