National Grid (LON:NG) has responded to Ofgem’s sector specific consultation documents for UK transmission businesses, urging the watchdog to adopt the concept of incentivisation to deliver innovation and efficiency. The move came after the regulator published consultation documents in December as part of the ongoing RIIO (Revenues = Incentives + Innovation + Outputs) 2 regulatory process which relates to gas distribution and gas and electricity transmission price controls.
National Grid’s share price has been little changed in London in today’s session, having inched 0.01 percent higher to 873.90p as of 13:58 GMT. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.57 percent higher at 7,226.41 points. The group’s shares have added more than 13 percent to their value over the past year, as compared with about a one-percent gain in the Footsie.
NG responds to Ofgem’s consultation
National Grid announced in a statement today that it had submitted its response to Ofgem on the sector specific methodology consultation for RIIO-T2, noting that it had outlined “the importance of a framework that fairly reflects the risk-return balance for consumers and investors alike”.
The company further said that it was encouraging the energy regulator “to re-embrace the concept of incentivisation to deliver innovation and efficiency,” arguing that incentive-based regulation had driven at least £15 billion of consumer value in electricity transmission over the last 25 years.
Analysts on FTSE 100 utility group
The 15 analysts offering 12-month price targets for National Grid for the Financial Times have a median target of 930.00p on the shares, with a high estimate of 1,030.00p and a low estimate of 800.00p. As of March 9, the consensus forecast amongst 18 polled investment analysts covering the blue-chip group has it that the company will outperform the market.