35p a year

Dear Office of Gas and Electricity Markets,

In your press release just published is the following
=====================
Ofgem is today consulting on proposals which include £2.9bn of
investment with up to a further £4.7bn available over the course of
the price control period (April 1 2013 – 2021). The investment is
part of Ofgem’s decision for SP Transmission Ltd (SPTL) and
Scottish Hydro Electric Transmission Ltd (SHETL) to be the first
companies fast-tracked under the new RIIO price control framework.
Alistair Buchanan, Chief Executive Officer at Ofgem stated that:
“Today is a very significant moment for three reasons. Firstly, it
forms a key part of implementing the £200bn investment identified
in Project Discovery to protect our security of supply. Secondly,
the upgraded network will greatly assist connections to renewable
generators. Finally, our brand new RIIO model to setting price
controls shows how we are cutting red tape.”
Today’s announcement provides good value for consumers, delivering
essential upgrades to Scotland’s transmission network at the lowest
cost to consumers. Ofgem estimates
the cost to consumers’ bills is 35 pence a year over the eight-year
period of the price control, 2013 – 2021.

=============================

I'm particularly interested in how the 35 pence a year is
calculated.

Assuming the households cover the entire UK, that is 30 million
units.

8 × 0.35 × 30 million = 84 million

So for the FOI requests.

Please supply detailed calculations of how the 7.6 billion gets to
35p a year per household.

Please supply details of who is paying the rest of the money.

Yours faithfully,

Nick Leaton

Dear Office of Gas and Electricity Markets,

Please pass this on to the person who conducts Freedom of
Information reviews.

I am writing to request an internal review of Office of Gas and
Electricity Markets's handling of my FOI request '35p a year'.

The reply does not contain details on how the 35p is calculated.

Let me put the calculation another way to show why the 35p claim is
relevant.

From the spreadsheet, there are two rates, 3.25% for debt, and 7%
for equity funding of the 7.6 billion cost.

That leads to repayment costs of 342 million, or 570 million a year
assuming a 40 year payback time.

If the cost is 35p a year, then we can divide 342 million by 0.35
to get the number of households paying the extra 35p a year. It is
one trillion for debt, and 1.6 trillion for equity.

In other words your calculations are wrong.

Having gone through the spreadsheet, there is no 35p figure to be
found.

The calculation hasn't been provided.

I would like a review and a detailed response as to how the 7.6
billion cost results in a 35p a year increase in bills. The initial
response fails to provide it.

A full history of my FOI request and all correspondence is
available on the Internet at this address:
http://www.whatdotheyknow.com/request/35...

Yours faithfully,

Nick Leaton

Dear Paul Kitcher,

I'll take you up on your offer of help with the spreadsheet.

Which cell has the 35p result in it that you have used?

In the documents you've linked to, I've searched them for the 35p
figure too. They aren't there.

I've produced a simple calculation to show that the costs of 5.6 bn
or 7.6 bn, cannot be funded (even interest only), from 35p per
annum, from just Scottish, or even UK customers.

Hence I don't believe your calculations and it seems you are having
difficulty pointing out where they are in the spreadsheet.

On the pages you have referenced, again there is no mention that I
can see of the 35p, or how it is derived.

How about a contact number / email for the person who built the
model? Then I can deal with them direct.

Yours sincerely,

Nick Leaton

Dear Paul Kitcher,

I'll take you up on your offer of help with the spreadsheet.

Which cell has the 35p result in it that you have used?

In the documents you've linked to, I've searched them for the 35p
figure too. They aren't there.

I've produced a simple calculation to show that the costs of 5.6 bn
or 7.6 bn, cannot be funded (even interest only), from 35p per
annum, from just Scottish, or even UK customers.

Hence I don't believe your calculations and it seems you are having
difficulty pointing out where they are in the spreadsheet.

On the pages you have referenced, again there is no mention that I
can see of the 35p, or how it is derived.

How about a contact number / email for the person who built the
model? Then I can deal with them direct.

Yours sincerely,

Nick Leaton