Energy and Climate Change written question – answered at on 13 September 2011.
To ask the Secretary of State for Energy and Climate Change what assessment he has made of the effect on domestic fuel bills of National Grid's request for an increase in allowed revenue.
DECC's assessment of the overall impact of energy and climate change policies on energy prices and bills was published alongside the Annual Energy Statement in July 2010:
Although, the analysis included assumptions on increased network costs into the future and increased costs for the necessary grid reinforcement associated with meeting our renewables target, it did not explicitly refer to any request for an increase in allowed revenue from the National Grid.
An updated assessment of the impact of energy and climate change policies on energy prices and bills will be published alongside the Annual Energy Statement in the autumn reflecting policy developments over the last year. Assumptions on network costs will include agreed increases in allowed revenue set out in the latest distribution price control settlements.
There are currently two price control arrangements going on at the moment:
An extension to the current arrangements (the ‘roll-over’) which lasts until 2013; and
The RIIO (Revenue = Incentives + Innovation + Outputs) controls, which for gas and electricity transmission and gas distribution run from 2013 to 2021.
The Ofgem website sets out the proposals for allowed revenue in the ‘roll-over’ year and estimates the initial proposals would increase the average residential gas and electricity bills by approximately £2 (0.3%) and £1 (0.4%) respectively:
http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?docid=63&refer=Networks/Trans/PriceControls/TPCR4Roll-over
The RIIO controls are currently been worked on, with Ofgem's final proposals to be set around the end of 2012. National Grid has recently submitted its transmission business plan proposals, which are being assessed. National Grid's estimates of the consumer impact of these proposals are included on its website.
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