Ofgem’s RIIO-ET3 Draft Determination: Consultation Response

We welcome the continued positive intent from Ofgem on the design of the framework. The commitment to an £80 billion investment plan in the electricity transmission sector, recognition of the need for urgency in delivery, and the changes Ofgem have made to the financial package since the Sector Specific Methodology Decision are all valuable steps forward. 

However, the Draft Determination does not sufficiently recognise the practical realities of delivering the biggest expansion of the electricity system in more than a generation and the required two and a half times increase in investment in our transmission network. We have submitted evidence and solutions for the changes required by Final Determination to achieve a framework that is:

• Investable by creating the conditions required to deliver the unprecedented increase in investment. Changes are needed in relation to the baseline return and the incentives framework to allow high performing networks to achieve a globally competitive overall return; and
• Workable by streamlining the overly complex suite of funding mechanisms, and changing the approach taken by Ofgem to make decisions in reopener processes. A workable framework enables transmission owners to recover the efficient costs of their investment and allows them to progress projects at the pace expected by our stakeholders. 

Both investability and workability are necessary for transmission owners to be able to meet the commitments put forward in their business plans including accelerating the decarbonisation of the energy system, and cost savings for consumers. 

As we move towards the Final Determination in December, we will continue to engage with Ofgem at all levels to agree a price control that attracts the investment needed to ensure the reliable and affordable flow of clean electricity whilst also meeting the ramp up in demand for power. A resilient, future-proofed network will be critical to economic competitiveness and growth for Britain in the years ahead. 

The executive summary to the company’s detailed responses can be accessed from our RIIO-T3 homepage.

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