28 June 2004 00:00 Central Networks says further negotiations required after Ofgem publishes initial price control proposals

Central Networks is to enter into further negotiations with regulator Ofgem over its planned £1.3bn investment to improve the electricity network for the East and West Midlands.

The company, formed by the merger of East Midlands Electricity and Midlands Electricity earlier this year, presented its plans for 2005-10 to Ofgem, the industry regulator, earlier this year.

As a directly regulated business, levels of spending by Central Networks are tightly controlled by Ofgem, which sets the allowed investment and operating costs for electricity distribution companies.

The Central Networks proposals call for investment in the region to increase by £100m a year between 2005 and 2010.

Bob Taylor, Managing Director of Central Networks, said: “The simple fact is that we need to be allowed to invest at these levels if our customers are to have a reliable distribution network for the 21st-century.

“In the past, as a result of previous distribution spending controls, our region has suffered from the lowest investment levels, for its size, in the country.

“This means that, if we aren’t allowed to increase our investment levels, some of our vital assets will have to last for over 100 years.”

If Central Networks’ spending plans are approved it could result in small increases in electricity bills for customers of around £5 a year by 2010.

“I think if you asked most people whether they’d like a more reliable electricity service in exchange for 10p a week, they’d probably say yes,” said Bob.

“Our goal is to efficiently offer customers the service they want and we intend to do this through increased network investment and improved operations.”

According to Central Networks, Ofgem’s initial response to the company’s investment and operating plans has acknowledged that further investment may be required but falls short of the levels required to sustain a reliable service.

This is the first of three sets of proposals from Ofgem, so negotiations will continue with the regulator. The final spending levels for Central Networks for 2005 to 2010 are expected to be set by Ofgem in by the end of the year.

Ends

Notes to editors:
•All electricity distribution businesses are regulated by the Government through Ofgem, with the amount of capital expenditure and operating costs for the network fixed by the regulator;
•Central Networks is the new name for Midlands Electricity and East Midlands Electricity. The company brings power to 4.8 million customers across the East and West Midlands through 133,000km of underground and overhead cables and via almost 97,000 substations;
•Central Networks covers an area from the Peak District in the north to the suburbs of Bristol in the south, and from the Welsh Borders to the Lincolnshire Coast.

For further information contact:
Jonathan Smith on 024 7642 5741
Rebecca Middleton on 024 7642 5779
Rebecca Jackson on 024 7642 4583
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