Ofgem launches RIIO-ED1 consultation

Press Release

28 September 2012

OFGEM LAUNCHES CONSULTATION ON PRICE CONTROL PROPOSALS FOR LOW VOLTAGE ELECTRICITY NETWORK

·; Successful RIIO price control model will be used to encourage smarter networks that deliver sustainable energy and value for money

·; Proposals aim to improve customer service and network reliability

Ofgem has today published its consultation on the next price control for Britain's 490,000 miles of electricity distribution network that delivers power to homes and businesses. The control, known as RIIO-ED1, is designed to encourage companies to deliver safe, reliable and sustainable services at value for money to consumers.

The new price control is proposed to run from 2015 until 2023, during which time there is expected to be an increased take up of low carbon technologies including heat pumps, solar panels and small scale renewable generation. This will require the networks to be flexible and smarter to allow the connection of these new technologies. Through RIIO, Ofgem's new framework for regulating network companies, we are proposing a range of incentives, obligations and targets to ensure that distribution network companies do this in a timely and cost effective way, using smart solutions where appropriate.

Included in today's consultation is a range of proposals which are aimed at stimulating increased network reliability and better customer service. These include proposals for a new target to stimulate improvements for customers who are 'worst served' in terms of reliability, typically remote rural locations. Also included are plans, which we have recently consulted on, to ensure uniform compensation rights and guaranteed standards across the country, including to Scotland's Highlands and Islands.

Hannah Nixon, Senior Partner for Distribution said: "Today's consultation asks questions on a number of areas where we are seeking to incentivise improvements in reliability, customer service, environmental impact and innovation. This is a price control that puts consumers at the heart of the companies' plans and we encourage people to get involved and tell us what they think about our proposals."

The consultation is open until 23 November and there will be a number of stakeholder events held where people can find out more about and ask questions. For more information go to www.ofgem.gov.uk or email [email protected].

Notes to editors

1. The RIIO-ED1 strategy consultation document can be found here: http://www.ofgem.gov.uk/Networks/ElecDist/PriceCntrls/riio-ed1/consultations/Documents1/RIIOED1SConOverview.pdf

2. The strategy decision for RIIO-ED1 is due to be published in February 2013. This will then be used by the distribution network operators (DNOs) to develop their business plans.

3. RIIO (Revenue=Incentives+Innovation+Outputs) is Ofgem's new framework for setting price controls. This new framework incentivises companies to meet environmental targets and secure energy supplies, while delivering long-term value for money for consumers. RIIO also puts in place greater incentives and penalties to stimulate greater efficiency and innovation from companies. RIIO has been used for the electricity and gas transmission as well as gas distribution price controls which are due to begin in April 2013.

4. Ofgem is the Office of the Gas and Electricity Markets, which supports the Gas and Electricity Markets Authority, the regulator of the gas and electricity industries in Great Britain. The Authority's powers and duties are largely provided for in statute, principally the Gas Act 1986, the Electricity Act 1989, the Utilities Act 2000, the Competition Act 1998, the Enterprise Act 2002, the Energy Act 2004 as well as arising from directly effective European Community legislation.

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