Energy Networks Association (ENA) Chief Executive David Smith has hit back at critics who accused network companies of making “excessive returns”.

Writing in Utility Week, Smith responded to criticism of his members from Citizens Advice, which followed the publication of Ofgem’s latest Revenue = Incentives + Innovation + Outputs (RIIO) report.

“As tightly regulated companies, networks are the most transparent part of the energy industry and the latest Ofgem reports provide clarity and detail on what networks are spending and the value that customers are getting for their money,” he said.

“We welcome this transparency and the open discussion around how future price controls can continue to drive performance.”

Need for clarity

Smith added: “However there needs to be clarity around some of the immediate responses to the publication of the Ofgem reports, particularly around returns.

“We need to be clear that levels of return are incentive based and dependent on companies providing a very high level of service for customers. The better networks perform the greater the benefit to the customer.

“It should also be recognised that there is uncertainty inherent in the type of long-term forecast used in the Ofgem’s annual report, so it is far too early to speculate on the future profitability of network companies and what the end of price control rate of returns will be.”

> Read Smith's comments in Utility Week