Disputing Gate 2 Decisions – Ofgem’s new guidance

Following the conclusion of the Gate 2 to Whole Queue (G2TWQ) process, existing customers with connection agreements within the scope of the G2TWQ process should have received their notifications from the National Energy System Operator (NESO) or the Distribution Network Operator (DNO) (as appropriate). As expected, the process has seen both 'winners' and 'losers'. For example, protected BESS projects have exceeded 3 times the CP2030 available capacity, meaning that it is unlikely there will be any capacity available in the next gated application window.

So, what can developers who have not received the desired outcome do now?

We have written previously about the available remedies, which include seeking a determination by Ofgem. Anyone considering pursuing such action, ought to review Ofgem's guidance on the determination of disputes under the G2TWQ process.

In this article, we have summarised the key points of this guidance.

Alternative Dispute Resolution (ADR)

Dissatisfied customers are expected to exhaust Alternative Dispute Resolution (ADR) before seeking a determination from Ofgem. Where a determination has been made by NESO and ADR and failed, customers shall also follow the formal dispute resolution mechanism in Section 7.4 of the CUSC 'Other Disputes' framework. Customers are expected to produce evidence of having attempted ADR before applying to Ofgem for a determination.

When can Ofgem be involved?

The guidance states that Ofgem will only consider a determination in exceptional cases, such as where:

• NESO or a DNO has breached regulatory obligations or license conditions; or
• There has been a material error or failure to follow the approved process.

Ofgem will not be involved where a customer disagrees with the outcome of NESO's or the DNO's (as appropriate) determination of the status of their project (e.g. where a customer considers that their project should have received a Gate 2 Offer), unless the customer can evidence that NESO's or the DNO's decision is a result of a "material error or other unauthorised departure from the approved process".

How to request a determination?

A party seeking determination by Ofgem has to submit a pro forma request within 30 days after ADR concludes.

Where does this leave customers?

As noted in our earlier article, the process will not lead to any financial compensation. Additionally, "it is unlikely that the Authority will be able to direct re-insertion in the connection queue ahead of the next evidence window". Whilst Ofgem is committed to arriving at an outcome that is "fair and equitable to affected parties", it is clear that this needs to be balanced against the interests of those parties that have already secured a place in the queue (recognising that any re-ordering of the queue is likely to have widespread implications for project developers, investors, NESO and the affected DNOs).  

Additionally, under current guidance, Ofgem is to recover costs only where the parties have acted in a manner that has resulted in Ofgem incurring unexpected costs. In anticipation of an increase in the volume of disputes that it may be asked to handle, Ofgem is considering revising this position. Whilst the details are not yet known, it is likely that a change in Ofgem's cost recovery approach will act as a further deterrent to customers wishing to challenge a G2TWQ process decision.

We are already working with customers seeking to challenge decisions made by NESO or the DNO, so please get in touch if you wish to find out more.