How we're regulated

How Ofgem regulates ESO

Ofgem makes sure we’re delivering value for existing and future consumers while supporting the transition to a more decentralised and decarbonised electricity system. One of the ways Ofgem does this is by setting regulatory price controls – these detail the services we’ll provide and the amount we can recover from consumers for delivering them.  

The services we provide and investment we need is informed by our own work and what our stakeholders think the Electricity System Operator (ESO) should deliver. Our business plans are then reviewed by Ofgem to determine our allowed revenue and how our performance will be evaluated. 
 

RIIO 

Ofgem’s regulatory framework is known as RIIO (Revenue = Incentives + Innovation + Outputs).  

The RIIO model offers energy companies incentives for securing investment and driving innovation, so they can develop sustainable energy networks and system operation services at the right cost for current and future consumers.  
 

RIIO timeline 

We’re currently in the RIIO-T1 period, which began on 1 April 2013 and runs through 31 March 2021.  You can find out more about the background of this price control on the Ofgem website. 

We’re now starting to build plans for the next regulatory period, RIIO-2, which will start on 1 April 2021. The ESO becomes a legally separate business in April 2019, so RIIO-2 will be the first time we have had our own bespoke price control.

We’re required to submit our plans to Ofgem by the end of 2019 for the RIIO-2 regulatory period. 

We’re currently working with stakeholders to make sure our plans reflect their priorities, and ultimately drive benefits for consumers. You can find out more about how to get involved below.