The chief executive of Northern Powergrid has criticised the RIIO-ED2 price control for having too many uncertainty mechanisms, which he warns could overwhelm Ofgem.
Phil Jones was speaking during a panel session at Utility Week Forum in London recently where he was asked what he would like to see in terms of the evolution of the process for RIIO-ED3.
In response he criticised the nature of the current RIIO-ED2 price control, which began last April, and said that “clarifying uncertainty is non-stop”.
“If you compared the ED2 settlement right now to any of its predecessors and judged it on that scale, I’m not sure it would score as well as any of them,” said Jones.
He added: “There are over 30 uncertainty mechanisms in ED2 for us…the ongoing rolling nature of clarifying uncertainty is non-stop. I would like to see more practical evidence of us getting back to some braver, bolder regulatory decisions that then do put clarity out there.”
“That doesn’t mean open cheque books and go and build what you want,” he clarified.
Jones was later asked how he would like to see the process improved.
He said: “The first fix is try and not to have so many (uncertainty mechanisms) in the first place. But when you do you have got to try and make them swift but when there’s so many of them and transmission is doing the same thing on top, it just overwhelms a regulator who themselves have said they are under pressure resource wise.
“The fundamental is try and have fewer of them and don’t build the plane as you are trying to fly it.”
Industry experts have previously warned Utility Week that the abundance of uncertainty mechanisms in the RIIO-ED2 price controls will leave a lot of work to do during the period for both Ofgem and distribution network operators.
In its final determinations the regulator said the “agile package” of 37 common and seven bespoke uncertainty mechanisms will “allow investment to adapt quickly to support higher volumes of low-carbon technologies if networks are faced with sharper uptakes in demand for new connections”.
The common uncertainty mechanisms comprise four indexations, 10 passthrough allowances, three use-it-or-lose-it allowances, four volume drivers and 16 reopeners.