Insights
RIIO-ED3, the next price control for Great Britain’s electricity distribution networks, is still being shaped. Ofgem’s sector specific methodology is in consultation, which makes this a decisive period: the evidence networks build and the positions they establish now influence the settlement they will live with for years. The networks that treat this stage as preparation, rather than waiting for the determination, are the ones that do well out of it.
By Christopher Fagan
By the time final determinations arrive, the shape of the price control is largely set. The methodology stage is where the mechanisms, the outputs and the evidentiary expectations are decided, and where a network’s engagement and data can still make a difference. Networks that wait until the plan is due to start assembling their case are already behind those that used the methodology period to build evidence and shape the debate.
A strong price control submission rests on robust, well organised evidence about the network’s condition, its investment needs and its costs. That evidence takes time to assemble and cannot be conjured at submission. Networks should be building it now.
The quality of asset and cost data underpins everything: the plan, the justification and later the delivery reporting. Networks with weak data spend the price control disadvantaged at every stage. This is the least glamorous and most valuable preparation available.
The consultation is an opportunity to shape mechanisms that will govern the network for the period. Engaging substantively, with evidence, is more effective than reacting to the determination after the fact.
The transmission and gas determinations under RIIO-3 are done. The distribution networks have a chance to learn from how those landed, what evidence carried weight and what did not, and apply it to their own preparation. See our note on delivering RIIO-3.
The trap is treating the plan as a submission exercise that starts when the template arrives. The networks that struggle are the ones that leave evidence, data and positioning until late. The ones that do well have been quietly building their case throughout the methodology period, so that when the submission comes, it is the writing up of work already done rather than a scramble.
Our consultants have worked across the energy networks and their regulatory environment. See energy and utilities and RIIO price control support, or get in touch.
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