Ofgem reduces base network company revenues by £827m

The energy regulator has made a series of adjustments to the revenue it allows networks to collect

By Jonny Bairstow

Ofgem has said it will reduce base network company revenues in 2019/20 by £827 million, compared to previous assumptions.

The energy regulator has published the results of the 2018 Annual Iteration Process (AIP) for energy network companies under its Revenue=Incentives+Innovation+Outputs (RIIO) price controls.

This involves making annual adjustments to the revenue Ofgem allows networks to collect and updating base revenues across four price controls across the next regulatory year, namely electricity distribution, gas distribution, electricity transmission and gas transmission.

The regulator has reduced revenues across all four price controls following an update to the data set used to calculate the Cost of Debt (CoD) – the CoD value has fallen and this has been reflected both in the 2019/20 value as well as being retrospectively restated for the 2018/19 CoD value.

Earlier this year Ofgem confirmed five-year price controls for energy network companies in the UK.

A new independent panel is to scrutinise the business plans developed by the energy network companies for the next price controls from 2021.

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