Source · Select Committees · Business and Trade Committee
Recommendation 47
47
Accepted
Paragraph: 203
Require Ofgem to ensure RIIO-ED2 mechanisms enable distribution network investment for low-carbon rollout.
Recommendation
We recommend that when a need for investment in the distribution network becomes clear, Ofgem ensures the uncertainty mechanisms included in the RIIO-ED2 framework are applied efficiently. Should these prove inadequate to respond to a rapid roll-out of low-carbon technologies, Ofgem should take equivalent steps to its ASTI framework to ensure that distribution networks are an enabler not blocker to net zero.
Government Response Summary
Ofgem states that its RIIO-ED2 framework already provides effective uncertainty mechanisms, including a Reopener mechanism, and an ability to accelerate investment for rapid low-carbon technology rollout, thus addressing the recommendation through existing provisions.
Paragraph Reference:
203
Government Response
Accepted
HM Government
Accepted
107. [Response provided by Ofgem] Ofgem’s RIIO-ED2 framework already provides for uncertainty mechanisms and an ability to accelerate investment to enable a rapid roll-out of low-carbon technologies, while ensuring that consumers are protected and receive value for money. 108. The framework includes mechanisms to manage investment risk, such as the Reopener mechanism, the ability for companies to submit an ad-hoc re-opener for a specific investment if they believe there is a need which cannot be recovered through the price control. As well as this, the uncertainty mechanisms can be used to recover costs for specific projects or programmes that are uncertain beyond the 2028 date when the price control ends. RIIO-ED2 will also incentivise speeding up the connections process.