Gloves off Amongst Networks, Ofgem and Suppliers
Electricity distribution and transmission costs should be analysed by the National Audit Office (NAO), that was the call delivered by Andy Manning, head of network regulation at British Gas.
Manning said that there was a requirement for a “detailed independent analysis” to be undertaken into why the networks, such as National Grid and the regional distribution companies were able to so easily out perform their targets.
We wrote recently about the controversy of Ofgem agreeing an ‘open goal’ set of targets for National Grid to achieve, which they did so with ease and for which they were handsomely rewarded at customers’ expense.
British Gas’ point however was about the general culture of reward even for underperforming businesses with Manning saying:
“To ape a competitive market we should see the high performing networks prospering and the poor performing networks struggling and that isn’t what we’re seeing.”
With the advent of the Competition and Markets Authority investigation into the energy market we can expect a lot more of this, particularly where a party does not have a beneficial interest in one or more elements of the energy market.
In this instance, British Gas, part of Centrica, do not have an interest in the transmission or distribution networks unlike some of their Big 6 counterparts such as EDF. In addition, Ofgem’s greater influence on the reward structure for such business opens the regulator up to retaliatory attacks from third parties.
That is not to say that British Gas’ call is without merit, it will just be interesting to see who strikes back next and how.