Ofgem has provisionally proposed disallowing up to £24 million of costs at Capita's Smart Data Communications Company, known as Smart DCC, for the regulatory year 2025/26. The energy regulator published its draft determination on Tuesday, 10 November 2026, and opened a consultation on the proposal.

Capita said Smart DCC would engage with Ofgem during the consultation to seek a reduction in the disallowed amount. A final determination is expected in the first quarter of 2027.

What Ofgem has proposed

Smart DCC is the central communications body responsible for managing communications and data transfer for Great Britain's smart meter network. It holds the Smart Meter Communication Licence, and its network connects more than 39.2 million meters across 23 million homes and small businesses.

The price control arrangements limit what Smart DCC can recover through its charges, so that the costs it incurs are economic and efficient. Ofgem's draft determination is the regulator's provisional view, and the consultation gives stakeholders a chance to submit further evidence and challenge its conclusions.

The proposed disallowance of up to £24 million for 2025/26 is lower than the draft disallowance of £31 million proposed for 2024/25. Capita noted that difference in its response, while making clear that it will still argue for a lower figure this time.

What Capita said

In a statement on 10 November, Capita said: “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 also said the draft determination and consultation form part of the usual regulatory framework governing the Smart DCC contract. The company stressed that Smart DCC Limited is a wholly owned subsidiary of the group which is not consolidated into the group's financial statements, so the direct effect on Capita's reported group figures is limited.

Why the figure matters

Although the £24 million figure is provisional, it matters for two reasons. First, it sets the starting point for the final determination, and any reduction Capita secures during consultation would lower the amount ultimately disallowed. Second, the process is repeated each year, so the outcome helps shape how Smart DCC manages costs and how Ofgem assesses them in future years.

For households, the immediate effect is limited. The price control is designed to protect bill payers by preventing inefficient costs from being passed through in charges, and the consultation process is part of that safeguard. The final figure, once Ofgem publishes it early next year, will show how much of the proposed disallowance survived challenge.

Investors will watch the consultation for any sign of how far Ofgem is willing to move from its draft position. For now, the proposal is exactly that — a draft, open to evidence and argument, with the final decision still to come.