Energy networks comment on Ofgem RIIO-2 price control announcement

Tuesday 18th December 2018

Commenting on the latest RIIO-2 price control proposals for energy network companies in Great Britain, published today by Ofgem, Chief Executive of Energy Networks Association David Smith says:

“It’s important that the public and the country as a whole benefit from the changes that are sweeping across the country’s energy system, but much more work still needs to be done by the regulator to understand the pace of that change, the risks that investors face and how that is reflected in the price control.

“Energy network companies are building a smarter, more efficient, cleaner energy system that is fit for the British public, so we can all benefit from things like more electric vehicle chargepoints to help improve our air quality and a lower-carbon gas grid to heat our homes. But as things stand, the proposals could jeopardise the innovation and investment that is critical to delivering these important outcomes. Britain’s people and businesses risk missing out.”

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Notes to editors

  • ENA is the voice of the networks representing the ‘wires and pipes’ transmission and distribution network operators for gas and electricity in the UK and Ireland.
  • Both gas and electricity networks are going through a period of significant change, as their business models change in response to the decarbonisation of the energy system in the UK:
    • For gas networks, this includes defining a new role to help decarbonise heat and transportation to help the UK reach its climate change targets by trialling new forms of low carbon gas, such as hydrogen and bio-methane.
    • For electricity networks, this means redefining their business models to deliver two-way flows of electricity and to using the latest smart technology as an alternative to simply building new energy infrastructure to create more grid capacity.
  • This change increases the amount of risk that infrastructure investors face. ENA does not believe that Ofgem’s current proposals reflect the cost of that risk, therefore undermining efforts by gas and network companies to attract the investment necessary to deliver these changes. You can read more on this issue in our detailed briefing note here
  • Under the current RIIO-1 price control, new investment in the energy networks under the price control period (2013-23) is forecast at nearly £35bn. Since the start of RIIO-1 in 2013 over £5 billion has been saved for consumers by energy network companies (Source: Ofgem).
  • Key facts about Britain’s energy network companies:
    • They maintain 1 million km of electricity cables and 272,000 km of gas pipelines that extend across all regions of the country (Source: ENA).
    • Customer satisfaction scores recorded by Ofgem for both electricity distribution and gas distribution networks currently stand at 8.8 out of 10, higher than many high street retailers (Source: Ofgem).
    • Energy network costs currently make up about 25% of the average dual-fuel energy bill. Gas network costs are 35p per day per customer. Electricity costs are 33p per day per customer (Source: Ofgem).
    • Current and recent energy network costs to the average dual fuel energy bill are as follows (Source: Ofgem):
 

2015/16

2016/17

2017/18

2018/19

Electricity networks

£118.90

£131.20

£123.60

£120.00

Gas networks

£128.10

£129.70

£127.80

£127.80

Networks total

£247.00

£260.90

£251.40

£247.80

Annual change

 

+£13.90

-£9.50

£-3.60

  • For further information please contact:

Press Team: [email protected]

T: +44 (0)207 706 5157

W: www.energynetworks.org

 

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