Citizens Advice's response to Call for Input: Future of local energy institutions and governance
We welcome the call for input on where Distribution System Operation responsibilities should reside in the future.
We fully support Ofgem’s work to provide direction for local network system operation development because there are currently accountability issues, institutional gaps and challenges around the coordination of distributional system operation functions. However, we think Ofgem has taken a problematic approach with this ‘call for input’. It is effectively asking stakeholders to choose, largely on principle, between institutional arrangement options.
At this stage, more evidence is required for stakeholders to make a reliable assessment. There is not yet sufficient clarity on the local system operation activities that will be undertaken by the proposed alternative institutions or the type and scale of consumer benefits potentially offered. We think that a cost-benefit analysis is required. The costs of regional institutional reorganisation need to be well-justified based on a clear positive value proposition with viable institutional arrangements.
Before local market institutional arrangements can be assessed on how they can contribute to regional value propositions to consumers, we think further clarity is needed on the role of the Future System Operator (FSO) and on market design reform. Once there is clarity on what efficient whole system operation, market functions and governance look like, the responsibilities and potential of local system operation to provide additional value should be clearer.