The British Office of Gas and Electricity Markets has published an open letter seeking views on its proposed approach for regulating the electricity distribution networks in the next price control (RIIO-ED2) to protect consumers today and in the future.
The electricity distribution networks are fundamental to the transition to a low carbon economy and to hitting the target of net zero emissions in the UK by 2050.
Ofgem’s proposed approach will build on the significant progress made so far by supporting further decarbonisation of power generation, transport and potentially how we heat our homes and businesses at the lowest possible cost to consumers.
These networks will be required to play a greater role in managing the energy system as the capacity of distributed, or locally connected, intermittent renewable generation continues to grow along with new sources of demand, such as electric vehicles.
Ofgem is seeking initial views from all stakeholders on issues such as the length of the price control, the approach to setting the cost of capital and the role of electricity distribution networks in enabling the low carbon transition more generally.
The next price control for electricity distribution networks begins in 2023. Ofgem’s next price controls for electricity transmission, gas transmission and distribution begin in 2021 and as such plans are further advanced.
Jonathan Brearley, executive director for systems and networks at Ofgem, said: “Electricity distribution networks have a fundamental role to play in the UK’s journey to reach net zero emissions by 2050.
“Ofgem will strike a tough, fair settlement with companies which enables them to go further in decarbonising the economy and ensures that costs are kept as low as possible for consumers paying for the required investment.
“All our network price controls will pave the way for an affordable, reliable and more sustainable energy system which protects consumers both today and in the future, including those who are in vulnerable situations.”
Ofgem will publish a formal consultation in the first half of next year on its proposed regulatory framework for the electricity distribution networks.