The Competition and Markets Authority (CMA) today published the outcome of an appeal brought by firmus energy (Distribution) Ltd of the Utility Regulator’s gas distribution price control (called GD17). The CMA’s determination upholds almost all of the Utility Regulator’s price control, including its decisions on the most substantial grounds.
Commenting on the CMA’s determination, Utility Regulator Chief Executive, Jenny Pyper said:
“We welcome the CMA’s determination on firmus energy’s appeal of our GD17 price control. It is clear from the determination that the true winners are local gas consumers.
“Our GD17 price control package would have reduced firmus energy’s tariffs by £15 per annum for the average domestic consumer and by tens of thousands of pounds for the larger industrial consumers. The CMA’s determination means that at this time, firmus energy does not receive any increase in its allowances above those identified in our GD17 price control and associated licence modifications.
“The CMA’s determination vindicates our price control decisions. We particularly welcome the endorsement of our decision on the rate of return for firmus energy. All utilities are entitled to a return on their investment but this must be commensurate with the risks that the business and its shareholder face and should not expose business and household consumers to further costs that impact on bills.
“If firmus energy had been successful in all of the grounds that it appealed, it would have been worth an extra £12 million to the company, which would have been paid for by local gas consumers. The CMA’s decision means firmus energy does not receive this additional £12 million. The CMA have remitted one matter back to us, which may result in future adjustments - upwards or downwards. We will now begin work to consider and consult on these areas and will work with firmus energy and all stakeholders to reach the best outcome.”
For further information, please contact Adele Boyle on 028 9031 6664 or 07787 279584.
Notes
- The Utility Regulator is the independent non-ministerial government department responsible for regulating the electricity and gas industries and water and sewerage services in Northern Ireland.
- The Utility Regulator determines price controls for regulated companies, which sets out the money the company is allowed to claim back from consumers.
- Regulated companies can appeal the price control decision through the CMA. Recent changes to this process have meant that companies can appeal certain parts rather than the price control in its entirety. Another change is that the CMA cannot, following an appeal, make a determination that leaves the company worse off than the original price control determination.
- firmus energy’s appeal had four grounds, which included 12 sub-grounds. The CMA upheld the Utility Regulator’s price control decisions in respect of nine sub-grounds.For the remaining three sub-grounds, the Utility Regulator has already made a decision on one (GIS costs), and the remaining two sub-grounds (connection target and non-additional costs) are covered by the matter which the CMA have remitted back to the Utility Regulator for review.
- Overall, the firmus energy grounds for appeal were worth an extra £12 million. The CMA decision does not increase allowances for any of this £12 million. The items remitted back to us may result in future adjustments - upwards or downwards.