Summary

  • Ofgem says current distribution delay payments no longer deter missed milestones, while transmission liquidated damages are commonly set at £0 a day.
  • Its next design must tie a meaningful payment to the right milestone and the party responsible, without making connection dates more cautious or charges higher.

Two grids, two kinds of late fee

A connection date can sit in a contract while the project around it keeps paying rent, finance and supplier bills. Ofgem’s September paper gives that date two very different price tags.

For distribution connections, existing Guaranteed Standards of Performance (GSoPs) can pay £180 to £350 a day when, in an applicable case, work is not energised by the agreed date. Ofgem says the wider payment schedule was set in 2015, updated for inflation in 2023, and has fallen behind connection costs. It now considers the values too small to deter delays.

Transmission has a stranger line item. Liquidated damages already exist in construction agreements, but Ofgem says the rates it has seen are predominantly £0 per day. A clause can therefore name a date and still put no daily payment beside a late delivery. Ofgem has no complete contract dataset, so it cannot calculate the share of zero-rate agreements or explain each rate.

The customer signs with one party; the work has several

A transmission construction agreement is between the customer and the National Energy System Operator (NESO). Corresponding terms connect NESO with the Transmission Owner (TO) through the System Operator–Transmission Owner Code. A project’s date can depend on several parties, permits, surveys and shared works; the contract still needs a rule for who pays when a milestone slips.

That distinction is the heart of the consultation. The customer may face the commercial cost of a late connection while responsibility moves between NESO, a TO, the customer and another delivery party. Existing terms already distinguish delays within and outside a TO’s control and send disputed responsibility to independent resolution. Ofgem wants the next round to clarify the payment, the milestone and the evidence before the contract is signed.

A bigger bill can move the date

Ofgem is developing stronger DNO payments, including revised values, possible tiers for delivery milestones, a cap, and a choice between setting values by voltage or by connection capacity. It is also weighing payments around the work customers feel most: construction starting, work finishing and the project being energised.

For transmission, Ofgem is considering a minimum liquidated-damages rate above zero, clearer explanations of the available terms before a construction agreement, or both. The value, cap, milestones and test for a TO-attributable delay remain under development. The consultation closes on 6 November 2026; Ofgem plans further design work before drafting the rules.

The regulator has also written down the catch. A large damages bill could be passed into connection charges. A TO facing greater exposure could protect itself by quoting a later, more conservative date. The customer might receive a stronger remedy after a delay and a weaker connection offer before construction. That is a very expensive way to improve a spreadsheet.

A useful rule has to price the delay the network party controls, publish enough context to compare performance, and keep the agreed date ambitious enough to matter. Ofgem’s planned reporting could show how often milestones are met, delay length and cause, who controlled the cause, and how often payments were made. A bare league table would hide the difference between a late survey, a customer-held project and a network workstream.

The consultation paper lays out a familiar British administrative puzzle: everyone can point to a contract, a milestone or another party. The £0 line is the moment the puzzle becomes expensive. Ofgem’s next decision will show whether it can make a connection date a commitment with a visible owner and a price—or leave customers paying the calendar’s entire bill.

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