Regulator seeks more from Electricity North West

ENERGY regulator Ofgem has rejected regional electricity distribution company Energy North West’s provisional business plan for the next five years, saying the Warrington company should do more to cut costs for consumers.

It has rejected its investment plans, believing the firm and its peers should be able to “deliver more for less”. Distribution accounts for about 19% of the £610 average annual domestic electricity bill, Ofgem says.

While Ofgem admitted that all companies had “responded well” to its price controls – with £2bn in savings achieved since 2012 – it said that “most companies can go further in cutting their costs”.

Five of the six companies that own and operate Britain’s electricity network, including Energy North West, were told to do better. All have to submit their business plans for the next price control period – 2015 to 2023 – to Ofgem for approval.

Electricity North West, which is backed by a number of private equity firms after being sold by United Utilities, said it was “very disappointed” at the snub.

It said its £2.6bn investment plan for the North West would have meant a 20% reduction in its prices.
 
Ofgem approved of Electricity North West’s plan in the four assessment areas of process, outputs, efficient finance, and uncertainty and risk, but said some amendments were needed on ‘efficient costs’.
 
Chief executive, Steve Johnson said: “I’m very disappointed. We proposed the biggest reduction in prices of any network in the first year of the price control in 2015 and the biggest average price reduction over the eight-year period.
 
“We remain extremely proud of our plan and, while obviously disappointed not to have our price control agreed early, we note Ofgem’s positive assessment in four of the five criteria.
 
“I am pleased that our stakeholder engagement activity, long-term strategy and ambitious targets for customer service have been recognised. We look forward to further detail from Ofgem so we can begin to deliver the key benefits of our plan to North West customers.”