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Ofgem has opened a consultation on proposed incentives to encourage gas distribution networks (GDN) to exceed their obligations for connecting fuel poor homes to the gas networks.
Under the proposals, the Non Gas Fuel Poor Network Extension Scheme incentive mechanism will award GDNs 2.5 per cent of the costs of connecting fuel poor households to the network above their current obligations from the 1 April 2016.
GDNs that exceed their obligations will be rewarded during the next price control period.
GDNs will also be penalised by 2.5 per cent of the avoided costs of the connections they have not delivered against the target.
Networks that fail to meet their obligations may also be required to meet the shortfall during the next price control period.
Ofgem committed to introducing the incentive mechanism in September following a review of the Non Gas Fuel Poor Network Extension Scheme in August 2014.
Ofgem also increased the number of connections required during the current price control period RIIOGD1 by 18 per cent to 91,203, up from 77,450.
It also increased the total expenditure allowance by £17.6 million to facilitate the additional connections.
The consultation closes on 30 November.
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