Upfront A&D Fees given the green light
After a relatively rapid consultation process, Government Department BEIS has given the go-ahead for DNOs to charge upfront Assessment and Design (A&D) fees for connection applications.
The government has given the go-ahead to Distribution Network Operators (DNOs) to charge Assessment & Design fees in advance for connection applications. The new legislation comes into force from 6th April 2018.
Following a consultation process at the end of last year, the Department for Business, Energy and Industrial Strategy (BEIS), produced a final impact assessment report laying out the arguments. In essence, DNOs currently have to meet any A&D request for a connection application, but only receive payment from customers that go-ahead with the connection.
The new legislation means that DNOs can request an upfront payment for A&D work even if the customer does not then go-ahead with the connection. The legislation will be flexible enough to allow the DNOs to determine any exemptions, providing they are “rationalised within the regulatory framework” according to the Department.
In the final document, BEIS stated its belief that the new legislation “is fairer, with more applicants paying towards the costs of preparing connection offers and that it will bring further benefits in improving the efficiency of the connections process and the service applicants receive”. However, it raises the question of whether longer-term demand for connections will be reduced?
Amongst the DNOs, Northern PowerGrid was quick to respond with an A&D Briefing which also outlined is fee structure depending on whether the request was demand or generation-led.
The property sector was also quick off the mark as advisors urged landowners with an interest in developing ‘grid balancing services’ to act fast or think carefully about putting in a connection request.