Northern Powergrid, one of the five companies affected by the British Gas referral, has also sought permission to appeal against its RIIO-ED1 settlement on the grounds that the price control is too tough, according to a statement released by the CMA this morning.
British Gas is appealing against Ofgem’s £17 billion eight-year price settlement for the companies, known as RIIO-ED1, having previously criticised the regulator for being too lenient in its price controls.
But Northern Powergrid’s referral has been made on the grounds that the control on how much the network can charge is too steep given its investment plan.
“The company’s eight-year plan, published in March 2014, would invest more than £3 billion in the infrastructure that underpins the regional economy. The plan includes significant service improvements and is the outcome of extensive engagement with customers and other stakeholders,” Northern Powergrid said, adding that even with heavy investment its original plans would have allowed domestic customers bils to fall by 10 per cent.
But British Gas has said, in a document seen by Utility Week, that its grounds for believing controls should be tighter include the return of “double-recovered” revenues; Ofgem’s asset life policy; the cost of debt; and procedural issues.
British Gas itself is subject to an ongoing and separate competition inquiry into the energy market.
The supplier has been vocal in its criticisms of network costs, calling on Ofgem last year to shave £500 million off its settlement. Last month, the Energy and Climate Change Committee accused Ofgem of dropping the ball on network costs, saying its settlement was too generous.
The CMA will have six months to determine the appeal, if it decides to go ahead.
The affected companies are UK Power Networks, Electricity North West, Northern Powergrid, SSE and Scottish Power, which hold ten regional distribution licenses between them.
Western Power Distribution, whose regulatory settlement was fast tracked by the regulator last year, is not affected by the referral.