Ofgem consults on electricity distribution funding requests
Ofgem is consulting on requests by several energy network companies for adjustments in funding under the RIIO-ED1 price control, which runs from 2015-2023.
- Network companies have submitted 12 funding requests with a total value of £322 million
- Ofgem is consulting on its proposal to allow network companies to recover approximately £75 million, including funding to invest in physical site security, rail electrification and a number of street works projects
- Ofgem proposes to refuse approximately £247 million of funding requests where we consider that these projects have not been justified or provide poor value for money.
In certain circumstances, network companies can apply for additional funding to cover significant and additional costs for certain activities which had not been forecast when the price controls were set.*
Ofgem is consulting on proposals to allow a total of £25 million to fund street works by three network companies – Electricity North West (ENWL), Scottish Power Energy Networks (SPEN) and Western Power Distribution (WPD). We are minded not to approve approximately £90 million in other street works funding requests.
Among other submissions, Ofgem proposes to allow an additional £16 million in funding to Scottish and Southern Energy Networks (SSEN) for diversions required to facilitate the electrification of the Great Western Railway line. We are also proposing to accept a £30 million request from SSEN for cable replacement at Pentland Firth East that will be subject to strict conditions.
Ofgem proposes not to approve the highest value funding request – £70 million sought by SPEN for cable repairs – as we consider that the level of investment requested was not justified. We also propose not to accept a £42 million request from SPEN for work to increase network capacity in anticipation of electric vehicle uptake .
Full details of all funding requests and Ofgem’s proposed decisions are in our consultation document. The consultation will close on 30 August 2019 and we propose to publish our final decisions in October 2019.
- *Ofgem sets four price controls (for gas transmission, electricity transmission, gas distribution and electricity distribution). Price controls for both transmission and gas distribution run from 2013 to 2021. The electricity distribution price control runs from 2015 to 2023. Collectively these are known as the RIIO-1 price controls.
Ofgem has been consulting on a new set of price controls, called RIIO-2, which will first come into effect in 2021 when the transmission and gas distribution price controls of RIIO-1 have expired.
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