Ofgem decides against mid-period review for networks price control

It follows Western Power Distribution’s decision to voluntarily return £77 million after the government cancelled its rail electrification schemes

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Ofgem has announced it will not be launching a mid-period review (MPR) into the price control system for local electricity networks.

The price control is a method of setting the amount of money that can be earned by distribution network operators (DNOs) over a certain period of time.

The regulator said the MPR of the 2015/23 RIIO price control is not needed due to the potential of the current controls to drive value for money for consumers more effectively “through a combination of efficiency gains and voluntary contributions”.

It follows Western Power Distribution’s decision to voluntarily return £77 million of its price control to consumers after the government cancelled its rail electrification schemes.

Ofgem believes reopening the electricity distribution price control could risk pushing up the cost of finance for the companies, leading to increased energy bills.

Jonathan Brearley, Executive Director for System and Networks at Ofgem said: “Our regulation will ensure that consumers continue to share in any savings the companies make in the remainder of the price controls. We will continue to monitor their performance and we have powers to make adjustments to their revenue if we find that targets have not been met, once the price control finishes.”

The regulator has also warned network operators to prepare for tougher price controls from 2021, with lower expected returns, which is estimated to deliver savings of more than £5 billion to consumers.

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