Consultation on transmission capital expenditure planning

Ofgem consultation (5 pages, PDF) on the approach to determining the amount of future capital expenditure to be taken into account in the Transmission price control from 2007. This letter, published two days after the deadline for responses to a major consultation document, appears to provide a timely and well-focused opportunity for consideration of the crucial issue of capital expenditure planning.

Ofgem notes the extent of uncertainty about future network enhancement and capital maintenance requirements, promises further development of the concept of forcing users to indicate a longer-term commitment to use network capacity, and invites responses specifically on incentives to "ensure that transmission companies finance their capital investment plans in a timely and efficient manner" and on the risk that investment may be undertaken for financial reasons (to maintain the regulatory capital value and depreciation allowances once pre-vesting assets have been fully depreciated for regulatory purposes) rather than in accordance with operational need. Responses by Wednesday 1 March 2006.

Update, 16 February 2006: link corrected after Ofgem deleted the original file from its website.

For further information or advice please contact Franck Latrémolière.

Filed under Electricity, Ofgem, Price controls.

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