Ofgem proposes cutting energy companies’ returns by half

Britain’s energy regulator is proposing to cut in half the returns large energy companies such as National Grid and SSE are allowed to make to cover their costs of maintaining and improving electricity and gas networks. Ofgem’s announcement on Thursday sparked outcry from network companies, which warned that lower returns would risk their ability to deliver reliable services and to ensure Britain’s energy system could cope with the big changes required to deliver the government’s 2050 net zero emissions target. Ofgem said that from April 2021, it plans to set baseline returns companies such as National Grid, SSE, ScottishPower and Cadent are allowed to make at 3.95 per cent, which would mark a record low and compares with returns of 7-8 per cent under the current regulatory regime.