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Ofgem has cut £11.278 million of “unacceptable costs” from the Data and Communications Company’s (DCC) forecasted costs to deliver the network underpinning the smart meter rollout, which would otherwise have been passed on to users of the network.
The cut is £0.422 million less than Ofgem originally proposed as it has concluded that some costs are justified after receiving “positive feedback” from stakeholders in the industry consultation on the DCC’s engagement.
Ofgem has also cut £0.409 million of internal costs for 2014-15 as it said the DCC has not provided enough justification for the extra expense.
The DCC disagreed with Ofgem’s findings in January that it failed to justify the added cost, saying it reported in “considerable detail on how the dramatic changes in the DCC programme have impacted the evolution of our costs.”
However Ofgem has increased the baseline margin by £0.483 million in recognition of the DCC’s increasing role and the “complexities of dependencies it is now managing”.
Ofgem said it is possible that the DCC may be able to justify some of the extra costs in future.
The DCC’s latest total cost forecast is £1.996 billion for its licence period up to 2026.
A DCC spokesperson said: “Ofgem has approved the vast majority of our spending and the quality of information we provided. We are fully committed to making improvements to our internal policies and procedures, based on findings from Ofgem’s audit review.
“We will continue to focus on making significant progress towards the development and delivery of the smart metering solution.”
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