Ofgem Consultation: Frameworks for future systems and network regulation

The existing RIIO-2 price controls for electricity and gas transmission and gas distribution networks will run until March 2026, with the new price control for electricity distribution running for 5 years until March 2028. We are now consulting on the process for deciding the overarching framework design for the network price controls that will replace these. The response from stakeholders to our open letter published in September 2022 re-affirmed our preliminary analysis that network price controls should be tailored to unlock whole system benefits to consumers.

We want to ensure that our regulation of networks enables a transformation of the energy system in the coming decades, as well as continuing to ensure efficient operation and management of all networks. It is now imperative that generation and network investment are closely planned and co-ordinated; and that the electricity network is upgraded in anticipation of the significant numbers of low carbon assets needed to meet net zero targets for 2035 (a net zero clean power system) and 2050 (a net zero economy).

The transformation means investing, upgrading, relocating capacity, and reconsidering use of the existing networks based on predictions of where the system will be in 5, 10 or 25 years’ time. We are therefore considering whether, and by how much, such a foundational shift merits adaption of our existing network regulation regime versus alternative solutions. In this consultation we set out options for the future regulation of networks to meet the challenges of the future and deliver net zero at the lowest cost for consumers.

We will be hosting a virtual launch event in the week commencing 27 March 2023. Throughout the consultation process, we will be holding a series of engagement events which we intend to be primarily between March and May 2023.

Register your interest for both the launch and engagement events at Future Systems and Network Regulation Engagement Groups – Register of Interest Survey

Final responses to the consultation should be sent to FutureNetworkRegulation@ofgem.gov.uk by 19 May 2023.