30 May 2007
Yesterday's announcement by energy regulator Ofgem to reduce suppliers' expenditure by 3.3% in order to save money which, in turn, can be passed on to consumers was branded "totally unacceptable" by the Energy Networks Association (ENA).
Chief Executive of the ENA Chris Goodall told the Independent that Ofgem's expectation that the companies can continue to significantly out-perform the rest of the economy in cutting costs is "unsustainable".
He added: "Ofgem's initial proposals for the forthcoming five-year price controls for the gas distributors fall well short of what the companies could consider to be an acceptable package of measures."
The ENA was also uncomfortable with Ofgem's proposal limiting capital and replacement spending on their networks to 1 billion per year. The regulator believes the proposals would add less than 1 a year to domestic gas bills, but many of the distributors claim it will cost far more than that.
In Ofgem's proposal, Ofgem's chief executive Alistair Buchanan admitted that its targets for 2008-2013 were "challenging", but insisted that Ofgem would listen carefully to the feedback it received.
"We do intend to set challenging price controls to give the companies incentives to operate more efficiently. This will generate savings for customers which will be passed on in successive price controls," he said.