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Citizens Advice views on the electricity distribution network companies’ draft business plans for RIIO-ED2

8 Medi 2021

Citizens Advice views on the electricity distribution network companies’ draft business plans for RIIO-ED2 [ 300 kb]

The electricity distribution network operator (DNO) companies have submitted their draft ED2 business plans to Ofgem. We have taken the opportunity to look at those plans and provide views so that the plans can be improved in time for the final submissions in December 2021.

We have key asks for Ofgem and the DNOs:

  • The need for coherent, joined-up, and well-justified plans as many plans appeared siloed and lacking a strategic narrative connecting the plan elements 

  • Justification for why DNOs are the most appropriate body, or well-placed, to undertake proposed activities as many new activities do not have sufficient explanation as to why the DNOs are best-placed to undertake them

  • Clarity, consistency, and comparability of information as it proved difficult to compare plans given the variable ways that companies have described their proposals. Ofgem needs to provide further guidance to companies in a range of areas

  • The need to demonstrate and justify how Vulnerability Strategies for customers in vulnerable circumstances meet or exceed baseline expectations, and how those strategies connect to other areas of the plan

  • For Ofgem to scrutinise the robustness of forecasting methodologies, and ensure that uncertainty mechanisms meet Net Zero needs as well as protect customers from the risks of company overpayment 

  • For Ofgem to consider the value of more independent Distribution System Operation (DSO) functions, and whether DNOs have considered all options to deliver DSO. The plans need to adequately incorporate the views of local authorities and devolved governments 

  • A higher cost of equity is not justified. We believe companies should be exploring all options that do not increase overall costs to consumers, including equity injections and depreciation

Citizens Advice views on the electricity distribution network companies’ draft business plans for RIIO-ED2