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The UK's energy monitoring agency has reduced the yields of power grids such as National Grid are allowed to follow sharp criticism from monopoly owners of pipelines and cables that carry gas and electricity in the country .
Ofgem – which sets the maximum amount of revenue that network companies can recover from users – plans to set the basic rate of return at 4.3% from 2021, just above the 4% proposed last December .
The new plan, which will run for five years starting in 2021, is comparable to the 7 to 8% returns allowed under the current regulatory regime. Ofgem said that this would save consumers 6 billion pounds over a period of five years.
Jonathan Brearley, Director of Systems and Networks at Ofgem, said: "Our proposals are on track to achieve a strong and fair deal that offers better conditions for consumers.
"Reducing the cost of capital for network energy companies will allow consumers to recover money, while service standards will have to remain high."
Friday's slight increase in the allowable rate, compared to the December proposal, came after the industry opposed Ofgem, saying a fair return would be between 5.5 and 6.3%.
Analysts said the announcement would be perceived as slightly positive by the network companies compared to the December proposal. National Grid, however, stated that the new tariff "still does not reflect the level of risk borne by the networks".
Nevertheless, National Grid shares rose about 1% on Friday morning. The share of the ESS increased by 2%.
The decision comes at a difficult time for the network companies, which are in the eyes of the Labor Party of the British opposition.
This month, the unions explained in detail how to renationalize energy networks if it formed a government – a proposal that, according to companies such as National Grid, would create legal difficulties.
Ofgem's decision also comes a few days after Cadent, the UK's largest gas distribution network, was fined £ 44 million for a litany of historic failures, including the loss of 775 apartment buildings, meaning that they were not included in its regular maintenance and inspection schedule. Cadent is excused for past failures.
Network companies are in reality monopolies whose revenues come from withdrawals from consumers' energy bills. These fees currently represent about a quarter of an invoice.
Consumer groups, such as Citizens Advice, have accused them in the past of making "amazing" profits at the expense of households.
Gillian Guy, chief executive of Citizens Advice, said Friday: "Ofgem has made significant progress so far, but the acid test will be the end result. The regulator will face intense pressure from the industry to dilute these measures in the coming months. She has to keep her cool and offer good price control for consumers. "
The new regulatory regime – or "price control" – applies to gas and electricity transmission and distribution companies, including National Grid, SSE, ScottishPower – owned by Iberdrola (Spain) – as well as to private companies such as Cadent.
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