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UK utility National Grid has said the country’s energy regulator’s Draft Determination on RIIO-ET3 needs more changes regarding baseline return and the incentives framework.
Ofgem’s determination for spending between 2026/27 and 2030/31 was announced in July and set the stage for an £80 billion ($107.5 billion) investment programme to boost electricity network capacity.
At the time of the draft’s publication, National Grid said they would review the details to assess whether it delivers an investable overall financial package.
National Grid has now welcomed the £80 billion commitment plan for the electricity transmission sector, which they say demonstrates ‘recognition of the need for urgency in delivery’.
However, they add that it does not sufficiently recognise the practical realities of expanding the power system, nor the required two and a half times increase in investment for the transmission network.
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Investability and workability, says the utility, will be necessary for transmission owners to meet the commitments in their business plans. The company says they have submitted evidence and solutions for the changes required by Final Determination, which is due in December, regarding these two points.
First, regarding investibility, conditions need to be created to deliver a massive increase in investment. Specifically, National Grid says changes are needed in relation to the baseline return and the incentives framework to allow high performing networks to achieve a globally competitive overall return.
Second, on workability, National Grid says more is needed to streamline the overly complex suite of funding mechanisms, and changes are needed on Ofgem’s approach to make decisions in reopener processes. A workable framework, adds the utility, enables transmission owners to recover the efficient costs of their investment and allows them to progress projects at the pace expected by stakeholders.
National Grid says they will continue to engage with Ofgem to agree a price control that attracts the investment needed.
