SSE 'disappointed' at Ofgem over price controls

Industry watchdog vows to cut £12 a year from customers’ bills

Energy giant SSE lashed out at regulators saying it was “disappointed” by plans from the industry watchdog that promise to cut £12 a year from customers’ bills.

Ofgem announced it had agreed proposals for five of the six electricity distribution companies in charge of the UK’s local energy network that will see the firms spend £17 billion over eight years on upgrades and maintenance.

As part of the plan, Ofgem also announced £2.1 billion of savings had been found from the firms’ original proposals, which the watchdog rejected last November.

Only one company, Welsh provider Western Power Distribution, was given the green light then, while SSE Power Distribution, Northern Power Grid, SP Energy Networks, Electricity North West and UK Power Networks were told to go back to the drawing board.

FTSE 100 utility SSE, the owner of SSE Power Distribution, said it was “disappointed with a number of elements” of the new proposals, including Ofgem’s “assumptions about the scope of further cost reductions across the industry”.

The company added it would be “reviewing Ofgem’s... assumptions on how [SSE Power Distribution], one of the leading cost-efficient operators in Great Britain, could operate and develop our networks to the standard customers expect with the proposed reduction in total expenditure”.

 

Ofgem chief executive Dermot Nolan said the plans, which will come into effect next April and run for eight years, were “part of Ofgem’s consistent drive to get the best deal for consumers while maintaining a stable regulatory regime which attracts investment as cheaply as possible”.

He added that setting price controls for network operators was “the only part of the energy bill Ofgem directly controls and our plans today will deliver better customer service and efficient investment at a lower cost for the customer”.

Ofgem said the distribution component generally makes up roughly 8 per cent of the average dual fuel bill. When it rejected the original plans last year, Ofgem claimed they “did not sufficiently demonstrate value for consumers”.

The final decisions are published by Ofgem in November.

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