SGN (formerly Scotia Gas Networks) has told Ofgem that it will not be claiming £145m of allowances agreed under its price controls.
The company, which is owned by SSE, pensions and infrastructure funds, said the move will ensure customers benefit and “help maintain the integrity” of Ofgem’s RIIO price control model.
Both network companies and the regulator are under pressure about profits and the perception that the RIIO price control formula may be too generous.
MPs raised the issue almost three years ago, and analysis by the likes of Citizens Advice and others suggest network firms are making billions more than envisaged by the regulator when setting price controls, though those figures have been disputed by the Energy Networks Association.
The regulator’s approach also attracted some criticism in the recent Helm review of energy costs.
Ofgem has started to clawback revenue from network operators but accepts it must be tougher after this eight-year cycle has run its course.
Related stories:
MPs warn Ofgem letting networks charge too much
Ofgem to clawback £200m from DNOs
Helm: Government should start running UK energy system
Follow us at @EnergystMedia. For regular bulletins, sign up for the free newsletter.
