Republication of RIIO-GT2 Price Control Financial Model following the Annual Iteration Process 2024
Reports, plans and updates
- Publication date
- Industry sector
- Transmission Network
- Distribution Network
On 31 January 2025 Ofgem published the results of the GT2 Annual Iteration Process (AIP). The AIP updates allowed revenues, which licensees must use when setting their charges for the next regulatory year (2025/26).
Special Condition 8.2, Part B in the GT licence specifies that the Authority may re-publish the value of Allowed Revenue (ARt), Adjusted Revenue (ADJRt), System Operator Allowed Revenue (SOARt) and System Operator Adjusted Revenue (SOADJRt) by the end of May of each regulatory year.
This re-publication process is set out in Chapter 2 of the GT2 Price Control Financial Handbook and enables NGT to reflect the impact of any unforeseen events on its allowed revenue in time for it to set tariffs, where these events have or are forecast to have a material impact on allowed revenues.
Since the publication of the AIP in January 2025, there has been a material reduction in SO Allowed Revenues driven by:
- System Costs – Actual and forecast costs have fallen due to lower shrinkage volumes.
- Operating Margin Services - Actual and forecast costs have fallen due to cost avoidance and contract values being set for the year ahead.
- Cyber resilience - Cost allowances have fallen following an Ofgem direction published on 9 December 2024.
- Recovered Revenue –The forecast has been updated, resulting in a reduction in SOARt.
The Authority gave NGT notice of the value of ARt, ADJRt, SOARt and SOADJRt on 15 May 2025.
The reason for and effect of this publication is to revise the PCFM Variable Values to re-calculate the values for ARt, ADJRt, SOARt and SOADJRt for NGT.
The re-published values for ARt, ADJRt, SOARt and SOADJRt following the January 2025 AIP are shown within the GT2 PCFM published on this page.