Some people have got the wrong end of the stick on the Citiworks ruling. But some companies appear to be deliberately spreading misinformation to further their own ends.
Just to be clear the ECJ ruling doesn’t make private wire illegal. It does require that private wire networks allow third party access. In other words, if I operate a private wire network I have to allow other electricity suppliers access to my customers. This can be done in a couple of ways, but it can be done without changing the private wire arrangement. In other words, the network will still be license exempt.
So if you come across people saying otherwise, you can contradict them with confidence.
carbon limited 
Surely the problem isn’t one of illegality, but of definition. If you have to allow access to the grid to all users, then what is the point of having a private wire arrangement?
Having private wires allows you to operate outside the licensing regime, which greatly reduces the cost of operating small schemes. For example, you avoid compliance costs associated with the Renewables Obligation and Climate Change Levy. Also (and more importantly), you avoid most distribution (DUoS) and transmission (TUoS) charges.
All this adds up to significant additional income per kWh for the scheme operator and, ideally, makes up for the poorer economies of scale for small schemes. Even with mandatory third party access, there are significant benefits to operating on private wires – benefits large enough to determine whether a scheme survives.
Hi – just picked up on this thread. In allowing 3rd party access, how does a private wire network deal with the MPAN and the rest of the MRA?
There are two ways to handle 3rd party access: financial and physical settlement.
In financial settlement, the private wire scheme continues to handle balance and settlement for the whole system and just signs a side agreement with the 3rd party. In this case, no MPAN changes are required.
In physical settlement, you assign a virtual MPAN to the end customer and the 3rd party settles on that basis. This route is riskier for the private wire scheme however.
Casey,
Interesting stuff. In terms of the two mechanisms for allowing 3rd party access, can you possibly elaborate on the economic issues?
Under Financial Settlement, is the private wire operator able to charge third party for admin and contribution towards maintenance of infrastructure etc? I understood this to be the case, with the “levy” being subject to Ofgem guidance and cannot be punitive – but I cannot find much info on web to back up my understanding.
Under Physical Settlement, can the private wire operator charge for issuing virtual MPAN? and also seek contribution for maintenance etc, as above?
Thanks, the answer makes sense to me, especially if there is a low number of users on a network, although I would be worried about trying to scale it up if we had many users on a private wire. Nevertheless, I guess any real legal issue would be more down to proving third party access is prevented, and this suggestion does seem a way to provide it.
Nick,
I agree that there is a lack of guidance out there. I think this is partly due to the fact that DECC and OFGEM haven’t developed the guidance in the first place.
In the end, we’ve taken our proposals directly to OFGEM to ask whether they’re acceptable and so far we’ve been able to agree on approach. If you’re in a similar spot, I’d suggest you do the same.