Contingency plans for delays to RIIO2 revealed

Ofgem is developing contingency plans to ensure the RIIO2 price controls are still able to take effect on 1 April 2021 even if the determination process is delayed by up to three months.

The regulator said the preparations are necessary due to ongoing delivery risks presented by the coronavirus pandemic.

“Following final determinations, we aim to publish a statutory consultation on licence modifications in December 2020, and to direct the necessary changes to licences in February 2021, with the new controls starting on 1st April 2021 following the 56-day standstill period,” Ofgem explained in an open letter to stakeholders.

“However, Covid-19 continues to present some risks to delivery, and we noted in draft determinations that we should have contingency plans in place should impacts on Ofgem or company resources mean we cannot adhere to the existing timeline.”

“Our proposal seeks to address the risk that there is some slippage in the RIIO-2 timetable but aims to ensure that the price control takes effect from 1st April 2021,” it added.

Ofgem intends to add a new condition within existing to the RIIO1 license that, when triggered, would allow it to modify the other license conditions to give effect to its final determinations for RIIO2:  “This would allow us to accommodate a limited delay of up to three months, whilst preserving the RIIO2 1 April 2021 start date.”

The regulator gave assurances that the license condition could only be used in the specific circumstances described, would be immediately followed a formal consultation and then direction, and would not affect companies’ ability to appeal against the final license modification to the Competition and Markets Authority.

Ofgem published its draft determinations for the RIIO2 price controls for transmission, gas distribution and the electricity system operator last week.