RIIO-T1 Financial Model (Electric)

Overview

The RIIO-ET1 Price Control Financial Model (‘PCFM’) is used to calculate values for the Base Revenue (the term MOD) that appears in the formula for each licensee’s Base Transmission Network Revenue and  SO Opening Base Revenue. The calculations are carried out as part of the Annual Iteration Process for the PCFM.

Caveat: The PCFM is designed to produce values for the term MOD by recalculating base revenue figures using revised variable values.  It does not deal with the other components that count towards the licensee’s :

  • Maximum Revenue , as set out in Part B of Special Condition 3A
  • Maximum SO Internal Revenue, as set out in Special Condition 4A

of the Electricity Transmission Licence.  Therefore, the PCFM should not, by itself, be considered a comprehensive model of the allowed revenue position for the licensee.

Annual Iteration Process and functional changes to the PCFM

Each year the table of variable values within the PCFM is revised as part of the Annual Iteration Process in accordance with applicable methodologies contained in the Special Conditions of the Electricity Transmission Licence and the ET1 Price Control Financial Handbook.  Functional changes to the PCFM can only be made in accordance with the governance regime contained in Special Condition 5A of the licence.   Superseded versions of the PCFM are archived in these pages, but only the most recent version of the PCFM should be used for purposes that call for the most up to date position.

Below are the practical procedures for the Annual Iteration Process (AIP) that will take place by 30 November each year to calculate the value of MOD that will apply in Relevant Year which starts on the first of April the following year (for example the AIP in November 2013 calculates the value of MOD that will apply in the Relevant Year 2014/15).

Practical procedures for the Annual Iteration Process (AIP)

RIIO Electricity Transmission

The formal Annual Iteration Process is run by the Authority, but stakeholders can ‘dummy run’ the process for themselves by following the practical procedures below.

  1. In the 'Userinterface' sheet under the heading 'PCFM year t', select 31 March 2015, since the process will calculate the value of MOD to be applied in Relevant Year 2014/15.
  2. In the 'Userinterface' sheet under the heading 'Active Company' select the designator for the licensee.
  3. Update the PCFM Variable Values (‘blue box values’) on the Input Sheet for the designated licensee in accordance with revisions directed by the Authority - a consolidated direction of values will have been issued by the Authority by 30 November’.
  4. In the 'Userinterface' sheet under heading 'Model Status', select model status ‘Licence Model’.
  5. Repeat items  2-4 for other licensees as required, for example to obtain MOD values for other licensees within an ownership group.
  6. Press the ‘Run for All’ macro button (or alternatively the ‘Run for One button’ if only one licensee’s MOD value is being calculated).

The MOD value for each licensee will be recorded in the ‘SavedResults’ sheet for the Relevant Year 2014/15 under the heading ‘Recorded MOD’.

Publications and updates

  • Published: 29th Nov 2013
  • Reports and plans
  • 2 Associated documents
This copy of the ET1 Price Control Financial Model (PCFM) shows the changes to the licensee’s Base Revenue (the MOD value). This has been directed as a result of the Annual Iteration Process that took place by 30 November 2013.

  • Published: 27th Sep 2013
  • Other
  • 2 Associated documents
On 27th September 2013, Ofgem published modifications to the ET1 Price Control Financial Handbook and Price Control Financial Model (PCFM).  These notices modified the ET1 Handbook and PCFM from the original versions in effect at 1 April 2013 (the start...

  • Published: 27th Sep 2013
  • Other
  • 2 Associated documents
The governance process contained in Special Condition 5A of the Electricity Transmission Licence provides for modification of the ET1 Price Control Financial Handbook and PCFM during the RIIO-ET1 price control period.  A summary of any such modifications...

  • Published: 1st Feb 2013
  • Other
  • 4 Associated documents
The RIIO-ET1 PCFM was incorporated into Special Condition 5A of Electricity Transmission Licence on 1 April 2013, under the licence modifications that implemented the RIIO-ET1 price control arrangements.

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