U.K.'s Ofgem Unveils Stricter Pricing Approach for Energy Companies
May 24 2019 - 3:07AM
Dow Jones News
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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