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Wales & West Utilities Staff News

Dear Member,

In this update you will find information regarding the following:-

• OFGEM Review of Pension Principles - delegation report
• Third and Final Consultation Document - OFGEM's "minded to" proposals

OFGEM Review of Pension Principles - delegation report

On 5 October a delegation from the trade unions including Mike Jeram, National Secretary UNISON, Ellis Broderick a GMB member and Trustee of the Gas Pension scheme and Mike Clancy Deputy General Secretary of Prospect met the Regulator Alistair Buchanan and Steve Smith who leads OFGEM's regulatory review team to discuss the submissions we had made on the second OFGEM consultation on Pension Principles. The UNISON submission was circulated with the last bulletin.

The trade unions stated that we respected OFGEM's duty to protect customers' interests but could not understand why OFGEM was spending so much time on this issue especially as the report that report they had commissioned from the Government Actuary's Department (GAD) gave the pension schemes a pretty good bill of health.

The unions expressed concern that not enough recognition was being shown for the steps already taken to contain costs e.g. all but one of the DB schemes are closed to new entrants, and the proposals in the consultation could increase pension administration cost e.g. by requiring more actuarial valuations. We also pointed out that all the DB schemes were protected by law or rule or both and that it is not in the companies' gift to change the schemes without agreement. We also pointed out that the review was having an unsettling effect on the already fragile industrial relations climate in the sector. Continues...

To obtain a copy of the FULL report please click here [word document]

Third and Final Consultation Document - OFGEM's "minded to" proposals

OFGEM has now published its "minded to" proposals in its third and final consultation document on its review of the Price Control Pension Principles. Comments are invited by 13 November. A copy of the consultation document can be downloaded from the OFGEM website - go to www.ofgem.gov.uk and follow links to live consultations.

OFGEM has rejected the argument put forward by the unions, trustees and companies that there is no need to change the current arrangements.

The changes that OFGEM proposes are based on its view that the costs of repairing scheme deficits and those of funding ongoing pension contributions should be separated and treated differently.

For ongoing costs OFGEM is minded to benchmark total employment costs (including pensions) against total costs to set revenue allowances in all future price controls. However in terms of the current review of the electricity networks formula OFGEM concedes that it is too late in the process to introduce this mechanism. They are prepared to allow the companies' forecast ongoing pension costs but to include an incentive so that they will benefit if they achieve actual pension costs below their forecasts. Continues...

To obtain a copy of this second bulletin please click here [word document]

Members are reminded that they can contact their local representative to express their views or to forward any questions. Alternatively, please feel free to email us at queries@unisoncymruwalesgas.org.ukuk - other contact methods may also be found at the bottom of this message.

Regards,

Unison Cymru/Wales Gas

Contact us with your queries:

• by email - queries@unisoncymruwalesgas.org.uk
• by speaking with your local UNISON representative - click here
• or online - click here


All communication will be dealt by a UNISON representative
and will be treated confidentially.

In the last update we reported on the following:-

• OFGEM Pension Review- UNISON Submission

To find out more about the above, please visit our website or click here

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