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News Regulation

Ofgem backs off from mid-period RIIO1 review

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Ofgem has confirmed that it will not open a mid-period review (MPR) of the current set of electricity distribution price controls, closing the door on potential changes to the RIIO ED-1 framework.

In an update yesterday, Ofgem said it had decided against opening the MPR owing to the current set of controls’ potential to offer more value for money for consumers through a “combination of efficiency gains and voluntary contributions”.

The news followed distribution network operator Western Power Distribution’s (WPD) decision to hand back £77 million of its price control funding to consumers after the government scaled back its rail electrification programme, meaning WPD no longer needed to conduct various related reinforcement works.

Jonathan Brearley, executive director for systems and networks at Ofgem, said the body’s regulation would ensure consumers continue to share in any savings made throughout the remainder of the price controls, which run until 2023.

“We will continue to monitor their performance and we have powers to make adjustments to their revenue if we find that targets have not been met, once the price control finishes. 

“We would also welcome moves by other DNOs to voluntarily refund consumers, particularly if a change in circumstances means they have surplus funding that is no longer needed,” he said.

Ofgem’s decision was immediately welcomed by the Energy Networks Association, whose chief executive David Smith lauded it as good news for consumers.

“[The decision]… means they will continue to benefit from network companies delivering investment as cheaply as possible, without distraction.

“It will keep the cost of new infrastructure down through maintaining investor confidence. That is vital for Britain’s homes and businesses as network companies continue to innovate to find new ways to decarbonise our economy and invest to deliver a more efficient, smarter, cleaner energy system,” he said.

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