RIIO-T2 built on the learning from RIIO-T1
Under this regulatory framework, we have to deliver a set of outputs that we agreed with stakeholders such as -
- meeting the needs of consumers and network users,
- maintaining a safe and reliable network and
- delivering an environmentally sustainable network
We also forecasted how much work was required to connect new customers and to maintain the assets on the electricity network as part of our business plans submitted. Through a process with Ofgem, our regulator, we agreed the volumes of work and costs associated tomdeliver these outputs, in return for an efficient revenue allowance that we have been set by Ofgem.
RIIO-T2 also introduced a far greater number of uncertainty mechanisms where the output (i.e. the volume or cost of works) was unclear when we submitted our RIIO-T2 business plans. These are called volume drivers and trigger additional allowances based on the type of work and the output it delivers.
There are a number of reopener windows for different investment areas, from SF6 reduction to cyber security and also mechanisms in place for agreeing costs for large onshore transmission investment (LOTI) projects. We will make cost and output submissions to Ofgem and they will decide on the efficient costs to deliver the agreed output, challenging us to find ways to deliver further consumer value