CMA final determination for RIIO-2 appeals
28 October 2021
National Grid plc
CMA publishes final determination for the RIIO-2 price control appeals
The CMA has published its final determination in relation to the RIIO-2 price control appeals this morning.
We are pleased that, in line with its preliminary determination in August, the CMA has found in favour of the technical arguments on the outperformance wedge and that it has therefore directed Ofgem to remove the outperformance wedge from the price control. We are disappointed that the CMA has not found in favour on the cost of equity. We will review the detailed documents to understand the CMA's rationale for this final determination, which we expect to be published next week.
We anticipate that revenues will be increased from 2022/23 onwards to reflect the CMA's decision to remove the outperformance wedge.
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Many of these assumptions, risks and uncertainties relate to factors that are beyond National Grid's ability to control, predict or estimate precisely, such as changes in laws or regulations, including any arising as a result of the United Kingdom's exit from the European Union, announcements from and decisions by governmental bodies or regulators, including the implementation of the RIIO-2 price controls as well as economic uncertainty following the COVID-19 pandemic; the timing of construction and delivery by third parties of new generation projects requiring connection; breaches of, or changes in, environmental, climate change and health and safety laws or regulations, including breaches or other incidents arising from the potentially harmful nature of its activities; network failure or interruption, the inability to carry out critical non network operations and damage to infrastructure, due to adverse weather conditions including the impact of major storms as well as the results of climate change, due to counterparties being unable to deliver physical commodities, or due to the failure of or unauthorised access to or deliberate breaches of National Grid's IT systems and supporting technology; failure to adequately forecast and respond to disruptions in energy supply; performance against regulatory targets and standards and against National Grid's peers with the aim of delivering stakeholder expectations regarding costs and efficiency savings, as well as against targets and standards designed to deliver net zero; and customers and counterparties (including financial institutions) failing to perform their obligations to the Company. 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