The Competition and Markets Authority (CMA) will hear Northern Powergrid’s appeal against Ofgem’s final determination on its business plan for the RIIO-ED2 price control.
Having granted permission to appeal, the CMA now has six months to reach a final view on the appeal. The review will be conducted by an independent group of three CMA panel members.
Northern Powergrid lodged an appeal against the ED2 decision last month, claiming that the way costs have been allocated contain “material errors” that will ultimately have an adverse effect on its income.
It claims the regulator misallocated allowances between cost categories. In particular, Northern Powergrid has taken issue with the way costs have been allocated for the uptake of low-carbon technologies such as electric vehicle charging points, heat pumps and batteries.
Northern Powergrid’s also claims that Ofgem “failed to compare costs on a rational and consistent basis when determining ”.
As a result of these alleged miscalculations, Northern Powergrid claims that the combined adverse impact of these errors is £171 million.
In November 2022, Ofgem approved £22.2 billion of investment by electricity distribution networks over the five-year ED2 price controls beginning in April.
The final determinations represent a £2.9 billion decrease when compared to the total expenditure (totex) allowances requested by distribution network operators (DNOs) in their business plans but a £1.3 billion increase when compared to the regulator’s draft determinations published in June last year.
All other DNOs have accepted their final determinations.