Question

To ask the Secretary of State for Energy and Climate Change, if she will take steps to (a) end the 14 regional markets for electricity distribution and (b) introduce a national market for electricity distribution.

Electricity distribution network charges vary by region and reflect the costs of running the network in that area and the number of consumers that those costs are spread over. The Government does not plan to move to national electricity distribution charging, as the current cost reflective approach helps to ensure efficient use of the network and keeps overall costs down for bill payers across Great Britain. In contrast, national pricing risks an overall increase in network costs by weakening each network company’s local accountability to its customers, as well as making charges less transparent. On 23 October 2015, Ofgem published a report on the regional differences in network charges, which found no compelling case from a regulatory perspective to move to a national network charge. The report is available at:

https://www.ofgem.gov.uk/publications-and-updates/regional-differences-network-charges.

The Government will continue to consider any evidence that is presented.

Whilst the Government believes that, in general, cost reflective charging represents the right approach, it is right to consider intervention if one region has markedly different charging levels to any other. This forms the rationale for our Hydro Benefit Replacement Scheme, which protects consumers in the North of Scotland from the very high electricity distribution charges that would otherwise occur. The scheme is providing an annual assistance amount of £57m in 2015/16, which equates to £41 per household in the North of Scotland. The cost of providing this discount is recovered from consumers across the whole of Great Britain.