UK energy market regulator Ofgem has entered into the review period to determine the prices that companies can charge in the UK local gas distribution network for the period 2008 to 2013.
This is the first opportunity Ofgem has had to review the gas distribution networks separately from the gas transmission networks since they were separated in 2004. It is also the first review following the sale of four of the distribution networks by National Grid in 2005.
The review therefore enables Ofgem to focus solely on the activity of gas distribution and better meeting the needs of its customers, the regulator said in a statement.
The gas distribution review covers prices companies can charge between 2008 and 2013, and Ofgem will use inflation-linked price controls to encourage companies to reduce their costs and pass on savings benefits to customers in future price controls.
The review will take the form of a consultation document to fully consider the range of issues at hand, including incentives and arrangements, in conjunction with companies’ statutory duties to operate safe and efficient networks.
As part of the review, Ofgem is considering whether to introduce a discretionary reward scheme for the gas distribution networks. This scheme was set up as part of the 2005 to 2010 electricity distribution price controls and is designed to reward companies for good performance in activities which cannot be easily measured through the price control, such as work to help vulnerable customers and corporate social responsibility programs.