2019 is a huge year for RIIO-T2. By the summer Ofgem will have decided on key regulatory framework policies and methodologies, within which our core UK businesses will operate.
By next Christmas we will have made our T2 price control business plan submission; setting out our outputs, service commitments and efficient costs for the next price control period.
The new year starts with us digesting and responding to Ofgem’s 600-page regulatory framework consultation, which was published at the end of last year. It is very clear from these proposals that the next price control will be tougher than previous deals for all networks; as pressure continues to mount on Ofgem to reduce returns earned by networks and to lower the cost of energy bills for consumers.
We will be responding in March, with Ofgem’s decision on the proposals due in May.
Alongside developing the regulatory framework, we will be creating stakeholder-led business plan submissions for each of the Electricity Transmission (ET), Gas Transmission (GT) and Electricity System Operator (ESO) businesses.
Each business is required to make draft submissions to their stakeholder groups and Ofgem’s newly established RIIO2 Challenge Group in July and October, with a final submission to Ofgem in December. Ofgem will then begin to assess our business plans, taking account of the views of these independent groups. Ultimately, Ofgem will determine our future allowed revenues for the T2 period, along with what we will be held to account to deliver for our customers.
As part of the process of developing a truly stakeholder-led submission, we expect to be the first of the network companies to consult publicly on what we have heard from our stakeholders; and to indicate direction of travel for how we might develop our draft business plans to deliver against their feedback. As well as external views, we would also like to hear views from within National Grid. You will see more about this in the coming weeks.
A big focus now is delivering our first draft business plan submission for 1 July. We have set ourselves a challenging target of having our first set of numbers, justification and initial narrative by the end of March. For those who have supported the programme, thank you for all your hard work up to this point. More than ever, we look forward to your continued support in 2019 as there is a lot more work to do.
Our business plans will need to shows efficient costs and how our customers, stakeholders and, ultimately, end consumers will benefit from our plans. To make the best submissions possible, we will need to present high-quality evidence, in-depth analysis, expert insight and explanation that relies on drawing on the relevant expertise from across the business entities and shared functions over the next few months. Prioritising this now is crucial for shaping our future. I look forward to your continued support for RIIO-T2 as we enter this critical phase.
You will hear more about RIIO-T2 progress throughout 2019. Here are some key milestones to look out for:
- End of January – we publish ET and GT stakeholder consultation
- Mid-March – we respond to Ofgem’s RIIO-2 Sector Specific Methodology Consultation
- End of March – we publish ESO stakeholder consultation
- End of March – first internal draft of our business plan numbers and initial narrative
- May – Ofgem will consult on its decisions following the consultation process
- 1 July – we are required to submit the first draft of our business plans to Ofgem and their Challenge Group
- 1 October – we are required to submit the second draft of our business plans to Ofgem and their Challenge Group
- December – we make our final submission of our ET, GT and ESO business plans to Ofgem
- July 2020 – Ofgem’s draft determination, providing proposals on the frameworks and revenues to apply to our ET, GT and ESO businesses
- November 2020 – Ofgem’s final determination
- 1 April 2021 – start of the RIIO-T2 price controls
If you have any questions or suggestions about RIIO-2 please feel free to contact us at box.RIIO.PMO@nationalgrid.com
Happy New Year from me and the RIIO-T2 team.
Project Director, RIIO-T2