Second ESO RIIO-2 draft business plan published
30 Sep 2019 - 2 minute read
We’ve published the second draft of our business plan which sets out the ambitious activities the ESO is proposing to deliver in the RIIO-2 period.
Our RIIO-2 plan, which will be the ESO’s first as a newly separate company, presents how our proposals will help us achieve our 2030 mission and contribute to the UK achieving its net zero ambition by 2050.
Ahead of our formal draft submission in October, we’ve been working with stakeholders across the industry, giving them the opportunity to further shape our business plan. Since July, we have also worked with Ofgem’s RIIO-2 Challenge Group, which has had the opportunity to scrutinise our business plan and further define our role as the ESO.
What is RIIO-2?
RIIO-2 is the price control that is set by Ofgem, and used to regulate the electricity and gas network companies.
RIIO stands for Revenue=Incentives+Innovation+Outputs. Its purpose is to encourage and reward network companies for taking innovative and efficient actions to deliver a safe and secure network at the right cost for current and future consumers. The price control framework sets out the outputs and activities each company will deliver over a period of time, and how they will be paid for this.
For the ESO, its RIIO-2 price control will look slightly different to the price controls of the network companies. It will start in 2021 and and will consist of a two-year business planning cycle within a five-year price control. We will also be funded using a different model.
Angelita Bradney, Head of ESO RIIO-2, said:
The energy sector is undergoing massive transformation. A new energy landscape is emerging, with different types of electricity generation, more parties to engage with and changing consumer behavior.
Supported by a new, bespoke regulatory model, we will facilitate the transition to a zero-carbon power system, helping to achieve the UK’s recent commitment to net zero emissions by 2050. Alongside this, we will continue to deliver energy safely and reliably and drive value for consumers in everything we do.
We are very grateful for the encouragement, support, challenge and guidance our stakeholders have provided to help us develop this ambitious business plan to meet the future needs of the energy market.
Watch our videos below to learn about the key themes in our RIIO-2 draft business plan: