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<p>Government expects network companies to work with Ofgem, the independent regulator,
to ensure a settlement for the upcoming set of energy network price controls which
is fair to investors and consumers, including in relation to Government’s net zero
and clean growth ambitions. Network regulation is a matter for Ofgem. By law, Government
has no role in this process.</p><p> </p><p>Ofgem has recently taken steps in this
regard. In August 2019 Ofgem published an open letter, asking network companies across
all sectors to clearly propose and evidence how their business plans for the next
price controls are able to adapt to support delivery of the net zero target. Final
business plans for electricity transmission will be submitted to Ofgem in December,
with determinations to be made by the regulator in 2020 ahead of those new price controls
starting in April 2021.</p><p> </p><p>Ofgem has also published an open letter consultation
on the proposed framework for the next electricity distribution price control starting
two years later in April 2023. In this letter Ofgem states it is considering including
a more direct link between network company revenues and the achievement of outcomes
outside the delivery of traditional network services, for example the decarbonisation
of transport and/or heat. Ofgem expects to confirm its decision on the framework that
will apply in December, with further detailed consultation of key regulatory policy
areas and approaches, including decarbonisation, scheduled for 2020.</p>
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