Network boss says lockdown may have changed consumers’ priorities for RIIO2

The head of SP Energy Networks has questioned the validity of prior feedback from consumers on networks’ business plans, saying the coronavirus lockdown may have drastically altered their priorities in the meantime.

Speaking to Utility Week about the fallout from the pandemic, chief executive Frank Mitchell said the crisis has arisen at a “critical time” for the development of RIIO2 business plans.

“The consequential impacts from the reprioritisation of activities and resources by distribution network operators and the government’s restrictions to civic life will have significant impacts on developing key building blocks of the business plan and testing them robustly with stakeholders,” he remarked. “If these restrictions continue, this becomes a more sustained and pressing risk to a satisfactory outcome to the business plan process itself.

“A key concern is the fundamental distortions and limitations that a continued lockdown will present to our process and outputs. Ultimately, our stakeholders will not be satisfied with a restricted approach, given the current timetable for business plan delivery.

“Another concern is the validity of consumer insight during a period of significant societal change, whereby our customers may have very different opinions on energy provision and related issues following the pandemic.”

He said the RIIO ED2 price control is likely to be “the most complex and challenging price control ever developed”, adding: “Given the current, unprecedented impact on our country, we believe it is reasonable to expect our stakeholders may have some fundamental reassessments on the drivers and outcomes of energy system strategy.”

SP Energy Networks operates both distribution and transmission networks. The price control for electricity transmission is due to start in April 2021, with Ofgem issuing its final determination for the price control towards the end of this year. The price control for electricity distribution will begin two years later in April 2023.

Mitchell said the company has reviewed all of its activities in response to the coronavirus – delaying some, accelerating others and undertaking entirely new work in some cases.

On the distribution side, for example, Mitchell said the firm has postponed work requiring home visits such as its rising mains and laterals replacement programme for flats and secured “extensive additional portable generation capacity” to ensure it can maintain power supplies to key services such as hospital and care homes.

On the transmission side, the company has increased its use of helicopters and drones to identify potential faults and rectify them quickly and accelerated its shunt reactor programme to help the electricity system operator manage to control voltage during periods of low demand. One shunt reactor has already been commissioned at Elvanfoot and two more will be completed at Smeaton and Bonnybridge “in the coming months”.

“We’re continuing to monitor the situation closely and are working with government and industry to respond appropriately,” Mitchell added. “Our priority is keeping the power flowing to our customers and communities and ensuring the safety and wellbeing of our staff and customers in the process.”

He continued: “As government starts to relax measures and where it’s deemed appropriate, we’ll look to re-introduce non-essential works when it’s the right time to do so. Even when this is all over, it will take a bit of an adjustment to get back to ‘normal’ – whatever that may end up being.”

As the head of a company with operations across England, Scotland and Wales, Mitchell noted that “not all countries are moving at the same pace”. He said: “Social distancing will be with us for some time and this has, and will in the future, impact some work, such as customer’s reluctance to allow staff entry for non-emergency work. We will continue this ongoing dialogue to ensure that Covid-19 network impacts are understood by Ofgem.”