Ofgem publishes 2020 Annual Iteration Process for the electricity distribution network price control

News stories related to Energy Efficiency, Climate Change and Fuel Poverty. We'd very much like to here you're views on any of the stories we post here. (Please note that only Admin members can post new topics in this forum)
Post Reply
Posts: 61
Joined: Wed Jan 15, 2020 9:54 am

Ofgem publishes 2020 Annual Iteration Process for the electricity distribution network price control

Post by AngelaE » Thu Dec 03, 2020 2:13 pm

More information: https://www.ofgem.gov.uk/publications-a ... ce-control

[Published 27 Nov 2020] Ofgem has today published the results of the 2020 Annual Iteration Process (AIP) for electricity distribution network companies (1) under its network price controls.

As part of the ‘Revenue = Incentives + Innovation + Outputs’ (RIIO) price controls for network companies, we make annual adjustments to the revenue that we allow the electricity distribution network companies to collect through the AIP.

The AIP updates base revenues across Ofgem’s price controls for the next regulatory year (2021/22).

This year’s AIP has reduced the allowed revenue that electricity distribution network companies will collect relative to the assumptions made at the start of the price control by around £256.6 million (2019/20 prices), saving consumers money on their bills. This reduction is driven by the following factors:
  • Cost of Debt - Lower interest rates in debt markets have resulted in a lower cost of debt allowance compared to the level set at the start of the price controls.
  • Allowed Expenditure – On the whole, network companies are spending less than the amounts assumed at the start of the price controls, therefore we make a proportionate reduction to their allowed revenue.
  • Pensions reasonableness review – Pension allowances have reduced following the triennial revaluation of the companies’ defined benefit pension schemes. This has led to networks having to pay lower costs to repair deficits that exist in their schemes. All these schemes are now closed to new members, but continue to accrue obligations in respect of pensionable service of remaining members.
We have published updated Electricity Distribution Price Control Financial Model (PCFM) for the Electricity Distribution 1 price control: RIIO-ED1 Financial Model following the Annual Iteration Process 2020.

For further information and Editor's Notes: visit: https://www.ofgem.gov.uk/publications-a ... ce-control

Post Reply

Return to “UK National News and Announcements”

Who is online

Users browsing this forum: No registered users and 1 guest