Ofgem proposes new regulatory framework for network companies

[ALEO Admin]

On 7 March 2018, Ofgem set out its proposals for a new regulatory framework, from 2021, which it expects will result in lower returns for energy network companies and significant savings for consumers.

Ofgem says that its proposal "includes a cost of equity range (the amount network companies pay their shareholders) of between 3% and 5%, if we had to set the rates today. This is the lowest rate ever proposed for energy network price controls in Britain."

Oftem estimates its proposals should result in savings of around £15 - £25 per year on a typical dual-fuel household bill, of which network costs account for around £250.

Other measures to be introduced under the new regulatory framework include:
- a five-year price control period instead of the current eight years
- setting up independent user and consumer engagement groups
- wider scope for opening up high value network upgrades to competition
- support for inventors and entrepreneurs in trialling new innovative business models
- measures to ensure that consumers don’t pay for capacity which is not used
- 'failsafe measures' to protect consumers including companies having to share more of the savings they make due to greater efficiency or use of innovation with consumers.

For more information, see:
https://www.ofgem.gov.uk/publications-a ... -companies