The Competition and Markets Authority (CMA) has ordered Ofgem to reconsider part of its analysis that led to the modification of two electricity distribution network operators (DNOs) licences.
The CMA will partially uphold the appeal which was brought forward by Northern Powergrid. Because of this, the organisation is asking Gas and Electricity Markets Authority (GEMA) – also recognised as Ofgem – to reconsider part of its analysis and re-determine the outcome.
According to a statement released by the CMA, Northern Powergrid submitted two grounds for appeal.
The first argues that Ofgem miscalculated allowances between cost categories resulting in Northern Powergird’s northeast and Yorkshire businesses being underfunded.
The second is that Ofgem did not grant Northern Powergrid Yorkshire a business plan incentive stage 4 reward when it should have done.
Having considered submissions from Northern Powergrid, Ofgem, and Citizens Advice, CMA will uphold the appeal on the first ground but Northern Powergrid’s second ground of appeal was dismissed.
Ofgem’s decision was based on its RIIO-ED2 price control determination published in November 2022. RIIO-ED2 covers the period 1 April 2023 to 31 March 2028.
The appeal prompted a response from Ofgem, which was released on 21 September.
Ofgem’s interim director for Network Price Controls, Steve McMahon, said: “Northern Powergrid’s appeal against the RIIO-ED2 price control focused on two narrow but important technical points. We note today’s final determinations by the CMA which has found in favour of Ofgem on one ground and asked for reconsideration and redetermination on the other.
“We will now carefully consider the CMA’s conclusions in determining next steps to finalise the RIIO-ED2 price control. Our focus remains on securing the energy infrastructure needed for a net zero future but doing so in a way that will always protect the interests of energy consumers.”
