Source · Select Committees · Business and Trade Committee
Recommendation 37
37
Deferred
Paragraph: 176
Planning system represents a major constraint on low-carbon energy infrastructure delivery
Conclusion
The planning system, nationally and locally within England and also in Scotland and Wales, is a major constraint on the timely delivery of low-carbon energy infrastructure. There are many reasons for this, some of which we do not cover in this report, and we acknowledge the need for effective controls where justified. But we are in no doubt that steps will need to be taken to accelerate the planning process for low-carbon energy infrastructure.
Government Response Summary
Ofgem's response describes its stakeholder engagement and consultation processes for the RIIO-ED2 price control, aiming to ensure fair price controls and minimise information asymmetry. This addresses network investment regulation rather than the committee's observation about planning system constraints on low-carbon energy infrastructure.
Paragraph Reference:
176
Government Response
Deferred
HM Government
Deferred
115. [Response provided by Ofgem] Ofgem recognises this is an important issue: the approach to RIIO-ED2 as well as the wider RIIO-2 price controls have sought to ensure consumers and consumer representatives are placed at the heart of the price control processes. To support this, Ofgem undertook a sustained and enhanced engagement process, which began with the publication of an initial open letter in summer 2019. This 24 Decarbonisation of the power sector: Government Response included a detailed consultation on the methodology adopted during 2020, a call for evidence on the DNOs’ final business plans at the start of 2022, and the Open Hearings with each DNO in March, which each involved large numbers of representative organisations. 116. Ofgem published its Draft Determinations on 29 June 2022 and undertook an eight- week consultation period, which saw around 150 responses submitted. Ofgem required each of the companies to convene an independent Customer Engagement Group to confirm that DNOs have engaged appropriately with consumers and stakeholders in developing their business plans. Separately, consumer representatives are members of the independent RIIO-ED2 Challenge Group. This approach has helped ensure consumers’ voices are integral to Ofgem’s overall approach and decision making, in line with its statutory duties. 117. The existing RIIO-2 price controls for electricity and gas transmission and gas distribution networks will run until March 2026, with the new price control for electricity distribution running for 5 years until March 2028. Ofgem is considering responses to a consultation on the process for deciding the overarching framework design for the network price controls that will replace these. The outcome will be shared with the Committee in due course. 118. Ofgem sets the price controls through negotiation with the network companies, and engages with a range of stakeholders in doing so, including with consumer groups. Part of the price control process requires that networks engage with Consumer User Groups to feed into their business plans, which they submit to Ofgem. While this helps to ensure a range of views are taken into account when setting the price control, it is true that networks are still a strong voice in this arena. Ofgem does compare different submissions from different networks to ensure fairness in setting the price control. This will be further assisted by data from network competitions, once introduced through the Energy Bill, when data on costs for build and delivery of infrastructure on the open market filters through to Ofgem’s consideration. This, as well as the Special Merger regime, which is being introduced through the Energy Bill, will help Ofgem to set a fair price control for consumers and minimise information asymmetries.