11th Aug 2021 09:27
(Alliance News) - National Grid PLC and SSE PLC were only partially successful in their appeals against the latest round of energy transmission network price controls, after a provisional ruling from the UK Competition & Markets Authority released on Wednesday.
Shares in National Grid were down 1.0% to 941.84 pence in London on Wednesday morning. SSE was up 0.2% at 1,616.00p.
The two FTSE 100 energy transmission network owners, along with a group of smaller companies, had appealed against aspects of the RIIO-2 price controls created by energy regulator Ofgem.
Contentious issues included the so-called 'outperformance wedge', in which Ofgem adjusted pricing because it expects the companies to outperform in the RIIO-2 period, which runs until 2026. The companies also appealed Ofgem's cost of equity calculations, which cut potential returns on investment to the companies.
The CMA ruled that the outperformance wedge was wrong, but upheld Ofgem's decision on cost of equity. The energy companies can now respond before the CMA makes its final decision by October 30.
National Grid said: "We are pleased to note that [the CMA] has found in favour of the technical arguments on the outperformance wedge, although we are disappointed that it has not found in favour on the cost of equity.
"We will now review the detailed documents to determine the CMA's rationale for this provisional determination and will be responding within the statutory timeline."
SSE said it will "continue to engage constructively with the CMA in advance of its final decision in order to achieve a fair settlement."
SSE also had appealed changes to transmission network charges, but the CMA upheld Ofgem's decision.
By Ivan Edwards; [email protected]
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