Changes to RIIO-ED2 Load Related Expenditure volume drivers

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.

How to respond   

You can submit your response by Friday 27 March 2026 by emailing RIIOED2@ofgem.gov.uk