The regulator announced earlier on Monday proposals to cut WPD’s cost of equity from 6.7 per cent to 6.4 per cent. It estimates the move will shave 54p a year of the typical household bill in the area.
The assumed cost of equity remains more generous than the 6.0 per cent proposed for the other five UK distribution network operators (DNOs), which are on the “slow track”.
An Ofgem spokeswoman explained: “We assessed that the package presented by WPD in the whole delivered outcomes at best value to consumers. We used 6.3% cost of equity for our stress testing, against which only WPD still came out as efficient. We are satisfied that WPD has proposed a challenging cost package, which is the most efficient of all the DNOs.”
Ofgem is to finalise its fast tracking decision for the RIIO-ED1 price control, which sets prices from 2015 to 2023, on 28 February. The slow-track DNOs must resubmit their business plans on 17 March.