By Adria Calatayud
SSE PLC and National Grid PLC said Thursday that they are "disappointed" by U.K. energy regulator Ofgem's new price-control and investment plans.
The regulator's proposals include a five-year investment of around 25 billion pounds ($31.43 billion) to transform the country's energy networks.
Furthermore, Ofgem said network companies' allowed rate of return would be halved, so that less money goes toward their profits and more towards driving network improvements. Ofgem said its proposals would lead to an expected GBP20 fall in network charges on bills per household a year at the start of the program.
Ofgem said it is allocating GBP25 billion upfront expenditure for Britain's gas distribution as well as gas and electricity transmission networks, while supporting the growth of green energy, as part of the country's ambition to deliver emission-free energy.
Ofgem said it plans to unlock additional funding of around GBP10 billion over the next five years that companies can access to drive green emissions-free energy and infrastructure upgrades.
In response, SSE said its SSEN Transmission subsidiary said Ofgem's approach fundamentally fails to deliver on net zero, inadequately reflects shareholder and customer needs, and falls short in seeking to attract the significant investment required.
The company said it will seek to work with the U.K. government and Ofgem during the consultation period to address these issues, but that it will keep all options open to secure a price-control settlement that meets the needs of all shareholders.
Separately, National Grid said it will be pressing Ofgem to come forward with a regulatory framework that both incentivizes investment and protects consumers.
"This proposal leaves us concerned as to our ability to deliver resilient and reliable networks, and jeopardises the delivery of the energy transition and the green recovery," National Grid said.
National Grid shares at 0702 GMT were down 3% at 872.60 pence, while SSE shares traded 3.1% lower at 1,300 pence.
Write to Adria Calatayud at email@example.com