Recent developments in common distribution network pricing in Great Britain

This paper presents the recent progress that the UK´s power industry has made in distribution pricing. The paper highlights the rationale for distribution pricing reform - incentivising efficient use of the existing network significant growth when connecting significant efficient and renewable distributed generation (DG). This is followed by an explanation of the drawbacks with the current pricing approach in promoting efficiency. Recent development in distribution pricing reform is then reported, this includes the development in Long Run Incremental Cost (LRIC) pricing, Forward Cost Pricing (FCP) and Investment Cost Related Pricing (ICRP). The reform has been running in two fronts since 2007. One is the development of cost-reflective and forward looking distribution charging methodologies that can encourage the efficiency use of the network. The other is to achieve commonalities in network charging as far as possible across GB (Great Britain)´s 7 DNOs. The latter development is for significantly reducing the burden that suppliers have to bear in replicating distribution charges, thus reducing the effort suppliers have to spend in deriving final tariffs for consumers. The paper is concluded by summarising the outstanding issues with distribution network pricing.