Ofgem takes £200m back from distribution network operators


Ofgem has decided to clawback £200 million from distribution network operators (DNOs).

DNOs are regulated utilities. They submit plans to Ofgem detailing what they need to do over several years, to maintain and reinforce networks and Ofgem determines how much they can spend dong so.

The regulator has been criticised in recent months after two separate reports suggested DNOs had been allowed to make much higher returns than anticipated in current price controls, which run from 2015-2023, adding billions to customer bills.

Ofgem has now reviewed the previous period (2010 to 2015) and decided to take back £200m from DNOs, which it said will mean lower bills during the current price spending period. The regulator has also said it will set tougher price controls in the future.

In making its decisions, Ofgem said lower than anticipated consumer demand had lead to less required reinforcement works over the period than when it set allowances.

The lion’s share of the reduction, some £130m, comes via Western Power Distribution and UK Power Networks, which Ofgem said cancelled some major projects after finding different ways to achieve outcomes.

See the decision letter here.

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