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The Competition and Markets Authority (CMA) has dismissed an appeal by EDF Energy (Thermal Generation) Ltd, SSE Generation Ltd and various related entities against a decision of the Gas and Electricity Markets Authority (GEMA).

The Appellants had appealed under section 173 of the Energy Act 2004 against GEMA’s decision to reject a proposal that generators receive a rebate in respect of charges that they had paid to National Grid in 2015-16. In total, generators in Great Britain would have received a rebate of approximately £119.5 million under the proposal.

The rebate proposal was premised on a contention that transmission charges levied on generators in 2015-16 had breached a cap laid down by EU Commission Regulation 838/2010. The question of whether there had been a breach turned on the proper interpretation of a provision in the Regulation that charges “for physical assets required for connection to the system” would not count towards the cap (the “Connection Exclusion”).

GEMA concluded that charges in respect of cables between offshore windfarms and the pre-existing onshore transmission network were within the Connection Exclusion. On that basis, there had been no breach of the cap. GEMA therefore rejected the rebate proposal.

The Appellants challenged GEMA’s interpretation of the Regulation, and argued that the Connection Exclusion does not cover charges in respect of cables running to offshore windfarms. The Appellants also alleged that GEMA’s decision was vitiated by errors of fact; involved an abuse of process; infringed the principle of regulatory consistency; and/or was contrary to various general principles of EU law.

The CMA dismissed the appeal on all grounds, and upheld GEMA’s decision to reject the rebate proposal.

Kieron Beal QC and Dominic Howells acted for the Appellants. Alan Maclean QC, Iain Steele and George Molyneaux acted for GEMA.

A copy of the CMA’s decision is available here.

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