National Grid plc (LON:NG) has submitted its responses to Ofgem’s RIIO-2 draft determinations on Friday. Our detailed response sets out why we regard a significant number of the current proposals, and the overall package, as unacceptable, not being in the interests of consumers, and not reflecting the views of our stakeholders.
Our largest ever stakeholder engagement programme, conducted as part of the RIIO-2 consultation process, highlighted the importance of maintaining reliable and resilient networks and the important role National Grid has to play in the UK’s transition to net zero. For this to be achievable, it requires a flexible regulatory framework that will incentivise investment whilst protecting consumers.
The proposals within Ofgem’s draft determination, in particular the combination of the proposed low base level of total expenditure, the uncertainty around the approval process for additional totex and the low allowed baseline return and potential inability to achieve it, does not allow this. The proposals also risk disrupting our supply chain, inhibiting our ability to maintain resilient and reliable networks and endangering the critical investment required to put the UK on the path to meet net zero targets.
Our response provides the remedies we believe are required to enable us to deliver the networks and investment our stakeholders clearly want. We have also included results from a consumer preference test, performed by an independent body also used by Ofgem, to show that consumers’ preferences are for investment in reliability and net zero above short term bill reductions.
Looking forward, we will continue to engage with Ofgem at all levels, including through CEO and Chair meetings, and October’s open hearings, to facilitate an agreement that can create the right incentives to drive the investment and innovation needed to allow the UK to meet its clean energy ambitions, at a cost that is acceptable to consumers.
National Grid will be hosting a call at 11am. Joining instructions can be found at:
https://nationalgridinvestorwebinarriio2ddresponse.eventbrite.co.uk
