Today has seen the Distribution Network Operators (DNOs) submitting their well justified business plans to Ofgem. The price control reviews are always important but this one will be particularly significant as it is the first under the new RIIO framework. It also sets the Revenue for DNOs for a longer period than previously provided, 8 years.
RIIO, which stands for Revenue = Innovation + Incentives + Outputs, has already been used for the gas distribution and electricity transmission network price controls. For the DNOs, part of their planning, looking at innovation potential, has been part of their work for the Low Carbon Network Fund and is a critical part of developing the smarter networks that will help to meet the challenges of our energy future.
Connection of renewables is likely to feature as a key part of companies’ proposals too as modelling, commissioned by ENA as part of the Smart Grid Forum, has been used to inform the likely impact of low carbon technologies.
Ofgem have also emphasised the importance of stakeholder engagement to inform priorities in DNO business plans. There will always be competing drivers for the network, it is the nature of the varied types of connection and demand patterns and the requests from different customers. What DNOs will always do is balance the need to deliver against a complex energy landscape with running a safe, reliable and efficient network that is value for money for bill payers.
The DNOs will meet with Ofgem during July and August to discuss their proposals and then Ofgem will consider whether to fast-track any of the companies, allowing for a speedier and less resource intensive decision. Ofgem has extended their decision on this until November to allow an 8 week consultation period.