The price control that applied to the Gas Distribution Networks (GDNs) since 1 April 2002 expired on 31 March 2007. The Gas Distribution Price Control Review (GDPCR) reset the price control, which specifies the maximum revenue that a network can recover from its customers for a specific time period. The output of the review is displayed on this page and includes:
· An extension of the existing gas distribution price control for one year from 1 April 2007 to 31 March 2008. This was completed in December 2006, in the GDPCR One Year Extension Final Proposals;
· The gas distribution price control for the next price control period from 1 April 2008 to 31 March 2013. This was completed in December 2007, in the Gas Distribution Price Control Review Final Proposals Consultation Document;
· The introduction of a cost reporting framework to apply from 2007-08 onwards; and
· A review of the framework for ensuring the quality of service that customers receive from the GDNs
Our final proposals, which are the culmination of two years work, have been built up from detailed analysis based on GDNs’ actual costs. We have used this, together with further analysis and judgements about the efficient level of cost which GDNs will incur over the next five years, to reach a view on the appropriate level of allowed revenue. We are satisfied that our final proposals are a package that, including the associated incentives, fulfils our principal objective and allows GDNs to finance their activities.
GDNs in total will be allowed to recover on average £2,470 million (in 2005-06 prices) for each of the next five years. This is equivalent to a 2 per cent increase above the rate of inflation (or RPI+2). For the average domestic customer this represents a real increase of approximately £2 per annum. This is the first time, following the sale of four of the GDNs by NGG in 2005, that we have been able to make use of meaningful comparisons between GDNs. At the next review in five years time we expect the importance of benchmarking to increase still further. In the meantime we are confident that our ability to establish benchmarks based on comparisons of separately-owned GDNs has allowed us to set revenue allowances at a significantly lower level than would otherwise have been the case.