Network

NETWORK / 31 / FEBRUARY 2019 tion should prompt reinforcements, and whether DNOs should be incentivised to keep it below a certain threshold. The question also arose whether Ofgem could use innovation projects to test new incentive mechanisms before rolling them out sector-wide. Several attendees highlighted the need to invest ahead of demand in preparation for the widespread adoption of electric vehicles. They accepted that Ofgem will not be able to provide large allowances in advance but said the regulator needs to reassure network com- panies they will be able to recover the costs they incur in due course. Network charging On the topic of network charges, attendees had fewer speci• c solutions to o• er but were clear on the nature of the problem at hand. They said network charges will create price signals that form the foundation of many in- novative business models. They should provide clear incentives to users to minimise whole-system costs but without leaving those who are unable to re- spond - vulnerable customers in particular - to pick up the tab. They should also discourage customers from going entirely o• -grid in order to avoid the charges. It was suggested networks could charge users di• erent rates for "core" and "discretion- ary" needs. There were also calls for custom- ers to receive more information about what they are being charged for on their energy bill and how they could go about saving money. Another subject that was touched on throughout the discussion was the importance of networks' relationships with stakeholders. There was agreement DNOs need to en- gage more proactively with customers rather than just responding passively to their needs. One attendee said networks need to step out from the "shadows" of energy sup- pliers, who until now have been the "face" of the industry. Another claimed this change is already taking place: "One of the key aspects of RIIO is increasing stakeholder feedback and customer engagement. "Stakeholder engagement is now hard wired in the business, and as a result it drives a lot of our work. Many of the things my team and I are doing now are a response to what customers said they wanted us to prioritise." Local energy schemes, particularly those being undertaken by large cities, were seen as an excellent opportunity for this type of engagement, bringing together numerous key stakeholders that networks might other- wise struggle to reach. Views from the speakers: "Optionality value is absolutely critical to the case for fl exibility and yet when you look at the regulatory arrangements they don't reward or encourage optionality. You could argue that early within a particular price control period they sort of do but later on, as soon as the optionality period bridges price reviews the value and incentive to the DNO is lost." Stewart Reid, head of DSO innovation, SSEN "It isn't a requirement to fundamentally change the technology because it has to do something different. Existing technology would work perfectly well. But it doesn't meet the affordability challenge." Paul Bircham, commercial strategy and sup- port director, Electricity North West "One of the key aspects of RIIO is increasing stakeholder feedback and customer engagement. Stakeholder engagement is now hard wired in the business, and as a result it drives a lot of our work. Many of the things my team and I are doing now are a response to what customers said they wanted us to prioritise." Sotiris Georgiopoulos, head of smart grid development, UK Power Networks "There is a risk that if you just focus on the network costs you ignore the opportunities for our customers. Sometimes spending more on networks enables customers to have cheaper energy overall. We need to set up an arrangement which allows us to refl ect that whole-system approach." Nigel Bessant, head of network trading, SSE In association with:

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