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Ofgem has proposed to withhold roughly £247 million of funding requested by distribution network operators (DNOs) on the basis it is not justified or would provide poor value for money.
The RIIO framework allows networks companies to apply through a reopener mechanism for additional funding to cover the cost of certain activities that had not been forecast when their price control was set.
Ofgem launched a reopener for the RIIO ED1 price control in May and received 12 requests worth almost £322 million in total. They came from all six of the DNOs in Great Britain and covered four categories:
- High value projects
- Rail electrification
- Enhanced physical site security
- Specified street works
Ofgem is now consulting on its minded-to decision to allow the companies to recoup just £75 million, as shown in the table below:
| Company | Category | Project details | Amount requested | Amount proposed |
| Electricity North West | Street works | £10.3m | £9m | |
| Northern Powergrid | Street works | £14.5m | Nil | |
| Site security | £3m | £2.9m | ||
| Scottish and Southern Electricity Networks | Rail electrification | Electrification of Great Western Railway line | £17.2m | £16m |
| High value projects | Replacement of subsea cable under Pentland Firth | £30m | £30m (subject to conditions) | |
| SP Energy Networks | Street works | £21.3m | £8m | |
| High value projects | Replacement of fault-prone cable joints | £70m | Nil | |
| Upgrades to low-voltage network to support EV charging | £42m | Nil | ||
| Addition of network capacity to meet extra demand from HS2 | £35.1m | Nil | ||
| Rail electrification | Diversion of power lines for HS2 construction | £12m | Nil | |
| UK Power Networks | Street works | £10.2m | Nil | |
| Western Power Distribution | Street works | £56.2m | £7.7m |
The three biggest requests all came from SP Energy Networks.
The company asked for: £70 million to replace more than 3,000 cable joints installed between 2008 and 2011 that were found to be susceptible to faults; £42 million to upgrade its low-voltage network in central and southern Scotland to support the uptake of electric vehicles; and £35.1 million to increase network capacity to meet extra demand from the proposed HS2 high-speed rail line connecting London, Birmingham and Manchester.
All three were provisionally rejected by Ofgem. The regulator also proposed to reject a separate request from SP Energy Networks for £12 million to divert a number power lines in preparation for the construction of HS2.
Of the £112.5 million requested for street works projects, the regulator has proposed to allow just £24.9 million to be recovered by Electricity North West, SP Energy Networks and Western Power Distribution.
The deadline for responses to the consultation is 30 August. Ofgem will reveal its final decision in October.
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