RIIO-2 energy price controls
09 Nov 2021
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The CMA has published its Final Determinations on the appeals brought by several energy companies against Ofgem’s RIIO-2 price control for the transmission and gas distribution sectors.
The RIIO-2 price control sets the revenues which transmission and gas distribution companies are entitled to collect from customers until April 2026. Eight appellants (all of them transmission or gas distribution companies) brought appeals under s. 11C of the Electricity Act 1989 and s. 23B of the Gas Act 1986, challenging various aspects of the price control, including Ofgem’s decisions on the cost of equity, the cost of debt, the outperformance wedge, ongoing efficiency, the efficiency benchmark and the licence modification process.
In its Final Determinations, the CMA partially upheld the appeals, finding in the appellants’ favour in relation to the outperformance wedge and on aspects of the grounds concerning ongoing efficiency and the licence modification process. Ofgem also conceded errors on two grounds (LTS Rechargeable Diversions and the Business Plan Incentive) at an early stage in the appeal process. The CMA dismissed all other grounds.
The CMA’s Final Determinations can be found here.
Emily Neill, Tom Coates, Daniel Cashman, Natasha Simonsen, Rachel Jones and Emmeline Plews acted for Ofgem.
Monica Carss-Frisk QC and Iain Steele acted for Scottish Hydro Electric Transmission.
Brian Kennelly QC, Hanif Mussa and Will Bordell acted for National Grid Electricity Transmission and National Grid Gas.
Alan Maclean QC acted for Northern Gas Networks.
