LONDON - Wales & West Utilities Limited (WWU) has released its business plan for the upcoming RIIO-GD3 regulatory control period, set to span from April 1, 2026, to March 31, 2031. The plan, now available on the WWU website, outlines the company's strategies and financial projections for maintaining and enhancing its gas distribution network.
WWU's CEO, Graham Edwards, emphasized the company's commitment to delivering a safe and reliable network, with a focus on innovation and high standards. The plan assumes revenue allowances will cover operating, financial, and investment expenditures, projecting a significant increase in total expenditure (Totex), 96% of which is mandatory for maintaining safety, reliability, and customer service.
Key financial details include a projected increase in the network distribution charge component of the average annual residential customer bill by £91, representing an 11.5% rise of the total gas bill (excluding VAT). This increase is attributed to policy decisions by the Office of Gas and Electricity Markets (Ofgem) regarding the cost of capital and Regulatory Asset Value (RAV) depreciation, as well as the higher Totex.
WWU also provided two versions of the plan as required by Ofgem, with one ("Ofgem Notional Company") considered financeable for RIIO-GD3, albeit with reservations, and the other ("Ofgem Actual Company") not financeable due to the assumed cost of capital being too low.
The company acknowledges considerable uncertainties that could affect the final revenue allowances for RIIO-GD3, including the outcome of a Judicial Review against the Competition and Markets Authority's Final Determination of WWU's RIIO-GD2 appeal and the impact of the UK's Net Zero Carbon 2050 target. Despite these uncertainties, WWU's operational strength, regulatory compliance, and shareholder support, including £344 million in equity support in 2023, are expected to underpin its strong credit rating and support its debt programme in the coming years.
The information is based on a press release statement and reflects the company's current position and expectations for the next regulatory period.
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