An important premise for an efficient power market is that consumers and generators are offered market access on terms that are unbiased and non-discriminatory.
All network companies are required to offer all customers a network connection. This obligation is, however, conditioned by the customer’s willingness to pay the relevant tariffs.
Network companies may require a connection charge to cover the costs of connecting new customers to the network or costs of reinforcing the network for existing customers. Connection charges are 'shallow' because it is generally not allowed to set connection charges for investments in the meshed network.
The objective of the connection charge is to make the customer responsible for the costs related to a new connection or an upgrade of the customer’s existing network connection. Costs not covered by the responsible customer, but by the network Company, will increase the network company’s allowed income and, hence, be dispersed to all customers through increased tariffs.