IN Brief:
- Ofgem has rejected proposed CUSC modification CMP344.
- The modification sought to change how costs linked to offshore Income Adjusting Events are recovered.
- The decision maintains existing arrangements affecting generators connected to OFTO transmission assets.
Ofgem has rejected proposed Connection and Use of System Code modification CMP344, which sought to change how costs associated with offshore Income Adjusting Events are recovered.
The modification concerned additional revenue allowances for Offshore Transmission Owners in relation to Income Adjusting Events. Under the proposal, costs would have been removed from the generator directly connected to the affected OFTO transmission assets and instead recovered from demand consumers through the Transmission Demand Residual charge.
The decision leaves the existing charging treatment in place. CMP344 dealt with recovery of revenue adjustments linked to offshore transmission assets, a technical area of the charging framework for offshore generation and transmission ownership.
Offshore Transmission Owners own and operate the transmission assets that connect offshore wind farms to the onshore grid after those assets are transferred through the OFTO regime. Income Adjusting Events are mechanisms that can adjust allowed revenue where specified circumstances affect costs or revenues. CMP344 tested how those additional allowances should be recovered through the charging methodology.
The decision sits within a wider question in electricity network charging: how costs should be allocated between generators, demand users, and network customers. Offshore wind projects are capital intensive and depend on long-term assumptions around connection costs, transmission charges, and revenue risk. Changes to cost recovery can therefore affect project economics even where the sums involved relate to specific charging categories.
Transmission charging has become more visible as offshore wind capacity has grown and more generation connects at the edges of the system. The location of renewable generation, the cost of moving power to demand centres, and the treatment of network investment are all central to the economics of the energy transition. Code modifications that appear narrow can shape how costs are distributed across developers, consumers, and transmission asset owners.
The rejection of CMP344 also comes against the backdrop of broader energy code reform. The UK’s electricity codes have long been criticised for complexity, slow governance, and difficulty in aligning technical changes with strategic policy goals. Code modifications remain essential to detailed market operation, while each change must be tested against cost allocation, competition, consumer impact, and consistency with the wider regulatory framework.
Predictability remains critical for offshore transmission. Developers and investors need to understand how connection-related risks and network costs are allocated over the life of a project. Consumers are exposed to transmission costs through network charges and ultimately bills. The regulatory task is to avoid arbitrary cost shifting while recognising that offshore infrastructure is now a core part of the national power system rather than a peripheral connection issue.
Ofgem’s decision maintains the current position, but offshore transmission charging will remain under scrutiny. Offshore wind deployment, network reinforcement, and charging reform will continue to interact as Britain’s power system becomes more dependent on large volumes of remote renewable generation.