Ofgem, the electricity and gas regulator, has welcomed the announcement from Scottish and Southern Electricity Networks (SSEN), the electricity networks division of SSE plc, that it will make a voluntary contribution of £65.1m to consumers.
This decision follows a review by SSEN of its performance under Ofgem’s RIIO-T1 (electricity transmission) price control and discussions with Ofgem.
Network companies require a licence to operate, not just from the regulator, but from their own customers who must be confident they are getting good value for money.
Last month, David Gray, chairman of Ofgem, warned network companies that their returns need to be seen as fair to maintain public confidence in the regulatory regime.
In July, Ofgem signaled that network companies need to prepare themselves for a tougher round of price controls from 2021.
During the current price control, Ofgem has secured additional savings of over £4.5bn for consumers by a combination of reduced revenues or voluntary contributions from companies.
In response to SSE’s announced contribution, the regulator said it hoped other network companies would follow suit.
From a PR standpoint, SSE’s voluntary contribution is well timed given that SSE and Npower have reached an agreement to merge their operations to create a new energy supplier in the UK.