CMP344: Clarification of Transmission Licensee revenue recovery and the treatment of revenue adjustments in the Charging Methodology
What is being proposed
Clarifies that the allowed revenue for Transmission Owners recovered from Transmission Users under the Charging Methodologies is fixed for each onshore price control period for onshore transmission licensees and at the point of asset transfer for OFTOs.
Current status
The Panel met on 29 May 2020 and agreed that it goes to a Workgroup. Workgroup meetings were held between 3 September 2020 and 24 November 2020.At June 2020 Panel, Panel determined that the priority of this was High. Final Modification Report was sent to Ofgem on 12 January 2021 requesting a decision by 25 January 2021 to meet an Implementation Date of 1 April 2021. However, Ofgem advised they were unable to make a decision by 25 January 2021 and sent back CMP344 on 5 May 2021 as they required further clarity on which OFTO costs the Proposal applies to and they need quantitative information regarding how the change impacts each set of network users. May 2021 Panel agreed for the Workgroup to be re-formed to address each of Ofgem's concerns and agreed in principle (following the assessment by the Workgroup) that a Code Administrator Consultation is needed to be run before it is re-presented to Panel for Recommendation Vote). They also agreed to place this as Medium to High in the prioritisation stack. Workgroups on how to address Terms of Reference agreed by Panel (to address Ofgem's send-back) were held 9 September 2021 and 31 October 2022 (following completion of Independent analysis to show the benefit). At December 2022 Panel, Chair of the CMP344 Workgroup presented how Workgroup had addressed the Terms of Reference set the Panel on 28 May 2021 (to address Ofgem's send-back on 5 May 2021). The Panel expressed no concerns with the approach taken and the Code Administrator Consultation was issued on 16 December 2022 and closed 5pm on 17 January 2023 with 5 non-confidential responses and 1 confidential response received. Draft Final Modification Report was presented to January 2023 Panel for recommendation vote. The Panel by majority recommended that the Original solution is implemented. Final Modification Report was issued to Ofgem on 8 February 2023. CMP344 had an expected decision date of 06 October 2023 (previously 29 September 2023) as per Ofgem's update to the August 2023 CUSC Panel. CMP344 had an expected decision date of 08 December 2023 (previously 29 September 2023) as per Ofgem's update to the September 2023 CUSC Panel. CMP344 had an expected decision date of 05 February 2024 (previously 26 January 2024) as per Ofgem's update published on 29 January 2024. The Authority sent back CMP344 on 12 February 2024 due to deficiencies in the Second Final Modification Report and Annexes. The February 2024 CUSC Panel agreed that the Workgroup should be reconvened ahead of a Second Code Administrator Consultation.The updated timeline was approved at the April 2024 CUSC Panel. Ahead of the CUSC Panel approving the reconvening of Workgroup meetings, external analysis will be completed and the ESO will continue to work on addressing the Send Back deficiencies in preparation for the next Workgroup meeting. October 2024 CUSC Panel prioritised as Medium, therefore Workgroup activity will start from Spring 2025. Upon receipt of the Authority Open Letter on 31 January: Outlining their approach to prioritisation of electricity transmission network charging modifications, Panel will review the modification status in the February Panel. On 14 February 2025 at the Special CUSC Panel the Panel discussed, at length and in detail, the prioritisation of CUSC Modifications. The CUSC Panel agreed there is no change to this priority status. On 28 March 2025 at the CUSC Panel the Terms of Refence were determined to have have been met and the modification could proceed to Code Administrator Consultation. The Third Code Administrator Consultation was issued on 12 May and closed at 5pm on 03 June with 2 non-confidential responses. The third Draft Modification Report will be presented to the June CUSC Panel. (03/07/2025) The CUSC Panel on 27 June recommended by majority that the Original better facilitated the objectives than the baseline. The Final Modification Report will be sent to Ofgem on 09 July 2025.
Details
Timeline
Analysis
CMP344 fixes transmission owner revenue recovery at the start of each price control period rather than allowing annual adjustments. The modification prevents mid-period revenue changes that currently create unpredictable cost shifts between network users. After multiple Ofgem send-backs since 2021, the CUSC Panel recommended implementation in June 2025, with final decision expected from Ofgem.
Why it matters
This removes a source of charging volatility that currently allows transmission owners to socialise cost overruns through annual revenue adjustments. Fixing revenue upfront forces transmission owners to bear their own cost control risks rather than passing them to users mid-period.
Key facts
- •Revenue fixed at start of price control period for onshore transmission licensees
- •Revenue fixed at asset transfer point for OFTOs
- •Multiple Ofgem send-backs since May 2021
- •CUSC Panel recommended implementation June 2025