Ofgem’s approach to energy network mergers and statement of methods - decision
Summary
Ofgem finalises its approach to assessing energy network mergers under the special regime created by the Energy Act 2023. The statement of methods sets criteria for evaluating how mergers between same-type network companies (transmission-transmission, distribution-distribution) affect Ofgem's ability to make regulatory comparisons. This applies when network enterprises cease to be distinct through merger.
Why it matters
Creates regulatory framework for network consolidation that could reduce benchmarking effectiveness. As such, this enables network mergers while attempting to preserve comparative regulation — a tension given that fewer comparators weakens price control effectiveness.
Key facts
- •Energy Act 2023 introduced special merger regime for energy networks
- •Applies to mergers between same-type network enterprises (transmission-transmission, distribution-distribution)
- •Ofgem required to prepare statement of methods for assessing merger impacts on regulatory comparisons
- •Decision published 3 April 2024 following statutory consultation
Timeline
Areas affected
Related programmes
Memo
Ofgem’s approach to energy network mergers and statement of methods - decision | Ofgem Please enable JavaScript in your web browser to get the best experience. BETA This site is currently in BETA. Help us improve by giving us your feedback . Close alert: Ofgem’s approach to energy network mergers and statement of methods - decision Publication type: Decision Publication date: 3 April 2024 Decision for: Ofgem’s approach to energy network mergers and statement of methods Print this page Share the page Share on Facebook Share on Twitter Share on LinkedIn The Energy Act 2023 has introduced into the Enterprise Act 2002 a special merger regime applicable to relevant merger situations where two or more of the enterprises that cease to be distinct are energy network enterprises of the same type. Under the amended Enterprise Act 2002, Ofgem is required to prepare a statement of methods, which sets out the criteria we will use to assess the impact of a merger on our ability to make comparisons and the weighting applied to those criteria. This document sets out the decision on our approach to energy network mergers and statement of methods under the new special merger regime introduced under the Energy Act 2023. Our decision takes into account the formal responses we received to our statutory consultation on our approach to energy networks mergers and statement of methods. We are publishing the non-confidential responses alongside the original consultation document. Main document Approach to Energy Networks Mergers and Statement of Methods decision [PDF, 442.63KB] Subsidiary documents Ofgem Special Merger Consultation Response Matrix [PDF, 387.03KB] Print this page Share the page Share on Facebook Share on Twitter Share on LinkedIn Close