SSEN Distribution publishes response to Ofgem RIIO-ED2 Draft Determination consultation

SSEN Distribution publishes response to Ofgem RIIO-ED2 Draft Determination consultation

SSEN Distribution is urging Ofgem to grasp the opportunity of the RIIO-ED2 price control to secure the necessary investment in local decarbonisation and resilience whilst also protecting customers from bill increases at a critical time for households. 

In its consultation response to Ofgem’s Draft Determinations for the RIIO-ED2 price control, which runs from 2023 to 2028, SSEN has strongly challenged Ofgem’s approach and is asking the regulator to look again at the robust stakeholder evidence presented in its £4bn business plan ahead of the Final Determinations in November. 

Co-created with over 25,000 customer and stakeholder inputs, SSEN proposed a balanced business plan to deliver a network ready for net zero, drive progressive technological change and improve network resilience to extreme weather, with no planned increase to the distribution charges on customer bills.

SSEN has expressed serious concern with Ofgem’s proposals to apply major cuts to the funding necessary to deliver this plan and enable decarbonisation of heat and transport, improve resilience at a time of increased climate risk and meet the specific needs of the north of Scotland. Ofgem’s cuts, if implemented, will result in:

• A trajectory for local decarbonisation that is less than the minimum required to reach net zero – and which will consequently increase future costs of reaching net zero for consumers
• At least a 30% reduction in the number of Electric Vehicles and Heat Pumps enabled by the SSEN plan
• At least a 30% reduction in investment to address network resilience and combat worsening winter storm and extreme summer heat events as a result of climate change
• Rejection of the end-of-life replacement of over 450km underground electricity cables essential to continued network resilience and prevention of localised power cuts
• Increased risk to security of supply to remote areas and island communities in Scotland through rejection of key subsea cable renewals

In its comprehensive consultation response, informed by further stakeholder engagement between June and August, SSEN sets out its position on these and other key issues including sustainability, efficiency, uncertainty mechanism design and financeability.  Aimed at improving Ofgem’s understanding of SSEN’s plan, it proposes constructive resolutions to core errors in the draft determination and provides additional evidence and justification where required.

SSEN will continue to engage constructively with Ofgem and wider stakeholders  over the coming weeks to ensure the Final Determinations in November fully reflect the needs of customers and stakeholders.

Chris Burchell, Managing Director, SSEN Distribution said:

“The RIIO-ED2 price control period will be absolutely critical in the context of concurrent climate, energy and cost-of-living crises and - if properly funded and regulated – could help to embed affordability and security in our future energy system without increasing bills today.

“Ofgem has the opportunity now to drive investment in the networks and systems to help local communities decarbonise at pace, increase network resilience so customers have the confidence to switch to low-carbon technologies, and enhance security of supply. This would lead to a cheaper, greener system in the longer-term, and a just transition for all our customers, including the most vulnerable.

“Ofgem’s current proposals miss this opportunity and go against extensive customer and stakeholder evidence by proposing cuts that erroneously apply a drag on decarbonisation and climate resilience at the very time we need to do more.

“In our consultation response we’ve been clear where change is required and have proposed several steps Ofgem can take to help us deliver our stakeholder-led plan to power communities to net zero and protect consumers over the long term. We’ve also highlighted where Ofgem has made material errors which, if unchecked, will result in significant impact to our customers and communities.

“Ofgem is bound by a clear set of duties and obligations. Our message is a simple one – take the opportunity to fund the investment our customers and stakeholders have told us is needed, without raising bills, or run the risk of creating an infrastructure gap to net zero, a slower recovery from the energy crisis and, ultimately, a higher cost transition for consumers.”