September 2013: The Mayor’s concerns over “uncertainties of our energy supply and growing chances of supply disruption in the coming years” have been highlighted in correspondence between Boris Johnson and Ed Davey, the Secretary of State for Energy and Climate Change, Ed Davey, released this week.
The Mayor writes that his “priority is delivering the jobs and growth that will ensure London remains the best big city in the world in which we live, work and invest, and having a secure energy supply will be absolutely crucial to achieving this… I am adamant that we must do everything in our power now to ensure that the lights will stay on in the future.”
The Mayor calls for major changes to the regulatory control framework rules for distribution network operators (DNOs). As these are predominantly monopoly businesses, the operating framework is set by energy regulator Ofgem. DNOs are the companies operating the local electricity grid (as opposed to the higher voltage ‘national transmission grid’) and in London the majority of the distribution network is managed by UK Power Networks and parts of west London by Scottish & Southern Energy. The Mayor letter calls for a “urgent review of the currently regulatory regime to ensure that DNOs are able to invest in energy infrastructure and install capacity ahead of need”.
The Mayor highlights problems with current legislation and – interestingly – points to “the way Ofgem interprets and exercises its regulatory functions [which] are not fit for purpose” and finally calls upon the Secretary of State for ideas on how to give “DNOs in London substantially more scope and flexibility to reduce the level of network stress and improve strategic investment in London’s electricity infrastructure.”
In response to the tightening of electricity supply capacity over the next few years Ed Davey refers to possible extensions to existing balancing services operated by National Grid and in the “medium term …steps to ensure sufficient investment in capacity via the Capacity Market, with the first auction taking place in 2014 for 2018/19 delivery.”
On the issue often brought up by businesses – the speed of installing electricity connections to new users – the Minster’s letter touches upon current Ofgem work to set the new electricity distribution price control (called RIIO ED1) and sets out that “the existing framework provides the flexibility to drive efficiency outcomes in the vast majority of cases.”
The Mayor’s correspondence with Ed Davey is set out in Appendix 6a of the following GLA document.
The Mayor has established a ‘High Level Electricity Working Group’ to look at many of the issues raised above and minutes and papers from the three meetings that have taken place to date of this group can be found here. A further recent paper looking at London’s electricity infrastructure by the London Infrastructure Group can be viewed here.