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In March, the Competition and Markets Authority (CMA) announced that it had granted permission to (i) Northern Powergrid (Northeast) Limited and Northern Powergrid (Yorkshire) plc (together 鈥楴Pg鈥�) to appeal against Ofgem鈥檚 decision to modify its 2 licences; and (ii) British Gas Trading Limited (BGT) to appeal against Ofgem鈥檚 decision to modify the licences of 10 distribution network operators (DNOs).

In its determination on NPg鈥檚 appeal, the CMA dismissed 2 of the 3 grounds of appeal. It upheld one ground in relation to Ofgem鈥檚 adjustments to reflect potential savings available from the introduction of smart grids and other technological innovations. The CMA鈥檚 determination will increase NPg鈥檚 allowable revenue over the price control period by around 拢11 million.

In its determination on the BGT appeal, the CMA dismissed 4 of the 5 grounds of appeal. The CMA upheld, in part, one ground which sought to challenge the adjustment that Ofgem made to the up-front rewards and penalties for DNOs in its Information Quality Incentive scheme. The CMA鈥檚 determination increases the net penalty across the 10 鈥榮low-track鈥� DNOs (those which did not reach an early settlement with Ofgem). After taking into account tax, the effect of the increase in the penalty is to reduce the amount of revenue DNOs are allowed to recover through charges by around 拢105 million over the price control period.

The appeals were made under section 11C of the Electricity Act 1989 and relate to price controls made for the 8-year period from 1 April 2015 to 31 March 2023. NPg is an electricity DNO. BGT is an electricity supplier which pays charges to each of the DNOs for use of their respective electricity distribution networks. Ofgem announced the details of the price controls in and published its on 3 February 2015.

The final determinations and all other information relating to the appeals are available on the Northern Powergrid and British Gas Trading case pages.

The appeals are separate from the CMA鈥檚 ongoing investigation into the retail energy market.

Notes for editors

1. The CMA is the UK鈥檚 primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For more information see the CMA鈥檚 homepage on 188体育.
2. The CMA鈥檚 group of panel members determining both appeals has been: John Wotton (Chair), Graham Sharp and Jon Stern.
3. As well as the 2 appealing parties, the Group also received and considered submissions from Ofgem and other interested parties, which have been published on the case pages.
4. The 10 鈥榮low-track鈥� DNOs are: Electricity North West Limited; Northern Powergrid (Northeast); Northern Powergrid (Yorkshire); UK Power Networks (London Power Networks); UK Power Networks (South East Power Network); UK Power Networks (Eastern Power Networks); SP Energy Networks (SP Distribution); SP Energy Networks (SP Manweb); Scottish and Southern Energy Power Distribution (Scottish Hydro Electric Power Distribution); and Scottish and Southern Energy Power Distribution (Southern Electric Power Distribution).
5. The direct effect of the CMA鈥檚 decision on NPg is to increase its expenditure (totex allowance) by 拢31.5 million. Under Ofgem鈥檚 RIIO-ED1 approach, this results in an 拢11 million increase in allowed revenue in the period 2015 to 2023. The remainder of the increase in the totex allowance will be reflected in future price control periods.
6. The appeals have been conducted according to the Energy licence modification appeals rules and Energy licence modification appeals guidance published on the 188体育 website.
7. For CMA updates, follow us on Twitter , and .
8. Enquiries should be directed to Rory Taylor ([email protected],020 3738 6798).