‘the court should be very slow to impugn decisions of fact made by an expert and experienced decision-maker, it must surely be even slower to impugn his educated prophesies and predictions for the future.’
‘…allowing for a pass through for each individual network’s debt costs subject to an efficiency check would expose each network’s customers to that network’s decisions on debt type, tenor, timing and risk management. We consider it more appropriate that a network company’s shareholders are instead exposed to these risks, in common with corporates in the broader market.’ 14.82 As Ofwat explained (see 14.72 above), a notional company approach incentivises companies to secure efficient costs of finance and protects customers from the risks of companies’ financing decisions; the notional approach reflects the principle that companies and their investors are best placed to bear the risks associated with their borrowing choices. It is therefore unsurprising that the notional company approach has been used in a variety of regulatory contexts. 14.83 We asked WWU in its hearing to reconcile the elements of its case set out at paragraphs 14.20(a) and 14.24(a) above (that GEMA is not required to indemnify licence holders but that its financeability obligations are mandatory). WWU initially said that GEMA had enforcement sanctions available to it and would be expected to take action under the relevant condition. We did not find that a convincing explanation because adopting WWU’s proposed interpretation of the financing requirement would mean that GEMA would in fact be in breach of its duty if a situation were to arise in which enforcement sanctions became necessary. 14.84 WWU later appeared to accept that GEMA could be said to have discharged its financeability duty even in a situation where a licence holder ultimately could not finance its activities: It may be that there are circumstances in which Ofgem has fulfilled that duty by putting a company in [a] position in which it is able to finance its activities, but nonetheless through some default – corporate fraud, for instance, or some other serious failing – the company does not finance its activities. Not because of an Ofgem failure of duty but because of the company's failure itself. 14.85 In its response to the provisional determination, WWU said that the two positions could be reconciled on the basis that GEMA was only required to put licence holders in a position whereby they were able to finance their activities. WWU then described the position of ‘being able’ as meaning ‘… by allowing them to recover all reasonable costs’
“We consulted on two possible options regarding the structure of the appeals mechanism – an adjudicative approach and investigatory approach. In practice, both types of appeal follow similar processes in so far as the appeal body would consider evidence submitted by the appellant, Ofgem, and potentially other parties, and weigh up the arguments and evidence to reach a decision. The appeal body would have the power to require the submission of information and to hold hearings. However, an investigative appeal would be more in-depth and longer. Therefore there may be a greater cost on business, Ofgem and the CC as they may require more time, legal resources and documentation. There may also be further duplication of Ofgem’s work due to additional analysis and consultation. However, an investigative appeal would allow for greater scrutiny of the economic considerations that underpin the regulator’s decision, which go to the heart of a business operation. Price control arrangements are mainly contained in special licence conditions and apply to individual network companies. Due to the complex nature of these decisions and the significant impact they have on companies, the government has decided that they should be subject more in-depth scrutiny. This was also the view of the majority of respondents to the consultation. While taking an in-depth, investigative approach to price controls seems likely to make these appeals more expensive, it would ensure a thorough review of decisions very fundamental to monopoly companies' financial positions. Appeals against standard licence condition modification decisions will follow an adjudicative process. The government will allow parties to appeal individual elements of a price control as this may reduce the cost of appealing. However, as price control decisions are essentially a package of balancing measures, there is the potential that the upholding of an appeal on a single element could have a knock-on effect on other elements of the package and upset the balance of the package. The CC would therefore have discretion to consider additional elements or the whole package of the price control decision if the evidence submitted shows that reviewing individual elements is likely to upset the balance of the whole package. . . . The government intends to introduce a carefully defined right of appeal on the merits, in relation to the specified grounds. We believe that this balances the costs and benefits of the different options best. This grounds would be broadly similar to those contained in theEnergy Act 2004 which provides the procedure for reviewing amendments to industry codes.”
“This duty to further the principal objective incorporates the matters which form the regulators’ existing primary duties. The Authority must have regard to the need to secure that all reasonable demands for the relevant utility are met. In the case of gas, this duty applies to the extent that it is economically feasible for demand to be met. Likewise, the Authority must recognise that, to the extent that the utilities legislation places obligations on utility companies (whether directly, through licence conditions or otherwise), such companies must be able to finance those obligations.”
“At such times as the Authority may direct, each of those licence holders must give the Authority such information as the Authority may direct with respect to the levels of compliance with the standards which the licence holder has achieved.”
“A person exercising any of those functions must, in exercising the function, have regard to any guidance given to the person by the Secretary of State for the purpose of subsection (1)”, which was itself concerned with the duty to make arrangements with respect to the “need to safeguard and promote the welfare of children who are in the United Kingdom”
“We agreed with GEMA that financing choices, and the risk and rewards that come from those choices, sit most appropriately with companies and their owners”