11th Mar 2026 14:28
(Alliance News) - Capita PLC on Wednesday said it was "pleased" by Ofgem's decision to slash disallowed costs incurred by its wholly owned Smart Data Communications Co by about two-thirds for the 2024/2025 regulatory year.
The energy regulator for Great Britain early on Wednesday said it determined to disallow GBP11.3 million in costs incurred by Capita's subsidiary building the communication network upon which smart meters rely after being appointed to hold the Smart Meter Communication Licence.
It is just over half of the GBP20 million disallowed in the previous regulatory year, and it represents a 64% reduction from the initial proposed disallowance of GBP30.8 million, thanks to the acceptance of an undertaking in lieu of a disallowance "in order to drive supply chain efficiencies", the regulator said.
Disallowed costs are costs that are barred from being recovered by a contractor.
Ofgem said it identified "several areas of unacceptable costs" at the consultation stage, but stakeholders "have provided a range of new information and views, and DCC has provided additional credible evidence demonstrating that some of these costs were incurred economically and efficiently" following consultation.
"We have therefore revised our decision on disallowances downwards where appropriate, while maintaining the view that some areas of cost remain unacceptable", Ofgem added.
Capita says price disallowances form "part of the usual regulatory framework governing the Smart DCC contract and a level of disallowance is anticipated by Capita as part of this framework".
It is however "pleased to see this reduction", and said that this outcome is broadly in line with previous estimated in preparation of its 2025 financial results announced on Tuesday.
"Since the licence inception, Capita has put in place and built a significant national network enabling smart meter monitoring. As previously announced, this contract will be transitioned to a not-for-profit service provider in the coming year," the company added.
Capita shares were up 7.1% to 295.00 pence each on Wednesday afternoon in London.
By Martin Miraglia, Alliance News reporter
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