46XU Cadent Fin 28

TIDM46XU TIDMTTM

RNS Number : 8909Y

Cadent Finance PLC

14 September 2020

CADENT FINANCE PLC

(LEGAL ENTITY IDENTIFIER: 5493005MBTJ0J6IMUF67)

Ofgem's Draft Determination: Consultation Response

14 September 2020

Cadent Gas Limited ("Cadent"), the guarantor under the Company's GBP6,000,000,000 Euro Medium Term Note Programme, submitted its response to the RIIO-2 Draft Determination to Ofgem on 4 September 2020. The summary of Cadent's response (the "Cadent Summary of Response") can be found at: https://cadentgas.com/news-media/document-library

In the Cadent Summary of Response, Cadent stated that:

-- their customers and stakeholders have worked with them to set out an ambitious, but achievable plan, and Cadent was very surprised by Ofgem's initial response to it as set out in the Draft Determination;

   --      the cost challenge proposed in the Draft Determination is unachievable and unrealistic; and 

-- the proposed GBP701m additional efficiency challenge, on top of the GBP505m of totex efficiencies contained in Cadent's plan is neither in customers' short, or long-term, interests.

Cadent further stated that:

-- they believe that the cost challenge proposed in the Draft Determination is a result of a significant number of material errors, including basic data and arithmetic errors - combined with the adoption of a benchmarking methodology that is not robust; a lack of allowance for regional factors; and errors in the calculation of ongoing efficiency; and

-- the result of these errors and lack of consistency across networks presents Cadent with an unworkable and unfinanceable plan whilst also funding other networks more than their requirements to the clear detriment of all customers.

Cadent conclude that, in its current form, the Draft Determination from Ofgem does not enable Cadent to finance the services they are delivering for their customers and the activities they are obligated to deliver under the licence and their statutory requirements.

Cadent believe there is a considerable amount of work to do to resolve the issues Cadent have raised to deliver a robust, fair and proportionate set of proposals in Final Determinations. It is critical that these issues are addressed for Cadent's customers and indeed for all customers across the UK. Cadent are keen to offer every assistance they can to help Ofgem achieve this and remain committed to working constructively for the benefit of customers.

Inside Information

This announcement is released by Cadent Finance plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"). For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is made by Diane Bennett (Secretary) at Cadent Finance plc.

Enquiries

For further information, please contact:

Helena Norgate

Cadent Finance plc

Ashbrook Court Prologis Park

Central Boulevard

Coventry

CV7 8PE

Email: Helena.norgate@cadentgas.com

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