Review of Ofgem's price control licence conditions

Reckon advised the Energy Networks Association on Ofgem's proposed price control algebra to be inserted in companies' licences as part of the 2004 electricity distribution periodic review. The review included an analysis of whether the algebra correctly implemented the policy stated in Ofgem's decision documents. Amendments to the algebra were proposed where errors had been identified. This work involved the development of a spreadsheet model to demonstrate the implementation of the licence conditions.

Reckon also advised a GB electricity transmission network operator on Ofgem's draft price control licence conditions as part of the 2007 periodic review. The work included helping the operator to respond to Ofgem's consultation and make constructive suggestions to improve the algebra. We subsequently provided a detailed report identifying various risks that the final draft of the licence condition may fail to achieve the objectives set out in the final proposals accepted by the company, or that ambiguities may arise in its practical operation.

*Franck Latrémolière

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Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.