Electricity Distribution Pric

RNS Number : 2133E

Scottish & Southern Energy PLC

16 December 2009

 



SCOTTISH AND SOUTHERN ENERGY PLC

ELECTRICITY DISTRIBUTION PRICE CONTROL REVIEW

SSE (Scottish and Southern Energy plc) has decided, on balance, to accept Ofgem's final proposals for the electricity distribution price control for the five years from 1 April 2010 in respect of its Scottish Hydro Electric Power Distribution and Southern Electric Power Distribution subsidiaries.

SSE stated in its financial report on 11 November, and again on 7 December, that it would assess Ofgem's final proposals against the combined impact of three key criteria: the scope to earn additional revenue through operational efficiency and excellence; the treatment of ongoing pension costs; and the allowed return for shareholders as measured by the weighted average cost of capital.  

On its own, the headline allowed weighted average cost of capital contained within the proposals would not be enough to provide an adequate return on investment in electricity distribution or transmission. The overall package proposed by Ofgem should, however, allow SSE, the most efficient operator in Great Britain, to secure a sufficient return from its electricity distribution assets in the north of Scotland and central southern England.

Gregor Alexander, Finance Director of SSE, said:

"You have to look at proposals of this kind as a package, and on that basis they represent an acceptable outcome. It is not, however, a package which is in keeping with the scale of the long-term investment challenges set out in Ofgem's own Project Discovery analysis.  

"Our priorities now are to retain our position as the most efficient electricity distributor in the country, delivering supplies of electricity customers can rely on, and to work with Ofgem to make sure that the right frameworks are in place to encourage the essential future investment in energy distribution and transmission networks."

SSE is planning to stage a presentation for institutional analysts on its energy networks businesses, the details of which will be confirmed in the New Year.

 

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