SSE code modifications appeal

The CMA has issued a new decision and order, following the Court of Appeal judgment and order. The CMA’s decision is in respect of the appeal brought by SSE against Ofgem’s decisions to accept code modifications on charges to generators for the electricity transmission system.

From:
Competition and Markets Authority
Published
14 January 2021
Last updated
5 December 2023 — See all updates
Case type:
Regulatory references and appeals
Case state:
Open
Market sector:
Energy
Opened:
14 January 2021

Final costs determination and order

5 December 2023: The CMA has issued to SSE and GEMA its final determination on costs and costs order in relation to the SSE code modification appeal 2021. Non-confidential versions of these documents are published below.

Decision following Court of Appeal judgment

Following the Court of Appeal judgment in an appeal by Ofgem and a cross-appeal by SSE against parts of the judgment of the High Court of 11 April 2022, and the consequent Order, the Competition and Markets Authority (CMA) has allowed a part of Ground 3 in the appeal brought by SSE against the code modification proposals that Ofgem had approved on 17 December 2020.

The outcome of all the proceedings is as follows:

  • the CMA Decision dated 30 March 2021 stands in relation to Grounds 1, 2, 3(ii), 4, 5 and 6 in respect of which the CMA dismissed SSE’s appeal
  • the CMA Decision dated 12 December 2022 has allowed SSE’s appeal on Ground 3(i)

Court of Appeal judgment following High Court challenge to the CMA’s decision on SSE’s appeal against decisions by Ofgem

On 8 November 2022, the Court of Appeal issued its judgment in an appeal by Ofgem and a cross-appeal by SSE against parts of the judgment of the High Court of 11 April 2022. The Court of Appeal allowed Ofgem’s appeal and SSE’s cross-appeal.

The Court of Appeal also made consequential orders including a quashing order in relation to the decision of the CMA dated 20 May 2022 (which gave effect to the High Court judgment) and certain parts of the CMA decision dated 30 March 2021 (in respect of which SSE had won in its cross-appeal). In addition, the Court of Appeal varied the costs order of the High Court so that each party should bear its own costs of the judicial review proceedings in the High Court.

Decision following the outcome of a judicial review

Following the outcome of the judicial review of certain parts of its decision dated 30 March 2021, the CMA has allowed a part of Ground 1 and the entirety of Ground 2 in the appeal brought by SSE. Those Grounds concerned the application of a legal exclusion (for charges paid by producers for physical assets required for connection to the system) in respect of code modification proposals that Ofgem had approved on 17 December 2020.

High Court challenge to the CMA’s decision on SSE’s appeal against decisions by Ofgem

11 April 2022: The High Court issued its judgment. The High Court allowed SSE’s claim for judicial review in relation to one ground but dismissed the other 2 grounds of challenge.

A link to the full copy of the High Court’s judgment is included below.

The High Court also made consequential orders including a quashing order in relation to aspects of the CMA’s decision as well as mandatory orders directed to the CMA. In addition, the High Court ordered that the CMA pay 65% of SSE’s costs. Permission to appeal was refused and an application for a stay was also refused.

May 2021: SSE issued a High Court challenge (judicial review) to the CMA’s decision on the appeal that SSE had made to the CMA (see below). SSE contended that in dismissing that appeal against decisions Ofgem had made, the CMA had made three errors of law. The High Court considered the challenge at a hearing in November and December 2021.

The CMA has dismissed an appeal by SSE against decisions by Ofgem

SSE has lost its appeal to the CMA (Competition and Markets Authority) against Ofgem decisions to approve proposals to modify industry charging rules.

The appeal related to changes to the calculation of charges paid by electricity generators, including SSE, for use of the electricity transmission system.

Ofgem approved changes to industry rules (PDF, 661KB) which it considered would better ensure that charges in 2021 / 22 would be within the range permitted under retained EU law. Ofgem recognised that the changes were imperfect and made clear that it expected National Grid Electricity System Operator Limited, as the transmission system operator, to propose further changes to take effect by 1 April 2022.

SSE argued that Ofgem was wrong to have approved the changes and that they could have led to transmission charges being outside the range allowed under the relevant law.

The CMA did not agree with SSE. The CMA decided that, on the points raised by SSE in the appeal, Ofgem was not wrong to have approved the changes. The reasons for this included that the changes made a breach of the law in 2021 / 22 much less likely and further changes were expected to take effect by 1 April 2022.

Please see the CMA’s determination, setting out full reasons for dismissing the appeal below:

Administrative timetable

12 February 2021: The CMA decided on 8 February 2021 to extend the deadline for the determination of the appeal by 10 more working days. The updated timetable below shows the new deadline.

Date Action
30 March 2021 Statutory deadline for CMA Decision
4 to 5 March 2021 Main hearing
11 February 2021 Clarification hearings
9 February 2021 Deadline for applications to intervene
2 February 2021 Deadline for GEMA reply
21 January 2021 Permission granted by the CMA
12 January 2021 Permission to appeal sought by SSE

Order to SSE and Ofgem

19 February 2021: The CMA has issued an Order to SSE and Ofgem to establish a confidentiality ring within which specified confidential information will be exchanged.

Directions to SSE and Ofgem

19 February 2021: The CMA has directed SSE and Ofgem to provide it with skeleton arguments, copied to all other parties.

Permissions to intervene granted

12 February 2021: The CMA granted permission to the following parties to intervene in the appeal on 10 February 2021:

Intervention applications

12 February 2021: The CMA received the following summary applications to intervene on 9 February 2021:

Ofgem’s reply to the notice of appeal

3 February 2021: Ofgem has replied to SSE’s notice of appeal on 2 February 2021.

Permission to appeal granted

21 January 2021: The CMA has granted SSE permission to appeal.

Appeal group appointed

21 January 2021: The CMA has appointed a group of panel members to determine the appeal.

Kirstin Baker (Chair), Colleen Keck, Frances McLeman

Notice of appeal

14 January 2021: SSE sought to appeal energy code decisions by Ofgem made on 17 December 2020 in respect of modifications to the Connection and Use of System Code (the CUSC).

Ofgem approved code modification proposals (CMP317/327) which concern assets required for connection to the national grid and the charges made for use of the national grid (CMP317 / 327). The changes affect the amount paid by generators for the charging year 2021 / 22. Ofgem has also directed that an associated modification proposal (CMP339) is to be made to the CUSC. This makes amendments to definitions in the CUSC, which are consequential on the CMP317 / 327 amendment.

SSE sought permission to appeal these decisions.

The CMA has considered this application, received on 12 January 2021, and decided to grant permission to appeal.

Any queries or submissions relating to this matter should be sent to:

CodeModificationAppeal2021@cma.gov.uk

Published 14 January 2021
Last updated 5 December 2023 + show all updates

  1. Final costs determination and costs order published.

  2. Decision following Court of Appeal judgement published.

  3. Court of Appeal judgment following High Court challenge to the CMA’s decision on SSE’s appeal against decisions by Ofgem published.

  4. Decision following the outcome of a judicial review and High Court Judgment published.

  5. High Court challenge to the CMA’s decision on SSE’s appeal against decisions by Ofgem published.

  6. Full decision of the dismissal of the appeal, including appendix and glossary, published.

  7. The CMA has dismissed an appeal by SSE against decisions by Ofgem, order published to the page.

  8. Order and directions to SSE and Ofgem published.

  9. Administration table, permission to intervene and intervention applications published.

  10. Reply to the notice of appeal published.

  11. Permission to appeal granted, appeal group appointed and administrative timetable published.

  12. First published.

Contents