Energy: Investment Income

Department for Business, Energy and Industrial Strategy written question – answered on 23rd March 2022.

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Photo of Jon Trickett Jon Trickett Labour, Hemsworth

To ask the Secretary of State for Business, Energy and Industrial Strategy, with reference to the report entitled Profiting amid the energy crisis: the distribution networks at the heart of the UK's gas and electricity system, published on 14 March 2022, what assessment he has made of the implications for his policies of the report's findings on the level of dividends paid by electricity distribution and gas distribution network operators to shareholders since 2017.

Photo of Jon Trickett Jon Trickett Labour, Hemsworth

To ask the Secretary of State for Business, Energy and Industrial Strategy, with reference to the report entitled Profiting amid the energy crisis: the distribution networks at the heart of the UK's gas and electricity system, published on 14 March 2022, what assessment he has made of the implications for his policies of the report's findings on the profitability of electricity and gas distribution industries in the UK; and if he will make a statement.

Photo of Greg Hands Greg Hands The Minister of State, Department for Business, Energy and Industrial Strategy

Network regulation is a matter for Ofgem as the energy regulator. While dividends are a matter for the individual companies and are a normal part of returns to equity capital providers, the return on capital network companies can earn is regulated by Ofgem.

Ofgem uses the RIIO price control to establish a regulatory framework which allows network companies to attract the investment they need to ensure a safe, secure and reliable supply of energy while saving consumers money by keeping returns as low as possible. In the most recent price control for gas distribution and electricity transmission RIIO-2, Ofgem has reduced the allowed return on capital to save consumers £2.3 billion over the five-year price control period. Ofgem will propose a similar reduction in allowed returns in the forthcoming electricity distribution price control.

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