Informal consultation on RIIO-ED1 price control reopeners (May 2019)
Consultation
- Upcoming
- Open
- Closed (awaiting decision)
- Closed (with decision)
Publication date
Closing date
Industry sector
Distribution Network
Decision
Overview
The current RIIO price control for electricity distribution (RIIO-ED1) runs from 1 April 2015 to 31 March 2023. For certain cost categories where there was uncertainty about expenditure requirements at the time of setting allowances, the price controls include a type of uncertainty mechanism called a “reopener”. The mechanism allows network companies to propose adjustments to baseline expenditure allowances for these costs when there is more certainty. The reopener mechanism specifies a window in May 2019 during which adjustments to allowances may be proposed for specified uncertain cost categories.
The reopener mechanism also specifies a window in February 2019, during which Scottish and Southern Electricity Networks (SSEN) was able to and did submit a request for an adjustment to its baseline expenditure allowances for Subsea Cables Costs. This request applies to SSEN’s Scottish Hydro Electric Power Distribution plc (SHEPD) licence area. This consultation process for May 2019 reopener submissions is being run separately to the February 2019 process and therefore we are not seeking views on SHEPD’s submission as part of this informal consultation.
We have received submissions from all six electricity distribution network operators (DNOs) during the May 2019 window.
We will assess these submissions in line with criteria set out in network company licences and the Price Control Financial Handbook, taking account of a range of factors, including the need for the proposed expenditure, our assessment of efficient costs, and any allowances that have been previously included in baseline allowances. We will do so in accordance with our principle objective to protect the interests of existing and future consumers and our other statutory duties. We are required to make our determinations on all submissions within four months of the close of the application window. That window may be extended by any requests we make of the licensees for further information or analysis.
We will consult stakeholders and seek feedback before making our determinations. We intend to do this in two phases:
- Phase 1: We will publish non-confidential versions of network company submissions as soon as possible following submission, and seek early feedback from stakeholders. This will allow us to take account of feedback while assessing these submissions.
- Phase 2: We will consult on our “minded-to” position on all submissions in late July/early August 2019.
We are now launching phase 1 of our stakeholder consultation process. We welcome your views on each submission. We have received submissions in the following uncertain cost categories:
Your views
We are particularly interested in your views on the following questions:
- Does the submission meet the qualifying criteria set out in Special Licence Condition CRC3.F of the network companies’ licences?
- Does the submission provide adequate evidence that the planned expenditure is necessary?
- Does the submission provide adequate evidence that the planned expenditure is economic and efficient?
- Is there any other relevant information we should consider before making our determination?
We ask that you provide your feedback as early as possible, ideally within two weeks of publication of submissions. This would allow us to take account of your responses in reaching our “minded-to” position. Please send responses to RIIO-ED1@ofgem.gov.uk. We will close this informal consultation on 21 June 2019.
Please contact RIIO-ED1@ofgem.gov.uk if you have any questions about the process or any of the submissions.
Respond name
Victoria Low