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Ofgem proposes stricter network regulation

The move would limit the cost of equity network companies are allowed to achieve
March 7, 2018

Energy regulator Ofgem has proposed a new regulatory framework for energy network companies, limiting their returns in favour of improved value for customers and higher levels of investment. The framework would be effective from 2021, but if it were applied today it would mean a cost of equity range of 3-5 per cent, the lowest rate ever proposed in the UK.

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The regulator estimates this would mean consumer savings exceeding £5bn over five years, but this would come at a cost to investors. Analysts at RBC Capital Markets estimated an impact of 6-12 per cent of EPS year on year for National Grid (NG.).