Continuing Professional Development: Independents bring more power to you

Continuing Professional Development: Electricity connections

•  The difference between DNOs and IDNOs
•  How the electricity distribution market is being opened up

•  The benefits of using independent operators

The CIOB requires members to assess and fulfil their own CPD needs. Members can therefore choose to study the CPD articles published in CM as a valid part of their personal record of CPD activity.

Click here to be taken to the online CPD test paper for the February 2012 issue.

Cable service: changes in the market now mean independents can connect power on site

Independents bring more power to you

Changes to the electricity distribution market mean greater choice when selecting connections from your site to the national grid, explains Dave Overman.

In 1990, the Electricity Boards were replaced with regional electricity companies. These companies operate distribution divisions, known as distribution network operators (DNOs).

Today, a small number of corporate groups, including US-owned Western Power Distribution and UK Power Networks, hold the 14 different regional Ofgem distribution licences allowing them to distribute electricity in set geographical areas of Great Britain. For example, Western Power Distribution holds the licences for south Wales, the south west and the west midlands, Northern Power Grid covers Yorkshire and Humberside, and UK Power Networks is responsible for East Anglia, London and the south-east (see map overleaf).

Since 2002, any client wishing to set up a new electricity network on their site, or modify an existing one, has also had an independent option. Under the Utilities Act 2000, licences became available for Independent Distribution Network Operators (IDNOs) to operate and compete with the DNOs. The act gives developers and their construction teams the opportunity to choose who should install, own and operate the electricity networks for new developments nationwide.

IDNOs, which are sometimes subsidiaries of DNOs, are not restricted to a specific geographical area. They are licensed to own and operate electricity distribution networks across Britain, connecting new developments to the existing distribution network. Currently, there are six IDNOs in Britain (see over).

Being able to select an electricity network provider through a competitive tendering process brings all the associated scheduling and economic advantages. But only if other barriers to competition are also removed.

For more than a decade, independent gas transporters have been allowed both to determine the point at which the gas connection is made to the regional upstream network, and to carry out the connection work themselves.

Electing to use an independent transporter for their gas gives construction teams more control over the time and cost of the project. Working with one company allows full control of the process, from deciding where to locate the connection to ensuring work is completed within the site schedule. 

Regional network operators

The same has not been true for electricity. Although construction managers have been able to choose an IDNO to plan and operate their new or modified connection, independents have not been allowed to determine the point of connection or make the connection themselves. Whilst thousands of independent gas connections have been made, the regional network operators have continued to insist on being directly involved in the process for electricity.

Work undertaken by qualified independent network operators currently undergoes time-consuming and often unnecessary administrative checks by the regional network operators. In addition, the DNOs continue to insist on carrying out the final upstream network connection and associated works, preventing independents from controlling the full process. Having to rely on the regional network operator — an extra link in the chain — often results in protracted schedules, administrative burdens and increased costs for construction managers.

Inaugural self-connection

The situation is finally beginning to change. In its 2010 Connections Industry Review, industry regulator Ofgem set targets for the regional DNOs to further open competition in their footprint regions or face referral to the Competition Commission. Recently, IDNOs such as GTC have been working with regional DNOs to trial “self-connection” to their electricity network.

Under a ground-breaking pilot scheme, GTC carried out the UK’s first low-voltage (LV) metered live-jointing self-connection on a development in Burnley, Lancashire, in November 2011. GTC’s own team made the connection and also removed a large, unsightly feeder pillar. This was replaced with an unobtrusive, link box. A live breech joint was completed, followed by a live pot end.

GTC worked closely with the regional DNO, Electricity North West, to ensure the connection went smoothly and any lessons will help shape the new and evolving process for the next connection and beyond. Electricity North West is happy with the works carried out by GTC’s project managers and all teams have been fully briefed on the process. The success of the pilot means that in the Electricity North West region, other new sites can now be connected by independent delivery teams, ensuring that construction managers’ timescales are met.

A traditional feeder box can be replaced by an unobtrusive link box in the ground

Building momentum

Under this continuing pilot scheme, GTC has now completed the first low-voltage self-connection in a second region — Northern Power Grid. A live breach joint was made onto the network and, following this success, a further two self-connections are already planned in this area. With the success of GTC’s first self-connection, other regional network operators are now progressing with pilots to open up their areas to this work.

While the actual connection made by GTC was relatively straightforward, the administrative processes involved in initiating these pilot schemes have been rather more complex.

Works are carried out under a safety management system that requires the controlled distribution of records to relevant parties and stringent health and safety documentation. GTC is also working with regional network operators to ensure that the appropriate costs are removed so that customers are not disadvantaged and only pay for the work undertaken. This should result in an overall cost saving for construction managers. Work can be programmed more cost effectively with one company and the charges made by the regional network operator for visits to the site to undertake the cable jointing are removed.

The whole project is being overseen and documented by the electricity industry’s auditor, Lloyd’s Register. The organisation accredits DNOs and IDNOs for reaching set standards, and is adding these new competencies into the National Electricity Registration Scheme (NERS) so that accreditations can be gained by all companies active in this market. This will ensure that a high standard is achieved by all players, reassuring construction managers and further removing barriers for true competition.

GTC has been accredited for design and construction tasks for the past six years and has played an active role in improving NERS so that it allows the opening up of the electricity connections market.

Boundary metering

While self-connection is only at the pilot stage, other changes aimed at introducing true and fair competition to the electricity market have been ongoing for some time. Ofgem reviews have already had a big impact on installation timescales and costs, and construction firms have been able to take advantage of these changes.

When Ofgem first introduced competition from IDNOs, the DNOs pushed for Ofgem to rule that boundary metering equipment, paid for by the independent, should be installed to allow tracking of electricity usage on the IDNO network. The DNOs did not, however, install such metering in respect of developments served by their own network extensions.

The impact was felt by independent network operators and developers alike. Boundary metering not only involves substantial costs, but also the problem of physically accommodating the equipment. The necessary feeder pillars are expensive and unsightly and often have to be placed at the entrance to a development. The metering equipment also generated land-take issues that in turn often incurred high legal costs and delayed delivery schedules.

IDNOs have always disputed the boundary metering rules and Ofgem’s Connections Industry Review 2010 highlighted the barrier that boundary metering posed to competition. New connections for the 2008/2009 housing market stood at 11% by independents for electricity, compared with 77% for gas. In March 2010, Ofgem agreed that if DNOs required boundary metering to measure the quantity of electricity conveyed between the networks, it should be funded by the DNO.

This decision has brought great advantages. For example, underground point-of-isolation solutions, such as link boxes in public highways, may now be used to connect to the regional network. Link boxes look similar to drainage covers in the footpath or road and therefore do not create land-take and legal issues. They are far less visually intrusive than the large, grey feeder pillars and have a positive effect on timescales and budgets. On smaller developments in particular, this approach means that cost savings can be considerable and installation timescales have been greatly reduced.

Issues with high voltage connection installations have also been resolved.

A double substation used to be required to house separate switchgear, one owned and operated by the regional network operator and the other by the independent network operator. These were very large, often brick-built, structures that had an enormous impact on time and budget. After negotiation, it was agreed that high voltage equipment may be housed inside just one substation, allowing network operators joint access.

Self-determination

The next stage in the process of opening up the market and removing barriers to competition is self-determination of the point-of-connection location. Currently the IDNO has to apply to the regional network operator for permission to make a point of connection, which also identifies its location. Once receipt of this has been acknowledged and consent given, the IDNO must then submit the relevant designs for approval. The process is long with two separate responses required for connection applications.

Self-determination looks to reduce the waiting period by allowing the IDNO to assess the point of connection, carry out design work and then submit design approval in one application. Again, this seems an obvious way to manage the installation of infrastructure for utilities. Indeed, the gas networks find this administratively-reduced system to be successful and have done so for many years. The simplified process is, of course, faster and more efficient.

Any movement towards self-determination in the electricity market will require close cross-party communication. Each regional network operator will need to furnish each independent network operator with the necessary information to understand how they establish their preferred point of connection. The regional network operators are willing to work with the independent network operators in this way as they need to enable growth of competition to avoid being penalised by Ofgem and potentially being referred to the Competition Commission.

GTC has already met with other DNOs — UK Power Networks and Northern Power Grid — to discuss self-determination. Further meetings are set for the coming months and plans are in place to meet with the regional network operators. During recent application submissions, GTC has run simultaneous in-house pilots to self-determine the point of connection and then compare this with the response from the incumbent. So far, the trials have been successful, although further consultation with the regional incumbents will be required to achieve consistent accuracy.

A feeder pillar is an eyesore on this development, while double sub-stations are no longer necessary (below)

The future

Removing the need for boundary metering and allowing self-connection and self-determination for independent network operators all helps to rebalance the market. With competition comes improved levels of service and greater flexibility on project delivery.

With accredited independent gas transporters carrying out connections themselves, delivery timescales have been dramatically reduced. The same should soon be true for electricity, with pilot schemes making way for self-connection to become the accepted norm across many regions in 2012.

Demand for independent network operators for electricity is growing fast and the independents have responded with improved service. Many employ their own construction divisions so the whole process of installing utility infrastructure can be managed in one coordinated process, by one company, from quotation to site delivery.

The market is now much more transparent, responsive and accountable. Utilities providers are in a position to be able to publish performance delivery statistics so the construction manager can see if the company meets its promises.

Construction managers must continue to demand high levels of service. Knowing more about the regulations regarding utilities puts the client in a position to be able to make much more informed choices about the right provider and solution for the project. The gas industry has long benefited from competition and the electricity industry is now following suit.

Understanding where the barriers are set will help construction managers to support the industry in challenging them, with everyone benefiting from the resulting changes, in all utilities.

Dave Overman is electricity network manager for independent gas and electricity network operator GTC. www.gtc-uk.co.uk

GTC carried out the UK's first low-voltage metered self-connection in Burnley last year

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Electricity supply

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