Regulation

What is RIIO?

RIIO stands for: Revenue = Incentives + Innovation + Outputs

RIIO-2 came into effect in April 2021 and lasts for five years through to March 2026.
In setting the control Ofgem:

• Assessed workloads and outputs needed to maintain the system, preserving the safety and reliability of the gas distribution network into the future.
• Analysed cost efficiency, including comparable studies with other companies, in order to set cost allowances at an efficient level.
• Set gas networks expenditure (Totex) at a level that sought cost improvements for all networks.
• Set output targets and incentives to improve our standards of service and environmental performance.
• Determined allowed revenues including mechanisms to:
  • ensure cost movements such as lower interest rates are passed fully on to customers, and
  • share any cost savings through efficiencies with customers, while ensuring outputs are delivered.

Our performance so far

Since the start of RIIO-1 in 2013 we have delivered improved safety, reliability, environmental and standards of service outputs as well as cost efficiency improvements, as summarised in our annual Strategic Performance Overviews for RIIO-1 in the document library below.

Supporting each annual Strategic Performance Overview are the summary spreadsheets for our four networks; East of England, North London, North West, and West Midlands.

These provide data on our performance across the eight years on

• costs
• workloads
• safety reliability and
• environmental outputs.

We also have a common performance snapshot and customer bill which will enable customers to be able to view high level information in a common format across the eight Gas Distribution Networks.

We recognise there are more improvements to be made and we are challenging ourselves to deliver them. These include further improvements in our customer service around new connections and planned replacement works.

The RIIO model also encourages us to focus on innovation to improve performance in this control period and the longer term.

A strategic priority for Cadent is to continually look into the future role of gas and how gas networks can help the United Kingdom with the longer term decarbonisation challenge we all face.

Long term development plan feedback

Long Term Development Plan 2018