In its initial proposals for the gas distribution one-year price control review, UK energy regulator Ofgem has stated that it wants shareholders of gas distribution networks to pay for 40% of the overspend for capital and non-mains replacement expenditure in the current five-year price control period.
<p>The gas distribution networks (GDNs) expect to overspend their total allowances for capital and non-mains replacement expenditure in the current five year price control period by approximately 65%, or GBP843 million, in 2005-06. Ofgem said that the GDNs are seeking to pass on virtually all these costs to customers, but the regulator is proposing that shareholders fund around 40% of the overspend.<br /><br />To enable the companies to meet rising operating costs, Ofgem is proposing to allow an increase in the GDNs' transportation charges of an average of 9.7%. For domestic customers, for whom distribution charges make up around 15% of their total bill, this represents an increase of around 2%, which is less than GBP9 a year.</p>