Citizens Advice response to UK Regulators Network (UKRN) cost of capital review of guidance consultation

Citizens Advice response to UKRN cost of capital consultation 197 KB

Citizens Advice welcomes the opportunity to respond to this consultation as part of its statutory role to represent energy consumers in Great Britain. Our response is not confidential and may be freely published. Citizens Advice agrees with a large part of the UKRN Consultation, particularly the aims to increase transparency and consistency across regulators when setting the cost of capital. We also support many of the recommendations, which we set out below. However, Citizens Advice is concerned that the consultation approach may not provide an opportunity for outcomes to strike a fair balance between the interests of consumers and investors. This is because the recommendations largely replicate the 2023 original draft guidance, which reflect the significant asymmetries between consumers and investors. 

We welcome the review of the TMR approach and ask the UKRN to ensure consumer perspectives are factored into the guidance. However, we do not support the proposal to introduce stable ERP estimates. This would be a significant change in regulatory precedent and would require compelling evidence. However, we do not believe there is sufficient evidence to justify a change