The charging regime for the UK’s electricity system is “no longer fit for purpose”, according to a new report from Energy UK.

The trade body said that the current system was drawn up 20 years ago, when large power stations were connected to the transmission system and customers were connected to the distribution system.

But the membership organisation pointed out that the charging regime is now out-of-date and doesn’t take into account distributed generation. The report called for a holistic review of the charging system. It comes as Ofgem looks at changing some of the benefits which embedded generators connected to the distribution system receive.

‘Not fit for purpose’

Energy UK said: “The current charging system is no longer fit for purpose.

“Ensuring the charging arrangements are appropriate for today’s energy system is important to allow for efficient investment and fair charging for customers.

“There are short-term changes that may improve the current charging regime but it is important that a holistic review of all charging issues is carried out in the near future.”

Meanwhile a new research report by Cornwall Energy into embedded benefits has highlighted “significant concerns” that the current process will result in “ill-considered changes that could have wide-ranging unintended consequences”.

Cornwall Energy chairman Nigel Cornwall said: "Many small-scale generators of less than 100MW depend on triad benefit payments. Arbitrarily reducing them in response to governmental pressure will cause significant customer detriment. Over the short term, there will be reduced security of supply, and over the longer-term capacity market prices and the costs of balancing the electricity system could increase significantly.

"In 2011 Ofgem said it would take an in-depth look at the complex issues surrounding distribution-connected generation but it has so far failed to do so. Instead it is seeking change but is focussing on a single market distortion. We see a much more complex and potentially dangerous position than Ofgem from rushed changes."

> Download the EnergyUK report

> Read more about the Cornwall Energy report