Ofgem seeks views on proposed approach for next electricity distribution price control
Ofgem has published an open letter seeking views on its proposed approach for regulating the electricity distribution networks in the next price control (“RIIO-ED2”) to protect consumers today and in the future.
The electricity distribution networks are fundamental to the transition to a low carbon economy and to hitting the target of net zero emissions in the UK by 2050.
Ofgem’s proposed approach will build on the significant progress made so far by supporting further decarbonisation of power generation, transport and potentially how we heat our homes and businesses at the lowest possible cost to consumers.
These networks will be required to play a greater role in managing the energy system as the capacity of distributed, or locally connected, intermittent renewable generation continues to grow along with new sources of demand, such as electric vehicles.
Ofgem is seeking initial views from all stakeholders on issues such as the length of the price control, the approach to setting the cost of capital and the role of electricity distribution networks in enabling the low carbon transition more generally.
The next price control for electricity distribution networks begins in 2023. Ofgem’s next price controls for electricity transmission, gas transmission and distribution begin in 2021 and as such plans are further advanced.
Jonathan Brearley, executive director for systems and networks at Ofgem, yesterday said:
“Electricity distribution networks have a fundamental role to play in the UK’s journey to reach net zero emissions by 2050.
“Ofgem will strike a tough, fair settlement with companies which enables them to go further in decarbonising the economy and ensures that costs are kept as low as possible for consumers paying for the required investment.
“All our network price controls will pave the way for an affordable, reliable and more sustainable energy system which protects consumers both today and in the future, including those who are in vulnerable situations.”
Ofgem will publish a formal consultation in the first half of next year on its proposed regulatory framework for the electricity distribution networks.
- Ofgem's principal duty, enshrined in statute, is to protect the interests of energy consumers both today, including by keeping bills as low as possible, and in the future, including by reducing greenhouse gases to tackle climate change.
- In May Ofgem confirmed the network price methodology for these price controls
- Ofgem has also published a position paper on distribution system operation (DSO). In this paper, we set out the outcomes we seek to achieve from our DSO policy reforms, describe our work programmes to deliver DSO policy and explain our emerging conclusions about the DSO transition. We expect there is significant progress that can be made by DNOs in advance of RIIO-ED2, and invite stakeholders to comment on our progress, analysis and trajectory to help shape this evolving policy area.
For media, contact:
Tim Webb 0207 901 7179
Media out of hours mobile: 07766 511470 (media calls only)
For investors, contact:
John Bolitho - 0207 901 7114
Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.
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