Utility companies are not exactly jumping with joy at Ofgem’s new electricity distribution price control proposals, with SSE calling them ‘tough and stretching’.
Russ Mould, investment director at AJ Bell said: “Energy providers would argue they are under pressure to invest heavily to improve infrastructure, make sure the supply network is resilient, and that everything is being done to hit net zero targets.
“On the other hand, the regulator has long had its eye on the amount of money these companies make, and whether their profits and dividends should be so high.
“National Grid says it will work ‘hard’ with Ofgem to agree a price control suitable for both sides, but you can bet behind the scenes those discussions are going to get quite heated.
“Politically this is a sensitive issue, with consumers under considerable financial pressure from a sharp rise in energy bills.
“The regulator will have to tread a fine between making sure the country’s energy network is robust and efficient, while also being fair to the operators that they can do their job and make a small bit on the side. It’s the size of that cake that remains the sticking point.”