PA Consulting energy regulation expert Mark Fitch is quoted in an article discussing Ofgem’s plans to introduce new protections against windfall gains by energy networks as part of the RIIO2 price controls.
The article says that the regulator says the measures, referred to as return adjustment mechanisms, will help maintain the legitimacy of the price controls by ensuring network returns do not exceed its expectations by too much.
Mark warned that return adjustment mechanisms could “dampen the spirit of the companies to go all out for higher levels of performance”.
He goes on to say: “Network operators who are nearing the thresholds for adjustment could be encouraged to delay or defer actions to allow them to reap more of the benefits.”
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