RenewableUK has warned that Ofgem’s price controls proposals put vital upgrades to the network at risk.
Responding to today’s announcement by Ofgem on draft RIIO-2 price controls, RenewableUK’s policy and regulation head Rebecca Williams said the proposals won’t bring forward the investment to kickstart a green economic recovery.
“That means fewer jobs and slower progress towards net zero,” she added. “So it’s a missed opportunity by Ofgem to encourage investment in grid infrastructure and it means consumers would lose out as vital grid upgrades wouldn’t happen.”
“However, we welcome Ofgem’s recognition of the importance of working with network companies to achieve net zero.
“Its proposals to build more flexibility into price controls by using a net zero ‘re-opener’ mechanism to accommodate new technologies such as renewable hydrogen, as well as boosting innovation funding more widely, could unlock benefits for consumers”.
Ofgem this morning laid out its draft determinations for the RIIO-2 price control for transmission and gas distribution network companies, including nearly halving their allowed base rate of return for the period which will run from 2021 to 2026.
Under its proposals Ofgem says it is allocating £25bn in upfront expenditure to maintain and operate Great Britain’s gas distribution, gas and electricity transmission networks as well as support the growth of green energy.
Ofgem is also proposing to cut over £8bn from companies’ spending plans by setting them “stretching efficiency targets” and disallowing some costs that they have not justified.