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Northern Gas Networks to appeal to Competition and Markets Authority on Ofgem’s Final Determination of its RIIO-GD2 Business Plan

Following extensive analysis of Ofgem’s Final Determination on its RIIO2 Business plan, published in December 2020, the Board of Gas distributor Northern Gas Networks (NGN) has unanimously decided to appeal its outcome to the Competition and Markets Authority (CMA).

The appeal will be launched on 3rd March 2021, with an outcome expected in Autumn 2021.

CEO Mark Horsley said:

“NGN is the frontier performing company in the gas distribution network industry and at the heart of NGN’s strategy is our desire to deliver efficiency gains for the benefit of our customers in a sustainable way.

“The final determination gives us clarity on what we need to deliver for our customers, and we’re in great shape as a business to continue doing this from April.

“Ofgem’s proposals do however present a very challenging environment for the RIIO-GD2 price control, and we consider that there are errors on specific aspects of the Determination that we are asking the CMA to adjudicate and conclude on.

“We will be following the formal regulatory process in order to seek a resolution and correct these errors.”

NGN’s grounds of appeal will centre on four key issues: Ofgem’s approach to calculating the Cost of Equity, the inclusion of an Outperformance Wedge, Ongoing Efficiency and the level of incentive offered to the Frontier company.

NGN is the gas distribution network for the North East, northern Cumbria and much of Yorkshire, transporting gas to 2.7 million homes and businesses across the region.