Ofgem final decision on DCC cost allowances
Summary by AI BETAClose X
In November 2025, Ofgem consulted on the proposals for the Data Communications Company (DCC) Price Control submission for the Regulatory Year 24/25 (RY24/25).
Today (Wednesday 11 March 2026), Ofgem is publishing its final decision in regard to both consultations.
DCC is the central communications body appointed to manage communications and data transfer for smart metering and holds the Smart Meter Communication Licence.
Price Control arrangements restrict DCC's revenues to ensure that costs incurred are economic and efficient. Ofgem proposes to disallow incurred costs of £11.245m for Regulatory Year 2024/25.
Ofgem's decision is explained in more detail in the following Executive Summary, also attached in PDF format:
Executive summary
DCC performs a critical role in the energy market, and it is essential that it is funded to deliver high‑quality, value‑for‑money services. It is through the Price Control that Ofgem seeks to strike the right balance between enabling necessary investment to maintain and improve service quality and ensuring that DCC operates economically and efficiently.
The assessment of DCC's costs is carried out in accordance with the principles set out in our Price Control Guidance.2 This Decision Document sets out3 our final determinations for the DCC Price Control for Regulatory Year 2024/25 (RY24/25). 4 It includes our conclusions on internal and external costs, performance incentives, adjustments to Baseline Margin values, and the External Contract Gain Share mechanism. Our decisions are informed by our initial assessment, the consultation published in November 2025, the responses received from seven stakeholders, and additional evidence provided throughout the process.
At the consultation stage, we identified several areas of Unacceptable Costs and proposed a disallowance of £30.841m. Following consultation, stakeholders have provided a range of new information and views, and DCC has provided additional credible evidence demonstrating that some of these costs were incurred economically and efficiently. We have therefore revised our decision on disallowances downwards where appropriate, while maintaining the view that some areas of cost remain unacceptable.
In line with the Licence, we have examined whether such costs should be disallowed or addressed through undertakings from DCC. Under LC37.8-37.9, we may accept or reject an undertaking and expect any such proposal to deliver outcomes equivalent to, or better than, a disallowance. We have decided to accept one of the three undertakings, in lieu of a disallowance in order to drive supply chain efficiencies. We are exercising our right under the Licence to accept this undertaking, and we have determined that doing so will deliver the greatest long‑term benefit to consumers.
Considering all adjustments together, our final decision for RY24/25 is to disallow
£11.245m.
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