As part of the process for agreeing new price controls (RIIO-GD1), National Grid has submitted to Ofgem business plans for its four UK Gas Distribution networks covering the period April 2013 to March 2021. National Grid is publishing those business plans today and will be hosting a web-based conference call to set out the highlights and provide an opportunity for investors and analysts to ask questions.
The business plans are National Grid’s realistic assessment of the investment and financial framework required to deliver a safe and reliable network alongside quality service and value for money for the customer while safeguarding the interests of future generations. The plans, which reflect an extensive programme of stakeholder engagement, recommend a baseline total capital and operating investment of around £13.5bn over eight years, including £5.4bn of replacement expenditure.
If the business plans were to be adopted in all aspects for the next price control the net impact by the end of the eight year period would be an increase in real terms on a typical annual household bill of around £8 across National Grid’s networks, less than £1 p.a. In addition, the plans would see regulated asset value rise by 4% p.a. over the period. In its submission, National Grid has set out appropriate financial proposals to accompany the business plans, including an allowed cost of equity of 7.2%, a gearing ratio of 53% and transitional arrangements including the migration of the treatment of a portion of replacement expenditure from operating cost to capital cost and additional depreciation on some existing assets.
The business plans will be available from 4pm today on National Grid’s website, at www.nationalgrid.com.
John Pettigrew, Chief Operating Officer, UK Gas Distribution and Metering commented: “Our gas networks will play an important part in the move towards a low carbon future, continuing to provide energy to around 11 million customers. These plans cover an eight year period, over which time the usage of our system and our work on that system is expected to be subject to considerable change.
The plans represent a well developed and realistic solution to these challenges, delivering safety and reliability along with meeting the needs of current and future customers in an affordable way, and providing adequate returns to existing roviders of capital We look forward to receiving Ofgem’s response in February and to discussing these proposals further with them as we work towards an appropriate outcome for all stakeholders.”
Contact for media information only:
National Grid Media Relations
Gemma Stokes
T: +44 (0)7974 198333
E: gemma.stokes@uk.ngrid.com
Isobel Rowley
T: +44 07917 211116
E: isobel.rowley@uk.grid.com
Chris Mostyn
T: +44 (0)7774 827710
E: chris.mostyn@ngrid.com
Brunswick:
Tom Burns, Rebecca Shelley or Tom Batchelar
0207 404 5959
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