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Statutory consultation on proposed modifications to the standard conditions of the electricity interconnector licence and to the special conditions of the licences held by NGIL and NGESO

About this consultation

This consultation sets out our proposals to modify relevant licences in order to reflect the Clean Energy Package (CEP) Electricity Regulation and implement our decision on our approach to cost sharing and cost recovery under the CACM Regulation.

For the CEP Electricity Regulation, we have identified changes to the standard conditions of the electricity interconnector licence and to the special conditions of the electricity interconnector licence held by National Grid Interconnectors Limited (NGIL) with respect to the Interconnexion France Angleterre (IFA) interconnector. These proposed changes aim to align these licence conditions with the relevant provisions in the CEP Electricity Regulation.

We are also proposing changes to the standard conditions of the electricity interconnector licence and the special conditions of the electricity transmission licence held by National Grid Electricity System Operator Limited (NGESO) in order to implement our decision on the approach to cost sharing and cost recovery under the CACM regulation.

We welcome your views on these proposed licence changes by close on 31 July 2020.

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Incentive on Connections Engagement consultation on the Distribution Network Operators’ 2020 submissions

We are seeking your views on how well the distribution network operators (DNOs) engage with their connections stakeholders to ensure they are delivering a service that meets these customers’ needs.

Helping new customers connect to the electricity network is one of the most critical services provided by DNOs. It enables new homes to be built and new businesses to start trading, as well as allowing new low carbon technologies and flexibility services to come on to the system. This will be crucial in helping the UK to decarbonise its economy, and move to a smarter, more flexible energy system.  

We expect DNOs to provide good service to all customers that are seeking a connection. The purpose of the Incentive on Connections Engagement (ICE) is to encourage this. Under the ICE, DNOs must provide evidence that they have engaged with their connection stakeholders and responded to their needs. If they fail to do this, they could incur a penalty.

DNOs submit evidence of their stakeholder engagement in two parts: a Looking Back report on their activities during the previous year demonstrating how they have met the needs of large connection customers; and a Looking Forward plan for the coming year describing the activities the DNO plans to undertake.

We are seeking your views separately on both the ‘Looking Back’ and the ‘Looking Forward’ sections of the submissions from each DNO. Your responses to this open letter will inform our assessment of each DNO’s submissions.

The closing date for responses is 28 August 2020. Responses should be sent to connections@ofgem.gov.uk.

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The Product Safety and Metrology (Amendment) (EU Exit) Regulations 2020

This instrument amends two earlier product safety and metrology instruments the Department prepared for exiting the EU without a Withdrawal Agreement, to reflect the fact that the UK has now left the EU and entered a Transition Period which will last until 11 p.m. on 31 December 2020.

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Press release: Government backed projects to speed up life-saving cancer diagnoses

  • Patients could receive earlier and more precise diagnoses for potentially life-threatening diseases such as cancer thanks to £16 million funding from government and charity
  • funding will benefit six innovative health projects across the UK using disruptive technologies such as AI, to detect chronic or terminal diseases earlier, helping to save lives
  • the projects will bring together the UK’s world leading academia, research institutions, NHS, charities and industry

Patients could receive earlier and more accurate diagnoses for potentially life-threatening diseases such as cancer and Crohn’s disease, thanks to £16 million of new funding announced by Science Minister Amanda Solloway today (3 July 2020).

The government backed funding, delivered to 6 of the UK’s most innovative specialist health projects, from Glasgow to Cambridge, will harness the most disruptive technologies, including artificial intelligence, to develop more precise medical solutions, which could enable earlier detection and diagnosis of some of the most serious and potentially fatal diseases.

One project led by the University of Oxford is working to improve survival rates in people with lung cancer, the deadliest form of cancer in the UK. It will bring together existing work being led by the NHS, universities, cancer charities and digital health companies to integrate the best of digital imaging and diagnostic science to help identify cancerous tumours in the lung earlier.

Another project, led by technology start up Motilent, is working on healthcare solutions to more effectively treat Crohn’s disease, a painful, lifelong inflammatory condition affecting 180,000 people in the UK. Through the use of artificial intelligence, it will seek to accurately predict when to start and stop drug use to control the disease, which currently has a 60% failure rate, and which can lead to further, irreversible damage to a patient’s bowel.

Science Minister Amanda Solloway said:

Our brilliant scientists and researchers are harnessing world-leading technologies, like AI, to tackle some of the most complex and chronic diseases that we face.”

Tragically, we know that one in two people in the UK will be diagnosed with some form of cancer during their lifetime, while Crohn’s disease affects up to 180,000 people across the country.

These six cutting-edge projects will improve early diagnosis, create more precise treatments, and crucially, save lives.

Other projects receiving funding include:

  • Actioned, led by Queens University Belfast which is using artificial intelligence to achieve more accurate and earlier diagnosis of early relapse in cancer, improving the outcomes for patients;
  • A University of Cambridge project which will help to diagnosis oesophageal cancer earlier. This type of cancer has increased six-fold since the 1990s and just 15% of people will survive for 5 years or more – often because it is diagnosed too late. Barrett’s oesophagus, a condition that can turn into cancer of the oesophagus is more common in patients who suffer from heartburn. The project aims to diagnose up to 50% of cases of oesophageal cancer earlier, leading to improvements in survival, quality of life and economic benefits for the NHS
  • A University of Glasgow-led project working to identify growths that are most likely to develop into bowel cancer, which is the second biggest killer among cancer related deaths in the UK.
  • University of Manchester led-research into when liver problems, which affects up to 4 in10 people, can lead to liver scarring and sometimes complete liver failure. Current tests pick up advanced scarring but do not pinpoint early disease or those patients who are destined for much worse. The project will use new software to identify liver damage earlier and more accurately.

Of the £16 million awarded today, over £13 million will be delivered by the government, while up to £3 million will be made available from Cancer Research UK, to specifically support the oncology focused projects.

The funding, delivered through the Industrial Strategy Challenge Fund, is part of a government programme in data to early diagnosis and precision medicine. The competition is run by Innovate UK on behalf of UK Research and Innovation (UKRI) and forms part of the government’s commitment to increase research and development investment to 2.4% of GDP by 2027.

Notes to editors:

  • UKRI’s competition for the best integrated diagnostics innovations was originally announced in July 2019.
  • UKRI works in partnership with universities, research organisations, businesses, charities, and government to create the best possible environment for research and innovation to flourish. Operating across the whole of the UK with a combined budget of more than £7 billion, UKRI brings together the seven Research Councils, Innovate UK and Research England.
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News story: Government agrees support package to UK steel company

The UK government has today confirmed that it has provided an emergency loan to Celsa Steel (UK) Ltd to allow the company to continue trading.

The agreement will safeguard a key supplier to the UK construction industry and secures more than 1,000 jobs, including more than 800 positions at the company’s main sites in South Wales.

As part of the loan, which is expected to be repaid in full, the company must meet a series of legally-binding conditions, which the government has negotiated to ensure the loan benefits the workforce, business and wider society. This will ensure public money is used to aid wider government policies to further benefit the UK. These conditions include commitments to protect jobs, climate change and net zero targets, improved corporate governance, such as restraints on executive pay and bonuses, and tax obligations. It has also required further financial commitments from shareholders and existing lenders.

The government has brought together the firm’s management, shareholders, and other lenders to create a strong package of support for the company, its workers and UK economy. This is a good deal for all parties.

In March, the government was quick to establish a broad package of support schemes for companies of all sizes across sectors, to protect businesses and livelihoods during the pandemic.

Through the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme and the Bounce Back Loan Scheme, more than 1 million loans have been approved – while 9.3 million jobs have been protected through the Coronavirus Job Retention Scheme.

In exceptional circumstances, where a company is of strategic importance and all other options have been exhausted, the government may consider providing bespoke support. This is a capability that the government has had for many years, and like previously, there is an extremely high bar for putting taxpayers’ money at risk in this way, and any companies seeking support from the Government should do so as an absolute last resort.

Furthermore, companies should be able to demonstrate that they can reasonably be expected to have a viable long-term future, have exhausted all other financing options (including support from existing shareholders and private sector lenders) and that their failure or financial distress could cause disproportionate harm to the UK economy or society.

More broadly in support of the UK’s steel industry, the government has provided more than £300 million relief for electricity costs since 2013, public procurement guidelines with annual reports on the proportion of public sector steel bought from British firms, and details of a steel pipeline on national infrastructure projects worth around £500 million over the next decade.

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Retail Energy Code Schedules: Working drafts July 2020

Under the Retail Code Consolidation and the Switching Significant Code Reviews, Ofgem is working with stakeholders on the creation of a new Retail Energy Code (REC). We are publishing the latest working drafts of REC schedules here for transparency.

We paused stakeholder engagement and consultations on the Retail Energy Code in March 2020 to allow stakeholders to prioritise the response to the COVID-19 pandemic. The documents published here may therefore contain material not previously discussed with stakeholders. They should be regarded purely as working drafts.

We expect to resume stakeholder discussions on these drafts in the coming weeks and to consult on them formally in the autumn of this year. We do not currently expect engagement or comments on these documents, but are open to receive views or questions.

More detailed information on a number of these working drafts is contained in the information document “REC Schedules: Working Drafts July 2020” below.

We are planning to update this page over the coming weeks to include further code drafting.

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Notice of proposed modification to the RIIO-ED1 PCFM with respect to SSEH subsea cables cost allocation rates, and other minor updates

In accordance with Charge Restriction Condition (CRC) 4A of the Electricity Distribution Licence, we are consulting on the following proposed modification to the ED1 Price Control Financial Model (PCFM):

Inclusion of allocation percentages within the “SSEH” sheet to allocate the £45.3m allowed expenditure in respect of Subsea Cables expenditure to “Non-load related capex – asset replacement” such that this amount is fed through to allowed revenue.

On 29 November 2019, whilst the Model published correctly reflected the allowed expenditure of £45.3m, the allocation percentages required to feed this expenditure through to base revenue had not been updated. As such, the additional allowed expenditure was not recognised in SSEH’s allowed revenue in that period.

This modification that we are now making to the ED1 PCFM will enable the revised allowed expenditure for Subsea Cables costs to feed through to SSEH’s allowed revenue.

Please respond to this consultation no later than 29 July 2020. We intend for this modification to take effect by 10 August 2020 and to be included within the Annual Iteration Process, due to conclude on 30 November 2020.

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ESO Performance Panel End of Year Review 2019-20

The ESO Performance Panel (the Panel) plays a central role in the ESO’s regulatory and incentive framework. It challenges the ESO’s plans before the start of the year, evaluates the ESO’s performance after six months (the mid-year review) and then performs an end year assessment.

We are publishing this report as the secretariat for the Panel, detailing the Panel’s end of year assessment of the ESO’s performance for the 2019-20 regulatory period. This report reflects the views of the Panel, not Ofgem.

This Panel report forms a recommendation to Ofgem on the ESO’s performance. We will use this recommendation alongside other evidence collated throughout the year to determine a financial reward / penalty for the ESO worth ±£30m.

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The Single Digital Gateway Regulation (Revocation) (EU Exit) Regulations 2020

Regulation (EU) 2018/1724 of the European Parliament and of the Council of 2 October 2018 establishing a single digital gateway to provide access to information, to procedures, and to assistance and problem-solving services, and amending Regulation (EU) No 1024/2012 (“the SDGR”), is a directly applicable European Union (EU) Regulation. Certain provisions of the SDGR will constitute retained EU law in accordance with section 3 of the European Union (Withdrawal) Act 2018 (“EUWA”). The purpose of this instrument is to revoke those provisions of the SDGR that will constitute retained EU law on and after 31 December 2020, so that the United Kingdom (UK) is no longer legally bound by the SDGR once the Transition Period ends.

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Electricity Distribution – Notice of proposed licence modifications to the special licence conditions of the electricity distribution licence and the ED1 Price Control Financial Model

We are inviting views on a proposal to modify the Special Conditions (also known as the Charge Restriction Conditions) of the RIIO-ED1 Licence and the ED1 Price Control Financial Model.

Over the course of the RIIO-ED1 Price Control we have identified a number of minor changes we believe should be made to the Special Conditions of the Licence. The changes are required to improve the clarity of the conditions of the Licence, by correcting evident mistakes including typographical errors, incorrect cross-references and formatting errors.

One of the changes we are proposing is a change in the capitalisation rate for SSEH. This will require a modification to the ED1 Price Control Financial Model in order for this to impact allowed revenue in the November 2020 AIP.

Responses to this statutory consultation should be submitted by email on or before 29 July 2020.