Open Letter Consultation on approach to setting the next electricity distribution price control (RIIO-ED2)

Published: 21 October 2019

Introduction

Energy Systems Catapult has responded to Ofgem’s open letter consultation which sets out the context for the development of RIIO-ED2 and the proposed framework for the price control. Among other things, this consultation considers how the price control should be set in the context of an increased focus on decarbonisation, digitalisation, and decentralisation.

Key points

  • As the main instrument to incentivise action by distribution networks, the future price control framework should support decarbonisation across all regulated network companies.
  • Our work suggests that local area energy planning can play a key role in informing decisions and providing a platform for coordinating actions among different stakeholders.
  • The price control framework should support well-justified anticipatory network investment that benefits consumers and enables efficient and coordinated deployment of network infrastructure as we transition to net zero.
  • Opening access to network data will be key in supporting innovation and the transition of the energy system. Ofgem should require companies to demonstrate progress in this area.
  • Ofgem should ensure that DNOs achieve progress in data modernisation and digitalisation before the start of the RIIO-ED2 period.
  • Ofgem should incentivise DNOs to act promptly to build and develop DSO functions. Ofgem should also assess the case for future development and separation of DSO roles, potentially on a multi-vector basis, and keep open the option of implementing some separation of DSO roles within the current price control period.