RIIO-T1 Transmission price control review
SHETL publications
Following Ofgem’s decision to maintain SHETL on the ‘fast-track’ timetable, we have been working on updating our Business Plan to reflect the areas which required further clarity and understanding of how our plan was to be implemented and delivered whilst still giving due regard to the uncertainty which surrounds much of the requirements for us to develop our network throughout this period.
We have now published our January 2012 Update document to support our July Business Plan based on Ofgem’s initial assessment. Further supporting information can available be read in conjunction with this January 2012 Update providing further background to how we have informed our decisions in our Latest Documents section.
Following Ofgem’s decision to maintain SHETL on the ‘fast-track’ timetable, we have been working on updating our Business Plan to reflect the areas which required further clarity and understanding of how our plan was to be implemented and delivered whilst still giving due regard to the uncertainty which surrounds much of the requirements for us to develop our network throughout this period. We have now published our to support our July Business Plan based on Ofgem’s initial assessment. Further supporting information can available be read in conjunction with this January 2012 Update providing further background to how we have informed our decisions in our .
Background
Scottish Hydro Electric Transmission Limited (SHETL) owns and maintains the 5,000km high voltage electricity network of underground cables and overhead lines that serves the northern part of Scotland and connects to central and southern Scotland and the rest of Great Britain. Electricity networks like this provide a physical link between electricity generators and electricity users. SHETL’s duties and obligations include ensuring we are able to provide an economic and efficient service to generators who wish to connect electricity onto our network.
Because electricity transmission businesses like SHETL are natural regional monopolies, they are regulated by Ofgem through a ‘price control’. Amongst other things, this determines the amount of revenue they can earn from network users and the framework for capital investment in developing; maintaining and upgrading the networks.
Transmission price control from 1 April 2013
During 2008-2010, Ofgem undertook a detailed review of the way electricity and gas networks in Great Britain are regulated - the RPI-X@20 review. Ofgem published its decision document in October 2010 to implement a new regulatory framework, known as the RIIO model (revenue = incentives+innovation+outputs) of which the electricity transmission network review will form one of the first under this process and be known as RIIO-T1. These decisions form the basis for determining the transmission price control which is due to begin on 1 April 2013. Visit Ofgem's website for more information about the review.
One of Ofgem’s key decisions is to adopt an outputs-led approach to network regulation. This means regulated companies such as SHETL will need to define the service levels or outputs they expect to deliver to their customers. The prices they will be allowed to charge for the use of their networks will be based on delivering those service levels or outputs. The companies might face penalties for not meeting the defined standards or secure rewards for exceeding them.
Ofgem published the results of their initial consultation on the strategy for the transmission price control in December 2010. They have followed this up with their decision on strategy document at the end of March 2011. Ofgem published their initial assessment to our Business Plan submission in October 2011, with a detailed annex document.
Ofgem published a letter, RIIO-T1: Decision on fast tracking, as an update on the progress SHETL has made on 'fast-tracking' on 23 January 2012 confirming their acceptance of our Business Plan as suitable for 'fast-tracking' subject to a consultation on Initial Proposals which they will issue on 6 February 2012.