High Cost Cap

WPD's request to undertake a trial under which the High Cost Cap (£200 per kW rule) will be disapplied 

In response to Ofgem’s call for DNO’s to undertake trials to facilitate quicker and more efficient connections in their publication of September 2015, WPD propose to undertake a trial under which the High Cost Cap – HCC (also known as t he £200 per kW rule) in paragraph 5.15 of the Statement of Methodology and Charges for Connection to WPD’s distribution system will be disapplied. This will enable a group of customers who apply for DG connections within a set time period, and the aggregate capacity sought by these customers exceeds the relevant minimum capacity, to be apportioned a share of the reinforcement costs between them in proportion to the capacity specified in their connection offer (rather than the majority of the reinforcement costs being charged to the first customer that triggers the HCC).

As this trial will require WPD to provide connection offers that are not wholly in accordance with the Common Connection Charging Methodology (the ‘CCCM’), we have submitted a request to Ofgem for the necessary consents to run this trial and a derogation from the CCCM.

WPD believe that if it is successful these arrangements could provide a fairer apportionment of costs between DG customers requiring capacity in the same part of WPD’s network, but without exposing the wider customer base to additional costs when compared to a single DG connection with a required capacity in excess of the HCC.

Attached below is a copy of our request with detailed information about the proposed trial, and Ofgem’s consultation letter. Ofgem would be interested in any views you may have on this derogation, in particular on the benefits it may deliver and any associated risks or downsides. They would also be interested in your views on the scope, duration and proposed reporting requirements that are outlined within their consultation.