Pension deficit funding policy consultation

Publication date
21st May 2015
Closing date
16th July 2015
Policy areas
Status

All regulated energy network operators (NWOs) operate defined benefit pension schemes. These schemes are a substantial expense to consumers and we believe it is appropriate to review our policy towards them. This document seeks views on our proposed model of regulation.

Ofgem's decision document outlining our current approach to pension costs was published in June 2010. A number of years have now passed and the second Pensions Reasonableness Review has just been completed, therefore we believe that now is an appropriate time to review this policy. Our current policy provides pass-through funding by consumers of Established Deficits (those for service before the cut-off dates) over a 15-year funding period.

Our policy intends to protect the interests of future and existing consumers and in doing so, ensure that NWOs are subject to the same incentive pressures as the broader market. We believe there is scope to improve our policy to better achieve these goals and we are issuing this consultation document to seek input into the best way to achieve this.