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RNS Number : 4802Q

OFGEM

30 November 2016

30 November 2016

Energy network revenue adjusted in annual iteration process

Ofgem has today published the 2016 annual iteration process (AIP) for energy network operators (NWOs) under the RIIO price controls. The AIP updates base revenues for all sectors for the next regulatory year (2017/18). We have also published updated price control financial models.

Ofgem sets price controls for the electricity and gas transmission, and electricity and gas distribution networks under the Revenue = Incentives + Innovation + Outputs (RIIO) framework. As part of this we make annual adjustments to the revenue we allow networks to collect.

The impact of this year's AIP has reduced the allowed revenue that Network Operators (NWOs) will collect from customers over the next regulatory year by GBP510.5m (2017/18 Prices). This reduction is driven by three factors:

-- downward adjustments to allowances - largely as a result of expected spending not being required in electricity transmission (these amounts are fully returned to consumers);

-- lower interest rates in debt markets and therefore a lower cost of debt allowance (these amounts are fully returned to consumers);

   --      NWOs requiring less spending to deliver outputs (these savings are shared with consumers). 

Our annual reports on the gas transmission, electricity transmission, gas distribution and electricity distribution price controls will be published in December and January. They will show our analysis of these factors and NWOs' performance in more detail.

Ofgem's price controls provide a long term stable investment framework for networks while minimising costs for consumers. Ofgem continues to monitor networks' performance closely.

-notes-

1. Links to the pages where the four updated price control financial models will appear are here:

RIIO T1 Financial Model (electricity transmission)

https://www.ofgem.gov.uk/network-regulation-riio-model/price-controls-financial-model-pcfm/riio-t1-financial-model-electric

RIIO GD1 Financial Model (gas distribution)

https://www.ofgem.gov.uk/network-regulation-riio-model/price-controls-financial-model-pcfm/riio-gd1-financial-model

RIIO T1 Financial Model (gas transmission)

https://www.ofgem.gov.uk/network-regulation-riio-model/price-controls-financial-model-pcfm/riio-t1-financial-model-gas

RIIO ED1 Financial Model (electricity distribution)

https://www.ofgem.gov.uk/network-regulation-riio-model/price-controls-financial-model-pcfm/riio-ED1-financial-model

2. An explanation of Ofgem's network price controls and its role in network regulation is here: https://www.ofgem.gov.uk/network-regulation-riio-model/energy-network-how-it-works-you

3. About Ofgem

Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.

For facts, figures and information about Ofgem's work, see Energy facts and figuresor visit the Ofgem Data Portal.

Follow us on Twitter @ofgem and LinkedIn

For further press information contact:

Out of hours: 07766 511470

Chris Lock: 0207 901 7225

Joseph Moss: 0207 901 7178

This information is provided by RNS

The company news service from the London Stock Exchange

END

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