Page 8 - Gi flipbook September 2018

NEWS | GOVERNMENT

Ofgem confirms five-year

price control for RIIO2

OFGEM HAS CONFIRMED To signal its intent,
that the default length Ofgem has confirmed that
of the next price controls National Grid can build the NATIONAL GRID
will be five years with the grid upgrade to connect the
energy regulator’s plans new Hinkley Point C nuclear
to deliver savings of over power station. However,
£5 billion to consumers Ofgem will set the revenue
moving a step closer. National Grid can earn from
Under the plans for the the upgrade based in part
second round of RIIO price on its experience in cutting
controls, which will start the costs of connecting
in 2021, Ofgem has also offshore wind farms to
confirmed the following: the grid by tendering the
• Lower returns for ownership of these links.
network companies Jonathan Brearley,
• Network companies Ofgem’s Executive Director
spending plans to be for Systems and Networks,
subject to open hearings said: “Today we have set out
• Using the benefits of our plans which will bring Ofgem is retaining a funding package in
competition to deliver the in tougher price controls the next price controls for innovation
power link to Hinkley C with lower expected returns
nuclear power station to for network companies. Ofgem is also retaining for delivering a range of
drive value for consumers. This is part of our ongoing a funding package in the exciting new services for
Utility Week reports programme to ensure that next price controls for their customers.
that the energy regulator consumers get reliable and innovation. Technologists, “Dynamic regulation
has confirmed the cost of secure power supplies at a scientists, inventors and is fundamental to help
equity range (the amount fair price. innovators will be able the networks continue
network companies pay their “As part of this to use this funding to enabling new, low carbon
shareholders) will go down continuous drive to deliver solve some of the biggest technologies while
to between three and five value for consumers, we are research and development responding to the changing
per cent, from six and seven using a new benchmarking challenges in adapting needs of consumers. RIIO2
per cent currently. This is the approach to cut the costs the energy networks to must allow networks to
lowest rate ever proposed of connecting the new a smarter, more flexible carry on delivering while
for energy network price Hinkley Point C nuclear energy system. These also being founded on the
controls in Britain. power station. This is include increased use of principles of transparency
Ofgem estimates this will another example of how electric vehicles, more and stability to provide
result in savings of over we are evolving regulation local production of energy predictability for investors,
£5 billion for household to deliver the upgrades to and integrating digital innovators and consumers.
consumers (or about £15- our power network while technology. “Customers are at the
£25 per year on the dual ensuring the impact on bills A spokesperson for heart of our businesses,
fuel household bill). is kept as low as possible.” the Energy Networks so we will be looking
The price controls set the Ofgem’s decision on Association said: “Energy to build on our track
revenue monopoly network the framework for setting networks are focused record of high customer
owners can earn from the next price controls on providing homes and satisfaction throughout
charges to consumers, and also confirms that new businesses with a safe, the current price control
from 2021 the length will independent user groups reliable network and the period and into RIIO2. New
be reduced to five years, and customer engagement best possible service. Since customer engagement
compared with the current groups will be set up by 1990 they have improved groups will help us to
eight years. each of the companies to significantly the reliability reflect customers’ views
Ofgem will extend the give consumers a stronger of their networks while at so we can take them into
scope for opening up high voice in how the price the same time cutting costs consideration for future
value network upgrades to controls are set. For the first for consumers by around plans. Network companies
the benefits of competition time, open hearings will take 17 per cent. They are the look forward to working
across the gas and place in the spring of 2020 nerve centre of a low cost, closely with Ofgem in the
electricity sectors in the where companies’ spending smarter and cleaner energy weeks and months ahead
next price controls. plans will be scrutinised. system and are responsible on their RIIO2 proposals.” ■

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News.indd 3 14/08/2018 20:00