Page 9 - Gi February 2019 - flipbook

Ofgem proposes to slash investor Association industry body,
said “the proposals could
returns on UK energy networks jeopardise… innovation and
investment”.
Ofgem’s proposed
changes will apply to gas
INVESTOR RETURNS ON year when combined with major capital programme distribution, gas transmission
electricity and gas network recent proposals to reform required across our networks and electricity transmission
companies in the UK are to network charges. in a rapidly changing energy companies. They are part of
be slashed under new price “We want to cut the market, we need to ensure a wider consultation process
control proposals. cost to consumers for the regulatory framework that on the so-called RIIO2
The regulator Ofgem — accommodating electric also provides for fair price control reform that
which sets the maximum vehicles, renewables returns to shareholders,” will continue until the
amount of revenue that and electricity storage, National Grid said. second quarter of 2019. The
network companies can and make sure that all David Smith, Head of reform is due to take effect
recover from users — has consumers benefit from the Energy Networks in April 2021. ■
proposed setting baseline these technologies,” said
rate of returns at four per Jonathan Brearley, Executive National Grid said it was disappointed
cent from 2021, based on Director for Systems and with the proposed package
current market conditions, Networks at Ofgem.
reports The Financial Times. “This will mean driving a
This is about 50 per cent harder bargain with network
lower than today’s price companies to ensure that
controls, in which the cost households who need it
of equity — or how much always have access to safe
network companies can pay and secure energy at a fair
their investors — is set at price,” he added.
7-8 per cent (using the CPIH National Grid said it was
inflation measure) until 2021. “disappointed with the
The new returns are also proposed financial package”
at the lower end of a range and said it did not believe
Ofgem laid out in March. the cost of equity range
Ofgem said the reforms “appropriately reflects
would save consumers the level of risk borne by NATIONAL GRID
an average of £30 a year transmission networks”.
on their bills, or £45 a “In order to deliver the

British Gas owner challenges energy price cap

BRITISH GAS OWNER cap, reports The Guardian. Ministers have one-off hit of around £70
Centrica has launched a The firm has applied for previously warned a legal million for Centrica, based
legal challenge against the a judicial review into how challenge risked damaging on a trading update it
government’s energy price energy regulator Ofgem the reputation of the published in November.
calculated wholesale costs whole sector. One analyst said Ofgem
under the cap. The company’s case had effectively “moved
The action came just focuses on a change Ofgem the goalposts” without
days ahead of the 1 January made between May and consultation. The challenge
cap, expected to save September on the cap’s only relates to the first
households on default methodology. three months of the cap,
tariffs an average of £76 The regulator originally before it is likely to be
per year. proposed using the adjusted upwards in April.
Iain Conn, the group’s wholesale price of April to The regulator said it
Chief Executive, has been September 2018 to set the would “robustly” defend
one of the most vociferous cap, but later switched to its proposals. “Ofgem
critics of the government a different period, February carried out an extensive
policy. Sarwjit Sambhi, to July 2018. That would consultation process when
Managing Director of the potentially hit companies setting the price cap and
Sarwjit Sambhi, group’s UK Home unit, in the pocket depending we believe that it offers
Managing Director of BG repeatedly refused to on how they hedged when consumers on poor value
Group's UK Home unit rule out a challenge when buying energy. tariffs a fairer deal,” a
questioned by MPs last year. That bill appears to be a spokesperson said. ■

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News.indd 4 17/01/2019 12:34