ENA chief executive David Smith told Utility Week that regulation of the networks has “delivered lower costs, improved performance and provided the highest customer service levels in the industry”.
“The stability of the regulatory environment has been one of the cornerstones of this success and that must be preserved if costs are to remain low,” he added. “Up to £41 billion is being invested in networks over the next eight years to meet demand and connect new sources of renewable energy.
He also pointed out that the new eight-year RIIO price controls are “in their very early stages” and it is “premature to make assessments at this stage”.
“RIIO also already includes processes to share benefits of outperformance with customers,” he said. “Any evaluation to inform the next price control will require a longer term view looking at how efficiencies, incentives and penalties have benefitted customers.”
The group added that the strict regulation of energy networks has seen the cost to bill payers fall by 17 per cent since privatisation, while incentives and penalties have “driven up performance”, so the UK benefits from one of the “most reliable networks in the world”.
“The energy networks are the most transparent part of the industry publishing full details of companies’ business plans, performance and profits,” it said.
In a report last week, Citizens Advice said the “overwhelming” majority of cases saw regulated energy networks making more than the baseline return on regulatory equity, with more than half the electricity distribution companies making double-digit returns, and all above 9 per cent.
The group urged regulators to “tip the balance between company and consumer interests back towards consumers” and “base their judgements more on the world as it is and less on the world as it used to be”.
Citizens Advice infrastructure policy manager Simon Moore, author of the report, stated that regulators should be “striving for settlements in which only outperformance gets rewarded, not any performance”.
“Exceptional performance is not being rewarded if everyone gets the prize,” he added. “Run-of-the-mill levels of competence are being rewarded as if they were extraordinary.
“At a time when the cost of living has become a prominent public concern, these profit margins far exceed what is needed to ensure the continued provision of essential services.”
At the time, the ENA responded, saying: “For 81 pence a day customers get one of the most reliable energy networks in the world at one of the lowest costs in Europe.”
The provisional determination is due to be published in July.