Citizens Advice response to RIIO-2 Draft Determinations for Transmission, Gas Distribution and Electricity System Operator
The energy network companies that deliver gas and electricity through their pipes and wires to our homes and businesses provide an essential service.
Keeping energy connected to people’s homes makes up about a quarter of the cost of consumers’ overall energy bills. Affordability has always been a keen focus of essential service price controls, but pressure on people’s incomes will be even greater due to COVID-19.
Ofgem has taken significant steps in RIIO-2 towards meeting our 5 principles, published in 2018, to ensure the price control would meet the needs of consumers. The principles were:
1. To address excess company profits
2. Return company unspent money to consumers
3. Listen to consumers
4. Improve company transparency
5. Support for low carbon initiatives and vulnerable consumers
We set out in this submission where we think Ofgem has made the right decisions, and our recommendations in other areas for final determinations that would be more cost-effective, better protect customers in vulnerable circumstances, and ensure that the energy network companies play a key role in the Net Zero transition.
The current context means it is vital that the energy network companies provide value for money and do not make excessive profits. More people are having difficulties paying household bills. While companies should still provide the services people need, this makes lowering costs a key priority.
The RIIO-2 price control is also an important delivery vehicle for Net Zero carbon emissions by 2050. Companies will need to ensure that they can readily connect low carbon generation and the flexible services to dampen peak and meet turn-up requirements. They will also need to put in place the infrastructure to allow for consumer uptake of low carbon technologies (LCTs) such as electric vehicles (EVs) or heat pumps. The companies will also need to effectively reduce their own impacts on the environment to help meet Net Zero.