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Still waiting in UK for policy on allocating transmission costs
1 April 2006
The UK's wind sector is still awaiting the government's decision on how the costs of transmitting electricity from offshore plant to the customer are to be recovered. The Department of Trade and Industry (DTI) was due to have published months ago the outcome of its consultation into a regulatory regime for offshore power cables. Indeed, the DTI is understood to have made up its mind on the issue. Of the two main options on the table, the majority of responses -- 20 out of the 25 who expressed a preference -- came down in favour of a "price control" approach where the offshore transmission assets would belong to the electricity transmission system owner, with the costs recovered through charges on all users of the system. This is believed to be the DTI's preferred option and would be consistent with regulatory arrangements onshore. The alternative was for a licensed merchant approach where generators would meet all the costs of the offshore transmission infrastructure upfront. This is the option favoured by energy regulator Ofgem because it is the most compatible with competitive markets.
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