The multi-billion pound investigation for the most part upheld Ofgem’s RIIO-ED1 price controls for the networks, calling for only marginal adjustments to the price controls which over an eight year period is not expected to have a material impact on the companies involved.
British Gas Trading called for tougher controls for the networks, while Northern Power Grid argued the case for greater leniency from the regulator.
The Authority dismissed four of the five grounds of appeal brought forward by British Gas but has upheld one, reducing the amount of revenue the five DNOs are allowed to recover through charges by around £105 million over the eight-year price control period.
It also dismissed two of three grounds of appeal by Northern Powergrid but upheld one relating to Ofgem’s adjustments to reflect potential savings through smart grids and technological innovations, increasing NPG’s allowable revenue by about £11 million.
As a result British Gas has been ordered to pay 80 per cent of the costs incurred by the CMA, and Ofgem to pay 20 per cent. In addition, British Gas has also been ordered to pay 60 per cent of Ofgem’s costs in connection with the appeal.
British Gas Trading, a subsidiary of parent company Centrica, referred Ofgem’s price settlement to the CMA in March this year amid growing pressure on suppliers to reduce the costs they pass on to consumers. At the same time Northern Powergrid, one of the five companies affected by the British Gas referral, also sought permission to appeal against its RIIO-ED1 settlement on the grounds that the price control is too tough.
The investigation was carried out alongside a wider probe into the energy market which has been extended beyond it’s Christmas 2015 deadline. The findings of the wider energy investigation are now expected in April 2016.