Competition in Connections - Are you missing out? | Blog | YPO

Competition in Connections: Are you missing out?

18 January 2016 By Beverley Upcraft, Category Business Partner - Energy

Streetlights

Until recently, local authorities were unable to select which companies connected their equipment such as streetlights to local electrical networks.

After revisions to government policy, councils could be saving money through a simpler, compliant and much more competitive route to market.

Many authorities are still not taking advantage of this new competitive market, but since the revision to the Ofgem Competition in Connections Code of Practice in July 2015, using an independent connection provider (ICP) to carry out electrical connections is much simpler, and could save local authorities money.

Why do I need an independent connection provider (ICP)?

ICPs do not own electricity networks, or supply electricity. They are accredited companies that can carry out works associated with electrical network connections, such as connecting and disconnecting electrical equipment, such as streetlights, to the electricity networks.

What has changed?

Historically, local authorities were restricted to using their local distribution network operator (DNO) for connections and disconnections to the networks, so had no choice but to accept the service and pricing offered. 

Ofgem decided that this monopoly environment restricted competition, and prevented local authorities from achieving best value for money. In 1995, they made it a legal requirement for the DNOs to facilitate the use of ICPs, with the aim of delivering more positive outcomes, such as a reduction in cost, cost avoidance, faster lead times, and better customer service.

Despite this, later reviews found that competition was still stifled or not being used, and in July 2015 Ofgem revised their code of practice to make the market a fairer place in which DNOs and ICPs could compete.

Why aren’t more services being procured from ICPs?

Law dictates that local authorities cannot ignore the use of ICPs and DNOs when procuring connection works. This is especially important where the value of works exceeds OJEU thresholds.  

The jargon-filled world of electrical distribution can make accessing industry information difficult, and make people reticent to change. However, with a more flexible policy on using ICPs, many local authorities could now be missing out on savings and better service.

We discussed these issues with local authorities directly, and have built a solution in the form of a dynamic purchasing system (DPS) for local authorities to simply and compliantly procure connections services for their electrical networks.

For further information and support on procuring an ICP, please contact [email protected].

Categories: Frameworks , Procurement , Energy

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