Gas Distribution Price Review Updated Proposals

24 September 2007

Gas Distribution Price Review Updated Proposals

Energy Networks Association (ENA) is extremely concerned by the limited movement made by Ofgem in its updated proposals for the Gas Distribution Price Control Review. Ofgem has not yet addressed a number of key issues which were left unresolved in its Initial Proposals, most importantly the cost of capital on which there has been no engagement with the network companies.

ENA’s Chief Executive, Nick Goodall commented that, "Ofgem has failed to recognise the evidence provided by the network companies, supported by independent reports, relating to the risks of operating a distribution business and of rapidly rising contractor rates. Coupled with the unrealistic expectation of additional cost savings the networks can achieve makes these proposals unacceptable to the companies."

"The methodology Ofgem and their consultants have adopted in setting allowances is flawed. The proposals seriously underestimate the investment needed to ensure the continued safe and reliable delivery of gas to 23 million homes and businesses across Britain."

ENA will continue to work with the gas distribution networks to agree a fair set of proposals with Ofgem that will strike the right balance between the needs of customers and the requirements to operate safe, secure and reliable networks.


Note to editor

The September Update falls between the Initial Proposals document (May 2007) and Final Proposals (December 2007) and is designed to update financial data and to complete outstanding issues. Final proposals will be released in December and the Gas Distribution Networks companies will have a month in which to decide whether to accept them or not.