Changes to RIIO-ED2 Load Related Expenditure volume drivers

Details of outcome

We sought views on changes to the Load Related Expenditure (LRE) volume drivers.

Having considered the responses provided, we have reached a decision on proposed changes to the:

• Low Voltage Service Volume driver (LVSVD) unit rates
• LVSVD ex ante allowance
• Secondary Volume Services Driver (SRVD) for one DNO

The main changes are:

• an upward revision to the LVSVD unit rates
• a higher LVSVD ex-ante allowance for all DNOs
• an upward revision to the SRVD cap for SP ENW

We intend to make these changes by modifying SpC3.9 of the electricity distribution licence.  

The changes would apply from 1 April 2026. We have also published the notice of a statutory consultation on the proposed licence modifications.

We are still considering changes to the SRVD metrics. We will put in place any changes to these, as well as our decision on the LVSVD metric, as part of the review of the LRE Volume Drivers Governance Document. We plan to consult on this during 2026.

Read the full outcome

Original consultation

Consultation description

The changes consist of:

• an upward revision to the Low Voltage Services Volume Driver (LVSVD) unit rates
• a higher LVSVD ex-ante allowance for all distribution network operators (DNOs)
• a revision to the Secondary Reinforcement Volume Driver (SRVD) cap for one DNO
• changes to the reporting metrics for the volume drivers

The current price control model is known as RIIO (Revenue = Incentives + Innovation + Outputs). RIIO-2 is the second electricity and gas price control under the RIIO model. The RIIO-2 price control period runs from 1 April 2021 until 31 March 2026 for electricity transmission (ET), gas transmission (GT) and gas distribution (GD). The RIIO-2 price control period for the electricity distribution (ED) sector (RIIO-ED2) runs from 1 April 2023 to 31 March 2028. 

In November 2022 we published our RIIO-ED2 final determinations for the electricity distribution network operators. This set out the key elements of the price control from 1 April 2023 to 31 March 2028. This included an uncertainty mechanism, a Low Voltage Services Volume Driver (LVSVD) and Secondary Reinforcement Volume Driver (SRVD) for Load Related Expenditure (LRE), collectively referred to as the LRE Volume Drivers. These arrangements are given effect in the electricity distribution licence. 

Following a review of the first two years of operation, the consultation sets out proposed changes to the LRE Volume Drivers that we have identified as part of this work that would apply for years 4 and 5 of RIIO-ED2. 

Who should respond 

The consultation will be of interest in particular to distribution network operators.