NGG National Grid Plc New

By Carlo Martuscelli

The U.K.'s Office of Gas and Electricity Markets said Friday that it was looking to cut the costs that energy companies passed on to consumers by 6 billion pounds ($7.6 billion) over the next five years through stricter price controls.

The energy watchdog said it would do this by lowering the cap on how much money utilities could get back from their investments. The proposed new controls would allow a baseline return on equity of 4.3%, with a range of 4.0%-5.6%.

It said that this is nearly a halving of the returns allowed under the previous price control regime. As part of the new framework, it would also increase the support that energy companies provided to more vulnerable consumers, Ofgem said.

FTSE-100 listed utility National Grid PLC (NG.LN) called the proposed new controls disappointing.

"We remain disappointed with the proposed range, which we believe does not fairly reflect the level of risk borne by networks," it said.

The new framework is due to start in 2021, with the final pricing decisions made by November 2020.

Write to Carlo Martuscelli at carlo.martuscelli@dowjones.com

(END) Dow Jones Newswires

May 24, 2019 02:52 ET (06:52 GMT)

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