The UK’s gas and electricity regulator, Ofgem, has set price controls for network operators using the RIIO framework since 2013. As the next price control period approaches in 2021, Ofgem is setting ambitious new targets in terms of costs, reliability, and environmental outcomes, as well as increasing their focus on innovation and efficiency in order to deliver more value to customers. It is clear that network companies will need to adapt and transform in order to meet traditional goals and these new emerging objectives.
We cannot know how exactly the future will evolve, but we can be sure that the pace of change—driven by new technologies—will increase, and that the sector will become increasingly complex.
In this period of sustained change and system disruption, network operators will need to develop cost-efficient, fully-justified plans that deliver long-term benefits to customers. Plans will need to consider all stakeholders, and evaluate investments holistically to ensure the best return. Successful companies will continuously adapt their plans to keep pace with rapidly changing business realities—from COVID-19 to natural disasters—while continuing to deliver essential services to customers. It is a challenging but exciting time for energy networks!
Copperleaf has closely followed RIIO-2 developments, through our work with Northern Gas Networks, SGN, Northern Ireland Electricity Networks, and National Grid, who must adopt this framework as soon as the current price control period ends.
Only those companies with the right tools and processes will be able to overcome the challenges and meet—or even outperform—the high expectations of Ofgem.
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