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Ofgem should be bolder and take more risks when it comes to setting the RIIO2 price controls, an industry figure has argued.
John Scott, who served as Ofgem’s technical director for more than five years before setting up the consultancy Chiltern Power, made the comments during a discussion about flexibility at Utility Week Live in Birmingham this week.
Scott said the transformation of the energy system will require network operators to take more risks and that investors will need to be compensated accordingly. But this could leave Ofgem exposed to accusations that it has been overly generous to network companies.
In light of these concerns, he said the energy industry should support Ofgem and the government by providing the evidence and assurances they need to “think a little more boldly and begin to take a little more risk at the margins”.
Speaking to Utility Week afterwards, Scott raised fears that Ofgem’s latest proposals for the RIIO2 price controls are too focused on driving down returns at the expense of encouraging ambitious action by network companies.
During an earlier session, the chair of the delivery board for the Future Power Systems Architecture (FPSA) project, Simon Harrison, warned that the operation of the electricity system will need to be urgently overhauled if the UK is to reduce its greenhouse gas emissions to net zero by 2050 and without burdening consumers with unnecessary costs.
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