Energy networks’ vision puts customers at the heart of the future energy system
• Energy Networks Association, representing UK’s electricity and gas grid operators, publishes response to major Ofgem consultation on future of UK energy networks’ regulatory model
• Ofgem approach needs to account for major changes taking place in the energy market, says ENA – and ensure that consumers are part of the way the framework works.
• Response includes proposals for new customer panels, a review of companies’ public reporting requirements and additional investment in innovation.
The UK’s energy network companies have today responded to Ofgem’s consultation on the future regulatory framework for the sector, calling for new measures that will ensure consumers are put at the heart of the approach to decarbonisation.
In their response to the regulator’s July “Open letter on the RIIO-2 Framework”, Energy Networks Association (ENA) sets out the changes they think Ofgem should make so that network companies are able to build on their success under the current regulatory framework and deliver further improvements in performance for their customers.
As with previous price control regimes, under the current 8 year RIIO-1 framework the ways in which network companies invest in and operate the UK’s energy networks is set out in detail by the regulator after a thorough and extensive consultation process with network companies, stakeholders and consumers alike.
The eight year framework will be succeeded by RIIO-2, which will set out how network companies will operate during a period of almost unprecedented change for the UK energy sector. In the coming years, energy network companies will be responsible for delivering major changes to the networks resulting from the deployment of new technologies such as electric vehicles, battery storage, renewable generation and the development of green gases like hydrogen and biomethane in the gas network as the UK moves towards a low carbon energy system.
ENA proposes changes to the RIIO framework in three key areas, which aim to ensure customers put at the centre of the energy networks’ role in delivering that transformation:
1. Improving customer engagement: The regulator should consider establishing expert panels that include end energy consumers representation that will operate over the course of the next price controls to ensure that consumers have a direct say in it as it develops.
2. Transparency through public reporting: Ofgem should undertake a review of reporting requirements in terms of what aspects of the network’s business is being reported against and the level of detail required, to ensure there is maximum public transparency.
3. Investing & delivering in innovation: Delivering innovation: It is imperative that innovation in networks continues to be strongly incentivised under future prices controls. The RIIO innovation stimulus has had significant success in encouraging network companies to bring forward innovative projects and embed a culture of innovation within their organisations. This has led to significant advances in the application of new technologies and techniques and the development of skills and capability within the organisations involved, to the benefit of current and future consumers. New approaches, including the development of whole systems incentives designed to drive innovation, used in combination with current type innovation support measures may also provide an attractive option, helping to deliver the energy system we will need in the future.
CEO of Energy Networks Association David Smith comments:
“Reliable energy supplies, world-class energy infrastructure and cutting edge innovation are as much consumer issues as anything else – we want to see a regulatory framework that ensures that consumers’ views on those things are all part of the conversation.
“Ofgem has acknowledged that energy network companies have a strong track record in driving significant improvements under RIIO-1.
Network companies are private companies delivering a public service, serving households, businesses and communities in every corner of the UK. That ethos is at the heart of everything our members do and that’s why today we’re pleased to set out how we believe the next price controls can improve our track record further still in these three areas.”
Notes to editors
• ENA’s response to the Open Letter can be read here.
• Energy Networks Association is the voice of the networks, representing the UK’s 15 gas and electricity transmission and distribution networks.
• ENA members serve over 30 million customers in all corners of the UK, whilst managing £62bn of assets that employ 30,000 people in communities across the country.
• By 2020 the UK’s energy networks will have delivered £80bn of investment since 1990, whilst reducing costs to the customer by 17%. In the next six years alone they are forecast by Ofgem to deliver £45bn of investment across the UK.
• Ofgem surveys consistently put customer satisfaction levels are more than 80%, higher than many of the UK’s leading high street retail brands.
• Smart network solutions connected at a local electricity grid level have already enabled close to £1bn of cost savings for customers.
• On 12th Jul 2017 Ofgem stated “price controls have driven significant improvements in reliability and customer service at reduced costs”.
For further information please contact:
UK and European Communications Manager
Energy Networks Association
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