Our response to Ofgem's open letter on the RIIO-2 framework

The RIIO-2 framework represents the bridge between today and tomorrow and will contain the vital cogs that will drive the industry forward to meet the challenges of delivering the affordable, secure and decarbonised whole energy system of the future.
We have already been working with our stakeholders to reflect on the RIIO framework and to look forward to the next price control period and have identified the following four key messages:
  • RIIO-GD1 provides a strong platform that can be evolved for RIIO-GD2 to deliver the outcomes that customers want and need;
  • Ofgem must ensure that the RIIO-GD2 framework can manage the interactions in costs across sectors ensuring the lowest cost pathway to the decarbonisation of heat and transport recognising the critical role of the gas networks in achieving these wider societal benefits;
  • In order to maintain and attract the required investment to deliver the outcomes required by current and future customers, all network companies must have a realistic opportunity to achieve fair returns in RIIO-GD2 which are clearly aligned to improvements in customer outcomes;
  • Customer requirements will vary across Great Britain, and there will be no one solution to decarbonisation, so the RIIO-GD2 framework must evolve to be more adaptable and responsive to regional energy strategies.

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RIIO-GD2 will be the next price control for Cadent and the other three network companies, who own and operate the gas distribution networks in Great Britain.

This will be the second price control period using the RIIO framework and will start in April 2021. Ofgem have initiated the first phase of their review which will culminate in their decision on the framework which is expected in either May or June 2018.