Watchdog To Rule On British Gas Costs Appeal

The latest in a series of running battles over energy prices will come to a head on Tuesday when regulators rule on an appeal by British Gas over billions of pounds of ‎costs imposed by network providers.

Sky News has learnt that the Competition and Markets Authority (CMA) will announce before the stock market opens the outcome of an inquiry lasting nearly seven months which could have a direct impact on millions of consumers' electricity bills.

The judgement will relate to a £17bn deal announced by Ofgem, the energy regulator, last November, which set out an eight-year price control framework for the renewal and maintenance of Britain's electricity network.

Ofgem said at the time that the blueprint would save consumers an average of £11 during the period to ‎the end of March 2023.

The regulator added that it expected the relevant companies "to meet tough targets on further improving reliability, customer service, connections, and their work with vulnerable‎ consumers".

But sources said on Monday that Ofgem was expected to be criticised by the CMA for elements of that deal.

The five distribution network operators (DNOs) covered by Ofgem's framework include UK Power Networks, SSE (LSE: SSE.L - news) and Electricity Northwest.

The competition watchdog said in March that it had granted permission for British Gas Trading (BGT) - a subsidiary of Centrica (LSE: CNA.L - news) , the UK's biggest energy supplier - and Northern Powergrid to appeal against Ofgem's price control decision.

Centrica said earlier this year that there was "evidence to suggest the settlements are too generous to the network operators and the costs to consumers are too high".

Northern Powergrid, one of the ‎other DNOs, effectively argued the contrary case, calling Ofgem's framework "a flawed decision [which] creates a material underfunding of the costs of providing the improved services customers want".

Centrica's decision to appeal against the £17bn Ofgem deal announced last November reflects ‎the extent to which the big energy suppliers are frustrated by the contribution to consumers' bills of costs which are outside their control.

An inquiry timetable on the CMA's website state that it is required to reach its verdict on the complaints about the ‎distribution network operators' price settlement by the end of September.

Tuesday's verdict will come days after the CMA said it would delay publishing its final report on the wider UK energy market until well into next year.

Its interim report, which included a proposal‎ for a 'safeguard tariff' which would effectively cap energy prices, was widely criticised by stakeholders across the industry.

The CMA, Ofgem and Centrica all declined to comment on Monday.