4th Mar 2015 09:40
LONDON (Alliance News) - UK energy markets regulator Ofgem on Wednesday said two electricity distributors have sought permission from the Competition and Markets Authority to appeal the price controls the watchdog finalised in November last year.
Northern Powergrid (Northeast) Ltd, a unit of Berkshire Hathaway Energy, and British Gas Trading Ltd, a unit of FTSE 100 constituent Centrica PLC, have sought to appeal the price controls.
In November, Ofgem said it had finalised price controls which would save consumers around GBP2.1 billion. When the regulator tabled its draft proposals in July, it had said that the companies had identified GBP700 million of savings themselves, but the regulator's further price controls resulted in an additional GBP1.4 billion of savings.
Ofgem's move to impose tougher price controls than the energy companies were expecting came amid increased political pressure to cut rising energy bills amid the economic downturn that followed the financial crisis. UK politicians were being criticised for not doing enough to protect consumer budgets being squeezed at one end by low income growth and the other by rising bills for things like power.
Ofgem said the Competition and Markets Authority, the UK's antitrust regulator, will now decide whether to grant the companies permission to appeal the price controls and, if it does so, will then have six months to determine the appeals.
SSE PLC, which owns Scottish and Southern Energy Power Distribution, is not joining the price control appeals, but issued a brief statement on them Wednesday.
"Our objectives for the next eight years are to ensure robust supplies of electricity for customers, achieve the efficiencies required by the planned price control and earn a fair return for investors. We will continue to focus on those objectives while playing our part in ensuring that any outstanding issues with regard to the price control are dealt with in the right way," said Colin Nicol, managing director for distribution at Scottish and Southern Energy Power Distribution.
SSE shares were down 1.4% to 1,544.00 pence on Wednesday, while Centrica shares were up 0.2% to 248.10 pence.
By Sam Unsted; [email protected]; @SamUAtAlliance
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