Cadent Finance PLC Parent Company Decision to Pursue CMA Appeal (0353R)
March 03 2021 - 8:00AM
UK Regulatory
TIDM46XU
RNS Number : 0353R
Cadent Finance PLC
03 March 2021
Cadent Finance Plc
PARENT COMPANY DECISION TO PURSUE CMA APPEAL
Date of disclosure: 03 March 2021
Cadent Gas Limited ("Cadent Gas"), the parent company of Cadent
Finance Plc, has today released the following announcement:
Cadent Gas
Cadent Gas appeals GEMA's RIIO-GD2 licence modification
decision
to the CMA
Cadent, the UK's largest gas distribution network covering
around half of all homes and businesses that use gas in the UK,
announces its decision to take the next step in the regulatory
process and appeal specific elements of the Gas and Markets
Authority's (GEMA) RIIO-GD2 licence modification decision to the
Competition and Markets Authority (CMA). GEMA's decision gives
effect to the RIIO GD2 Final Determinations published in December
2020 and will apply to the next price control period which will
operate from 1 April 2021 to 31 March 2026.
The appeal is limited in scope and relates to three narrowly
defined areas that are technical in nature and/or in relation to
which specific material errors have been made:
1. Baseline total expenditure (totex): Cadent is appealing
three, discreet, material errors in setting baseline totex, which
result in allowances that do not fund efficient costs for essential
services. These errors relate to: (1) the inconsistent treatment of
Local Transmission System diversions; (2) the efficient costs of
operating its North London network; and (3) setting a reasonable
and appropriate ongoing efficiency target.
2. Cost of Equity : Technical errors in determining the overall
cost of equity.
3. Outperformance Wedge : The introduction of an outperformance
wedge; a downward adjustment to allowed returns in expectation of
future outperformance.
Dr Tony Ballance, Chief Strategy & Regulatory Officer at
Cadent explained:
"Cadent plays a vital role keeping the energy flowing to over 11
million homes and businesses across the UK - and a leading role in
transitioning the gas sector to a low carbon economy.
"To enable us to lead the way in this role over the next five
years, we submitted a robust and very ambitious business plan to
Ofgem in December 2019. This was a plan built on the most extensive
and tailored customer and stakeholder engagement programme,
providing what we believe was the best option for our customers -
ensuring Cadent can continue to deliver a safe and reliable energy
network now, and lead the development of a net zero future.
"We have thoroughly reviewed Ofgem's Final Determination on our
plan, published in December 2020 and have engaged with them very
collaboratively throughout the process. After a great deal of
careful deliberation, Cadent has decided to take the next step in
the regulatory process and appeal their decision to the Competition
and Markets Authority. This is because we do not believe the final
determination strikes the right balance between bill reductions and
future investment, that is necessary to enable us to deliver the
very best service to customers and wider society." "Throughout the
CMA process we will remain absolutely focused on continuing to
deliver operational excellence and great service for our
customers."
The full announcement can be found on Cadent's website:
www.cadentgas.com
Enquiries:
David Moon, Cadent Gas
07833 047637
david.moon@cadentgas.com
Cadent Finance Plc LEI: 5493005M8TJ0J6IMUF67
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END
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