29th Nov 2019 11:24
(Alliance News) - The UK energy regulator announced Friday its new revised price controls for the financial 2021 year which will see revenue for UK energy network firms reduced by GBP965 million compared to its initial assumptions.
Ofgem published its annual iteration process report related to its RIIO - or Revenue = Incentives + Innovation + Outputs - price controls. The AIP report adjusts the amount of revenue networks can collect. This is based on the four price controls targeted by the regulator across gas and electricity distribution and transmission.
The current changes bring into force various changes previously announced by Ofgem.
Revenues have also been reduced across all price controls after the cost of debt for network firms, which include FTSE 100-listed National Grid PLC, resulted in a lower cost of debt allowance for the operators.
In addition, revenues were reduced after network companies were spending less than originally expected in their allowed expenditure. Consequently, the regulator trimmed allowed revenue to reflect this.
All told, the changes will see total network company revenue reduced by GBP965 million for financial 2021 compared to its initial assumptions when the current price controls started.
The current RIIO 1 price controls have been in place since 2013. The new RIIO 2 price controls come into effect from 2021.
By Ahren Lester; [email protected]
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