British Gas and Northern Powergrid appeal against Ofgem pricing rules
Two energy companies have started an appeal process against electricity price guidelines imposed by regulator Ofgem.
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Centrica's British Gas and Berkshire Hathaway's Northern Powergrid have sought permission from the Competition and Markets Authority (CMA) to appeal against regulator Ofgem's November 'RIIO-ED1' ruling on price controls for electricity suppliers.
CMA said it would now decide whether to grant permission for an appeal, which would then take six months to determine the appeals.
The appeal is not expected to have any impact on distribution companies' base revenues this year, according to one electricity company.
Although British Gas is not an electricity distribution network operator it has sought to appeal "as a party materially affected by the decision".
CMA said it would now decide whether to grant permission for an appeal, which would then take six months to determine the appeals.
The CMA added that these appeals are separate from its ongoing investigation into the retail energy market, which has already suggested that households are overpaying and that the firms have "unilateral market power" over most customers.
The Ofgem pricing rules, which set prices for the eight-year period from 1 April 2015 to 31 March 2023, require require power network operators to spend £17bn to upgrade and maintain the UK’s electricity network.
The appeal comes after more than three years of open consultation and independent analysis, with the price controls set to deliver an underlying reductions in average household electricty bills.
Last year, five of the six big electricity suppliers final proposals were rejected by Ofgem as "they failed to deliver good enough value for consumers", resulting in them eventually being stripped of £2.1bn from their initial proposals – with the companies identifying £700m of savings and Ofgem disallowing an extra £1.4bn.
Though it had not joined the appeal, one of the five eelctricity distribition companies, SSE, said on Wednesday that it "will not have any impact on distribution companies' base revenues in 2015/16".
Colin Nicol, managing director for distribution at SSE said: "Customers benefit from a stable and transparent regulatory framework for the network companies that deliver electricity to their homes, offices and businesses and maintaining such a framework should therefore be a key priority."
He added: "We will continue to focus on those objectives while playing our part in ensuring that any outstanding issues with regard to the price control are dealt with in the right way."