Ofgem sets challenging environment for networks
For immediate release - Friday 28 November 2014
Five of the UK's electricity distribution network operators in the UK have today (Friday) received their Final Determinations on their business plans from Ofgem. These decisions will set the framework and amount of investment that can be made into the network over the eight years from 2015-23.
Over the period of 2015-23 £24.6 billion will be invested into the electricity distribution network while the amount of money charged to customers will fall in real terms. This is the first price control under the new RIIO framework for the electricity distribution network and it includes provisions for the efficiencies gained by companies to be shared with customers.
Energy Networks Association Chief Executive David Smith said:
"This decision comes after a lengthy and comprehensive process for companies over the last two years, speaking with their customers and evaluating the cost of delivering this vital infrastructure. In deciding on these reduced figures, Ofgem have set a very challenging settlement to meet the investment needed for the priorities of customers.
"The electricity distribution networks are not just focused on ensuring the lights stay on today but are planning for the future with the new technologies and low carbon energy that must be delivered. Over the coming weeks each company will assess the affect of these decisions on their own network area and look at how this will impact on what is delivered for customers.”
Electricity distribution networks in the UK account for around 8% of the average domestic dual-fuel bill and in the 15 years since privatisation efficiency savings reduced costs by 45%. Ongoing investment has lead to many improvements including a 30% reduction in power cuts since 2002 but further investment is needed if the progress already made is to continue.
Despite record levels of investment in recent years, the UK energy networks remain 17% lower than they were before privatisation and by 2020 there will have been £80 billion invested – enough to stage the Olympics nine times.
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.
The five network companies affected by today’s announcement are Electricity North West, Northern Powergrid, SSE Power Distribution, SP Energy Networks and UK Power Networks. Western Power Distribution has already had its settlement agreed as part of the fast-track approach earlier in the year.
More information about how Ofgem regulates the networks, including historical data, can be found here – https://www.ofgem.gov.uk/electricity/distribution-networks
Ofgem have produced an infographic about the networks which can be found here - https://www.ofgem.gov.uk//publications-and-updates/infographic-how-ofgems-network-price-control-proposals-riio-ed1-will-affect-you
For further information please contact:
Tim Field MCIPR
Head of Press and Public Affairs
Energy Networks Association
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