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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.

• Decision (PDF, 208KB) (12.12.22)
• Order (PDF, 132KB) (12.12.22)

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 SSEs appeal
• the CMA Decision dated 12 December 2022 has allowed SSEs appeal on Ground 3(i)

Court of Appeal judgment following High Court challenge to the CMAs decision on SSEs 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 Ofgems appeal and SSEs 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.

• Court of appeal judgment (8.11.22)

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.

• Decision (20.5.22)
• Order (20.5.22)

High Court challenge to the CMAs decision on SSEs appeal against decisions by Ofgem

11 April 2022: The High Court issued its judgment. The High Court allowed SSEs 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 Courts judgment is included below.

The High Court also made consequential orders including a quashing order in relation to aspects of the CMAs decision as well as mandatory orders directed to the CMA. In addition, the High Court ordered that the CMA pay 65% of SSEs 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 CMAs 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.

• High Court Judgment (20.5.22)

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 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 CMAs determination, setting out full reasons for dismissing the appeal below:

• Decision (30.3.21)
• Appendix and glossary (30.3.21)
• Order (30.3.21)

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.

• CMA Notice of extension (12.2.21)

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.

• Order on exchange of confidential information (19.2.21)

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.

• Directions on skeleton arguments (19.2.21)

Permissions to intervene granted

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

• Centrica plc and British Gas Trading Limited (Centrica and BGT) (12.2.21)
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