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Ofgem looks to slash energy returns

Ofgem looks to slash energy returns

Ofgem has revealed that it intends to almost halve the allowed returns energy companies will be able to make in the next regulatory period, running from 2021 to 2026. The regulator is proposing that the allowed return on equity – based on the ‘consumer price index including owner occupiers’ housing costs’ (CPIH) – be set at 3.7 per cent for electricity transmission and 3.95 per cent for gas transmission and distribution, down from the current 7-8 per cent level. The new plans are also a step down from the 4.3 per cent threshold it had proposed last year.

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