Superfast Broadband - Evidence - Parliament

SSE plc – supplementary written evidence
Comparable markets: the electricity market structure and obligations
8. At privatisation of the electricity industry in Great Britain, 14 different entities, each
carrying out both supply and distribution (low voltage networks near to customer
premises and therefore logically similar to communications access networks) activities
within their own “authorised areas” became private companies. There has been legal
separation of distribution and supply activity and some consolidation in the market since
then but the 14 areas, now known as “distribution services areas”, remain and affect the
licences discussed in the appendix to this note. The appendix lists the headings for the
different sections of the electricity distribution and supply licences, together with some
commentary on the detailed content and forms a brief summary of the licence content
for both distribution and supply companies in the electricity market.
9. It can be seen from this summary that the majority of detailed obligations fall
on distribution entities. While suppliers have obligations around provision of
information to customers and contractual provisions, distributors have a range of further
obligations both to customers – including those parties interested in providing
infrastructure on a competitive basis – and to support the operation of the competitive
retail market. It is worth noting that special administration arrangements in electricity
market legislation protect the ongoing operation of distribution companies while
“supplier of last resort” arrangements administered by Ofgem exist to allow orderly
transition for customers of a failing supplier to other suppliers interested in taking on
that customer portfolio.
10. Examples of customer-related requirements on electricity distribution licensees are: to
run safety and security of supply enquiry helpline services so that any person can report
or receive information about network incidents that may be dangerous or require
attention; and to establish a priority services register for those vulnerable customers
who particularly depend on their electricity supply such that these customers receive
tailored advice on what to do in the case of supply interruptions and, in the event of
planned or unplanned interruptions, receive prompt advice and information relevant to
the circumstances of the interruption. It can be seen that these particular requirements
are more practicably provided by the distributors than by suppliers. It is possible to
identify technical requirements in the communications market that should similarly be set
as network provider responsibilities e.g. battery back-up for fixed line telephone service
provision over fibre.
11. Examples of competition-related requirements on electricity distribution licensees are: to
offer non-discriminatory terms for connection by any party (including other competing
network providers) to their network and for using their network to supply to or receive
electricity from it; to have charging methodology statements approved and changecontrolled;
to adhere to technical and performance standards; and to abide by industry
codes and agreements. They are also required to maintain and run the systems that,
amongst other things, allow end customers on their networks to change suppliers. This
very important part of the framework is explained in more detail in the next section.
12. SSE wishes to highlight how the separate requirements on distributors and
suppliers underpin the successful operation of the competitive retail market
in electricity. The structure of obligations leads to the existence of an
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