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Capita Contests £24m Ofgem Cost Proposal

Ofgem has proposed disallowing up to £24m of costs at Capita's Smart DCC subsidiary, below last year's draft. Capita will contest it, and the unit sits outside its group accounts.

Capita (LON: CPI), the UK outsourcing and business-services group, said before the London open today that Ofgem has proposed disallowing up to £24m of costs at its Smart DCC subsidiary for regulatory year 2025/26. Capita says it will contest the figure.

The shares were up 1.05% at 267.27p at 9.46am, against yesterday’s close of 264.5p, in a day range of 265p to 276.5p. That is a delayed quote, not a close. It sits above the three-month low of 196.2p on the 6th of October and below the closing high of 304p on the 20th of October.

CPI.LSE

Ofgem, the energy regulator that sets and audits the Smart DCC price control, has opened a consultation on the draft decision. Smart DCC held the smart-meter communications licence, and its network connects more than 39.2m meters across 23m homes and small businesses.

Capita says the process is part of the usual regulatory framework. Its statement to the market said:

As in previous years, Smart DCC Limited will engage constructively with Ofgem during the consultation period to seek a reduction to the level of disallowed costs, ahead of the final price determination in Q1 2027.

Capita plc

The £24m is below the £31m in last year’s draft, a cut of about £7m, or roughly 23%. A draft determination is Ofgem’s provisional decision, open to challenge. Proactive Investors reports the consultation closes on the 8th of January.

Line chart of Capita's share price in pence from late July to 10 November 2026, with a band marking 10 November when Ofgem proposed disallowing part of Smart DCC costs.
Capita share price, late July to 10 November; last point is a morning quote, not a close.

Smart DCC Limited is a wholly-owned subsidiary whose results are kept out of Capita’s group accounts. The licensed business has recently moved to a not-for-profit structure, meaning the holder no longer earns a profit margin. The licence reportedly passed to DCC2 Ltd on the 2nd of November.

Capita has not said how any disallowed cost would reach the group, so the direct effect is unclear. The open questions are the final figure and how any cost lands, with Ofgem’s final decision due in the first quarter of 2027.

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