There should be a level playing field for all generators, says Ofgem.
The regulator has said it is concerned about specific payments that generators receive from suppliers, for helping them to reduce the biggest element of the electricity transmission charges they face at peak times.
According to Ofgem, generators connected to the high-voltage transmission network and larger generators connected to the lower voltage distribution network, are at a disadvantage as they do not get these payments.
However, small generators connected to the distribution network get these payments.
Ofgem believes that these arrangements may be distorting energy markets and could also impact on the decisions to either build or close large power stations.
In a statement it commented: “Ofgem is asking for views on these concerns which will feed into our thinking including on several proposals that have been raised by industry parties to change network charging rules.
“Ofgem encourages industry stakeholders to respond to the open letter and engage in the consultation process for these rule changes before they come to us for a decision. Ofgem will also consult on some other aspects of embedded benefits and related matters in the autumn.”