Ofgem update on electricity distribution price control

Ofgem letter (7 pages, PDF) on its plans for the review of electricity distribution price control, to take effect on 1 April 2010.

Ofgem wants to link revenues to new output measures including:

Composite risk indices for highly loaded substations (customers at risk, time at risk, forecast demand growth etc.),

Health indices such as the condition of transformers, switchgear and overhead lines,

Modelled remaining useful life etc, and

Fault rates.

There is a suggestion to cap profits (not just revenues) for companies that do not commit to enough such outputs.

There is a brief discussion of changes to the information quality incentive (menu for capital expenditure); “further thoughts” on this and other policy issues are due to form part of an Ofgem consultation paper in early December 2008. Ofwat's work on a similar scheme is mentioned with apparent approval.

Increases in data requirements have caused a slight timetable slippage, with business plans now due on 15 February 2009, an additional consultation on cost issues in Spring 2009, and Ofgem's initial proposals in late July 2009.

There are specific requests for comments on ideas for additional metering to measure losses more accurately and the publication of historical profitability (return on equity) figures for companies, with various short deadlines for responses.

For further information or advice please contact Franck Latrémolière.

Filed under Electricity, Ofgem, Price controls.

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