Ofgem to cut investment for electricity firms by £200m

Ofgem said on Friday that it will cut the allowances of some of Britain's electricity distribution network operators (DNOs) by around £200m for the period from 2015 to 2023.

The announcement follows a review of how much the DNOs had spent and what outputs they had delivered during the previous price control.

The regulator said electricity demand was significantly lower than expected in the 2010-2015 price control and some DNOs did not need to spend as much as expected on reinforcing their grids. As a result, Ofgem has cut allowances by a total of around £74m across some of the distribution networks of Western Power Distribution, Scottish Power, UK Power Networks and SSE.

Jonathan Brearley, Ofgem’s senior partner for networks, said: “We have already told network companies that they should prepare for tougher price controls from 2021, with lower returns.

“We also want to get a better deal for customers in the current price control period which is why we have announced a reduction in the DNOs’ allowances today. This is in addition to savings of over £4.5bn for customers.These result from other action we have taken to reduce revenues in the current price controls, or voluntary contributions from some companies."