Consumer groups to gain more power in RIIO2

"Vital" consumer voice is heard in price setting process, says Ofgem networks chief

Ofgem wants consumer groups to take a leading role in the process of setting the next price controls for energy networks, the regulator’s senior partner for networks has said.

Writing for Utility Week, Jonathan Brearley commented: “Network charges make up about a quarter of an average household energy bill or £251 a year so it’s vital that consumers’ voice is heard”.

His comments follow Ofgem’s revelation of the draft framework for RIIO2 and the publication of a report from Citizens Advice which claimed networks have been making “unjustified profits” under the current regime.

“We don’t agree with this assessment,” Brearley wrote, “but we do agree the report raises some important issues which we will address next time”.

He added: “We accept that investor returns for RIIO have been at the high end of our expectations, in part due to companies making efficiency savings.

“Given the shift in financial markets since 2008, evidence suggests that investors may accept a lower cost of capital next time round.”

Brearley concluded his column by reiterating Ofgem's assertion that RIIO2 will be "tougher for investors" in order to ensure networks "keep delivering good value for consumers. It may also need to be more “adaptable”, he said, “to allow networks to respond to the unfolding energy transition and meet customers’ changing needs”.

Author: Jane Gray,
Channel: Policy & Regulation

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