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Contestability of Distribution Connection
PRACTICE AREA GROUP: Projects and Infrastructure Law Ireland
Prospective generators seeking connection to the Irish electricity distribution system have, in the past, queried the cost and timelines presented by ESB Networks – the Distribution System Operator (“DSO”) – for the proposed connection works.
Unlike the process for connection to the high-voltage transmission system, in respect of which “contestability” (where the performance and funding of connection works may be shared between the connection applicant and the transmission system operator) has been enshrined in legislation since 2000, contestability was introduced in relation to the distribution system as recently as the signing into force of the European Communities (Internal Market in Electricity) (Electricity Supply Board) Regulations 2009 (S.I. 226 of 2009) (the “Regulations”) in June 2009.
Following a consultation process initiated in August 2009, the implementation of distribution-level contestability has now been settled – at least on an initial basis – by a decision of the CER that was published on 15 April 2010 (see Decision Paper on Contestability for Distribution and Transmission Level Connections to the Electricity System (CER/10/056)).
The highlights of this Decision Paper are:
- Connecting parties can select a contestable, hybrid (where, in relation to shared connection assets, groups of connecting parties are not required to decide on contestability until mid-way through the connection the process) or non-contestable connection offer;
- Where connecting parties have not already had the opportunity to select the hybrid option, and where minimal or no work has been undertaken by the Systems Operators, the DSO shall be required to accommodate any request to modify the connection process to a hybrid or contestable offer;
- On a contestable connection, connecting parties may procure and install all equipment for the connection with the exception of the revenue meter, which will be provided and installed by the DSO. The DSO may specify the make and model of certain equipment to be installed;
- Where a member of a connecting group withdraws its connection application, final electricity customers (ie. consumers) will (through the DSO) pay to the remaining parties the withdrawing party’s share of connection costs, in line with the arrangements that exist for non-contestable connections;
- Unanimity across the members of a connecting group is required in order to select a contestable or hybrid connection offer for shared connection assets; absent such unanimity, non-contestable connection is the default position;
- Ownership of the connection can be retained by the connecting parties. However, the transfer of assets to the DSO may be ordered by the CER where (among other reasons) the transfer is in the interests of public safety or where the connection is needed to connect other parties or for wider system reasons; and
- The CER intends to undertake a review of these arrangements after a bedding-in period has passed.
Clarity around the availability of contestability in the distribution system connection process will be welcomed by developers of small scale generators, particularly renewable projects, and can be expected to promote and assist efforts to install capacity in pursuit of the Irish government’s 2020 renewable energy targets.