UK energy regulator Ofgem (Office of Gas and Electricity Markets) has published its proposals for a five-year investment programme in order to transform the country’s energy network ready to deliver clean renewable energy, but the Energy & Utilities Alliance (EUA) is not happy with Ofgem’s price determinations.
Ofgem intends to invest £25 billion with potential for a further £10 billion or more, while cutting the cost for UK billpayers. Britain’s networks carry energy around GB to heat and power homes and businesses, and increasingly to power cars and other means of transport.
These networks are privately owned and funded through energy bills, but they are also monopolies, which means there is only network in each area. For this reason, Ofgem limits the amount these networks can charge for their services through price controls known as RIIO1.
Ofgem’s proposals are set out in its RIIO-2 Draft Determinations Overview, covering the transmission and gas distribution networks and the system operator for the price controls running 2021-26.
However, the Utility Networks division of the Energy and Utilities Alliance, EUA, has expressed its disappointment with the proposed RIIO2 draft determinations, and believes OFGEM needs to urgently listen to industry to ensure the networks can support the move to Net Zero.
“EUA is deeply disappointed that it appears as though Ofgem had decided on the determinations before the consultation had even started” said Mike Foster, EUA CEO. “EUA and the wider industry put in many hours participating in consumer and business planning groups, and putting together detailed reports on how the networks should operate, yet these seem to have been ignored. The regulators draft determinations published on 9th July 2020 risk the UK’s progress towards meeting Net Zero. The networks have been leaders in pushing new and innovative ways to meet our climate obligations, hydrogen for example. It is the gas networks, through projects such as H21, HyNet, HyDeploy, Freedom Project, and H100 that are leading the debate around decarbonisation of heat to homes. They have embraced Net Zero, even before the politicians and the regulator thought to do so. Ofgem’s draft determinations could derail this progress which, in turn, could result in job losses and business closures at a time when the country needs to ‘Build Back Better’.”