UK Utilities Called Upon to Return Billions Paid Due to Regulatory 'Blunder'

Data : 30/05/2019 @ 11:56
Fonte : Dow Jones News
Titolo : Severn Trent Plc (SVT)
Quotazione : 2579.0  -4.0 (-0.15%) @ 17:35
Quotazione Severn Trent Grafico

UK Utilities Called Upon to Return Billions Paid Due to Regulatory 'Blunder'

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--Consumer charity Citizen's Advice has called on utility companies to pay compensation for excessive fees

--Citizen's Advice claims consumers overpaid GBP24 billion in the last fifteen years due to regulatory errors in setting price controls

--U.K. utility companies are currently facing increased regulation and the threat of renationalization under a potential Labour government

 

By Adam Clark

 

The U.K's under-pressure utilities companies face a fresh threat after consumer charity Citizen's Advice said they should pay compensation for billions of pounds worth of excessive bills due to errors by regulators.

Citizen's Advice said Thursday it had calculated water, energy, broadband and telephone networks overcharged customers a collective 24 billion pounds ($30 billion) over the last fifteen years because regulators made errors in setting price controls.

Forecasting errors over debt costs and investor risk led to GBP13 billion in overpayments in the water industry and GBP11 billion in the energy sector, according to Citizen's Advice.

"Companies need to play their part in putting this multi-billion pound blunder right. They must compensate customers where they have been paying over the odds. If they don't government needs to intervene," Gillian Guy, chief executive of Citizen's Advice, said.

British utility stocks are already being weighed down by increased regulation and the threat of renationalization. At the start of this year, energy regulator Ofgem brought in a price cap after the ruling Conservative government promised to tackle "rip-off" fees. Jeremy Corbyn, leader of the opposition Labour party, has said he would nationalize water, electricity and gas companies.

British regulators said they had already set out plans to cut consumer costs.

"While we do not agree with Citizens Advice's estimate of excess profits, we welcome their report and recommendations. We will continue to work closely with them and wider stakeholders to apply lessons learnt from previous price controls for the next price control period. Our plans include the lowest ever returns for investors in energy networks which would cut costs for consumers by GBP6 billion," Ofgem said.

Water regulator Ofwat also said it welcomed the report and it has made changes to the way it sets the cost of capital.

"As we set the price review for the five years from 2020 we expect to see prices continue to fall before inflation and a step change in performance for customers and the environment," Ofwat said.

 

Write to Adam Clark at adam.clark@dowjones.com; @AdamDowJones

 

(END) Dow Jones Newswires

May 30, 2019 05:41 ET (09:41 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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