NGG National Grid Plc New

By Adam Clark

National Grid PLC (NG.LN) said Tuesday that it was "disappointed" by U.K. regulatory proposals to cut the rate of return for investments in electricity and gas networks.

Energy regulator Ofgem said it intends to set baseline returns to shareholders at 4% for the next regulatory period from 2021, about half of the previous limit. This is at the bottom end of previous guidance in March, when the regulator said it would propose a range of between 4% and 6%.

"We want to cut the cost to consumers for accommodating electric vehicles, renewables and electricity storage, and make sure that all consumers benefit from these technologies," Jonathan Brearley, Ofgem executive director for systems and networks, said. "This will mean driving a harder bargain with network companies to ensure that households who need it always have access to safe and secure energy at a fair price."

Ofgem said it expects the change, along with adjustments to borrowing costs, to save consumers 6.5 billion pounds ($8.2 billion) overall. Ofgem has launched a consultation on the proposals which will close in the second quarter of 2019.

"The consultation is a very detailed document which we will need to work through; however we are disappointed with the proposed financial package, in particular the cost of equity range as we do not believe it appropriately reflects the level of risk borne by transmission networks," National Grid said.

National Grid shares at 0813 GMT were down 3.0% at 810.30 pence, among the worst performers in the FTSE 100.

Write to Adam Clark at adam.clark@dowjones.com; @AdamDowJones

(END) Dow Jones Newswires

December 18, 2018 03:42 ET (08:42 GMT)

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