Culture change is crucial to the future of UK networks

Springing off recent research into distribution network operator (DNO)expectations of life under the RIIO regime, a Utility Week roundtable last week, held in association with Tata Consultancy Services, sought to bring to light the hopes and concerns of a variety of stakeholders in the ongoing process of UK network transformation.

Utility Week editor Ellen Bennett opened the meeting with some observations on the outcomes of the RIIO research (available to download at www.utilityweek.co.uk/downloads).  She highlighted the widespread pessimism expressed by DNOs regarding the expected benefits of smart metering and expressed surprise at the high proportion of respondents (one third) who said they doubted smart metering would help them deal with outage management.

Attendees responded with opinions on the still smarting pride of networks which had hoped to lead the UK smart meter programme rather than suppliers. Others observed that the DNOs seem to find it consistently difficult to understand the business case for increased use of customer data, but are on a journey towards doing so.

Turning to address the implications of Ofgem’s final determinations for the DNOs, many doubted the threat of a referral to the Competition and Markets Authority, despite protests from a number of networks that the controls were too harsh. It was pointed out that risks of a referral are high. One delegate said that supporting a CMA referral could almost paralyse a business and that its outcomes “may leave you worse off than before”.

As discussion of the DNOs’ approach to RIIO developed, a number of comments were made regarding the quality of the business plans submitted during ED1. While Sharon Darcy, a member of Ofgem’s Consumer Challenge Group, said she felt the plans had shown a marked improvement on those submitted during Distribution Price Control Review 5, many still lacked what she termed “a golden thread running through” – meaning a clear and coherent message linking top level objectives with financials and operational detail.

A key conclusion from the roundtable was that DNOs still need to make a significant cultural shift if they are to adapt to life under RIIO. There remains a significant gap in understanding how to execute effective customer centricity and the potential for a changing role in the energy system.

Crucially, this challenge will need to be met with increased collaboration, knowledge-sharing and a significant shift in the traditional DNO skills base.

To download pdf of full article as if appeared in Utility Week: Culture change report