What the new Electricity (Connection Offer Expenses) Regulation means for consumers

The new legislation The Electricity (Connection Offer Expenses) Regulation 2018 was voted in favor by all of the six major Distribution network operators (DNOs) – UK Power Network, Western Power Distribution, Electricity North West, Northern Power Grid, Scottish Power and SSE Distribution.

The DNO and National Grid Responsibilities

The DNOs across the UK are responsible for carrying electricity from the National Grid to homes, businesses and industrial users across the country via large pylons which look like those pictured above. 

The pylons are operated by the National Grid and carry electricity to local distribution substations/transformers, at which point a DNO takes over facilitating the passage of electricity via low-voltage overhead lines and underground cables to homes, businesses and industrial plants.

New Legislation from 6 April 2018 The Electricity (Connection Offer Expenses) 

Since 6 April, when The Electricity (Connection Offer Expenses) Regulation 2018 came into effect a fee is now chargeable by the DNO for an application for a new electricity connection to cover researching, designing and planning the application.

By way of background the DNOs had received a large increase in connection applications during the past couple of years, for which they carried out the assessment and design for the connection, before issuing the proposal to the end client. A vast amount of these were declined by the end client due to costs and/or the work no longer being required. The research and design phase is technically quite time consuming and having a fee in place will cover their costs.

Each DNO has its own approach in terms of operating within the new regulation and how each new application is handled, but generally efficiency of the connections process should improve and costs will be more evenly allocated because people will think before making an application.

Each DNO will have their own charges, which again will vary from job to job depending on the complexity. This will be on top of the proposal for the connection works and will still be required even if the end-user rejects the offer.

As the assessment and design process can take up to 40 working days from start to finish, make sure you take advice from experts before arranging any connection requirements, as a change of mind later on will have cost implications.

Connection Offer Expenses – New Regulations

BEIS are introducing new regulations which come into force from 6 April 2018, in the form of the Electricity (Connection Offer Expenses) Regulations 2018. This will allow all Distribution Network Operators (DNO’s) to charge customers a fee for assessing their connection offer, regardless of whether they are accepted.

Distribution Network Operators (DNOs) are legally obliged to provide customers with an offer to connect to the electricity distribution network.

Assessment and Design

Expenses are incurred by the DNO’s in reviewing applications, assessing the network, designing the connection and preparing the connection offer, known as the Assessment and Design (A&D) Fee.

In providing connection offers to customers, the DNOs incur Assessment & Design (A&D) costs which typically include the costs of DNO staff wages, undertaking surveys, site visits, drawing plans, accommodation and equipment amongst other things.

Previously, only customers that accept the offer are required to pay the A&D fees. These customers also paid the DNO costs of providing connection offers that are not accepted. In recent years, the number of connection applications and proportion of connection offers not being accepted has grown. This has led to an increase in the DNO resources required to prepare the connection offers and in the costs being spread across those who accept their offers.

Very shortly each DNO will be providing detailed information about the new A&D fees. These will currently apply to HV and EHV distributed generation applications and rates for which will be published within their Connection Charging Methodology and Statement document. This information should then be available on their website.

Applicable Fees

From 6 April 2018, The Department for Business, Energy & Industrial Strategy (BEIS) introduced new regulations that allows DNOs to charge customers for their connection offer whether it is accepted or not. These charges will be applied to 33kV and 132kV connections. DNO’s will then be applying these charges to distributed generation connection applications over 1MVA at 6.6/11kV and they then intended to roll it out further to other connections at a later date.

The new legislation is supported by Ofgem who believe that the upfront fees will allow for a fairer allocation of costs by ensuring that customers who do not accept connection offers contribute to the costs of assessing their applications. It also allows DNOs to work more efficiently and improve the service our applicants receive.

How it Works…….

It’s not clear at this stage whether all DNO’s will follow suit, however SSE have advised that a separate Connection Offer Expense invoice will be issued at the same time as the connection offer. At which point the customer may accept and pay the full connection offer expenses (to secure the connection), or not accept the offer but pay the Connection Offer Expenses Charge invoice. Non payment of the connection offer expense invoice will result in the debt being pursued through a DNO’s normal debt recovery process.

The link to the new regulations can be found on this link – http://www.legislation.gov.uk/uksi/2018/254/made.

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