Brearley hints at flexibility on RIIO2 timetable

The timetable for the RIIO2 price controls may have to be adjusted if networks struggle to engage with the process due to their coronavirus business continuity measures, Ofgem’s chief executive has said.

Speaking during the latest Utility Week #AskUsAnything webinar today (17 April), Jonathan Brearley was asked about how the process could be impacted by the virus.

He said: “It’s very important to Ofgem, it’s very important to the sector and I believe it’s very important nationally that we do get RIIO2 determinations on time.

“That doesn’t mean that if we get to a point where the network companies say to us they’re at such as stage in their business continuity plans that they think it’s going to be extremely difficult to engage properly in this process – and any other stakeholder may come to us and say the same thing – then we may have to adapt.

“But right now, our Plan A is to continue with the program under the timetable that exists.”

Brearley said there were two reasons to continue with the programme as planned.

“The first is, fortuitously in this case, the time we have now was going to be one where we were examining the business plans in detail and although we very much changed the way we are working – we are all working remotely – that is something that we can continue to do with the support of companies when we need clarifications.

“The second is we do need to look forward and we do need to think about how this economic recovery is going to happen and the role that energy can play in that and it’s my view that those RIIO2 determinations are a fundamental part of building our low-carbon future and getting the investment in place that’s going to support our recovery.”

The first wave of RIIO2 business plans were submitted at the end of last year with electricity distribution companies currently working on theirs.

The Ofgem chief executive also warned that the sector must be more responsive to the challenges posed to customers as a result of Covid-19, describing the industry’s response to the financial crash in 2008 as “tin eared”.

“If I was to issue a challenge to the industry, I would say that in the past perhaps we haven’t been as thoughtful as we could be about the importance of the cost of living in the lives of the people who are going to be going through this crisis and coming out of it. Indeed if I look back to the financial crisis, you could say that industry was a little bit tin eared to the situation that was happening there.

“What I would encourage the industry to do now is to think very hard and to ensure that customers do not feel ripped off and do not ask too much on, for example, the rates of return. If we do not have the understanding of the situation that people are in, I think it would be hard for the industry to make the kind of progress that it wants to make”, he added.

You can listen to the full recording of the webinar here.