Utility Week

UTILITY WEEK | AUGUST 2021 | 17 Policy & Regulation The operator for the Midlands, South West and South Wales has already published two iterations of its dra business plan. Each version of the plan has included an upli in the totex requested, with the latest asking for £6.2 billion over the give years – an 18 per cent increase in average annual expenditure for ED1. As revealed in the second dra of its plan, WPD has committed to becoming a net zero business by 2028. The expenditure requested includes £1.1† billion of network operating costs and £595 million for reinforcement of the network. A further £1.7 billion is proposed for non- load-related investment, with the bulk of this (just over £1 billion) targeted at asset replacement. The plan also asks for £1.2 billion for engineering management and £850 million for upgrading IT and telecoms. The plan includes 45 core commitments, covering priority areas such as customer ser- vice, vulnerable customer support, the deliv- ery of a safe and resilient electricity network, net zero, community energy and " exibility markets. UKPN's plan sets out a number of di˜ erent totex scenarios, with a baseline plan of £4.5 billion over ED2 (a 7 per cent rise on ED1) but potentially growing to c£5.6 billion through uncertainty mechanisms. This highest case scenario is based on the Climate Change Committee's widespread engagement path- way. The baseline scenario works on an assumption that customers will change their behaviour to support decarbonisation, for example by taking up smart charging. This model assumes that by 2028, 2.6 million EVs and 300,000 heat pumps will be connected to its network. The plan stresses that it is impossible to accurately predict the rollout of low-carbon technologies (LCTs), pointing out that only 20 per cent of the LCTs forecast for ED1 have actually materialised. It adds: "This lower than forecast take-up has resulted in a combination of customers paying for investment that was not required and owners of regulated network businesses earning greater than expected returns, both damaging the legitimacy of the sector." UKPN predicts a real terms decrease in customer bills over the ¢ ve years in any of the scenarios, of 10 per cent for the baseline and 4 per cent at the highest case. It says that at the heart of its plan is the establishment of "the UK's ¢ rst independ- ent DSO", which it said would lead its work to facilitate the transition to net zero. It believes this will ensure "transparency of investment decision-making and ensure that the lowest cost solutions overall for custom- ers are adopted". UKPN chief executive Basil Scarsella said in his introduction to the plan that the com- pany intended to "walk the talk" by commit- ting to achieve net zero in its own operations by 2028. Its approach has already been veri- ¢ ed by the science-based targets initiative. The plan also commits to establishing a dedicated team to work with local authori- ties to develop local area energy plans. It proposes "innovative approaches" to help unlock public on-street charging, which it claims will increase the current levels of on-street public chargers by 25 per cent. The company has also pledged to create £67 million-worth of bene¢ ts to support cus- tomers experiencing fuel poverty. SSEN is requesting totex of £4.1 billion over the ¢ ve years – a 36 per cent increase over an equivalent time frame in the ED1 cycle. SSEN stresses that the increase should have no impact on the amount customers are charged, due to its proposed 0.5 per cent year-on-year e¥ ciency gain for ED2 and other embedded e¥ ciencies. More than half of the requested expend- iture – £2.2 billion, or 53 per cent – is ear- marked for network resilience and safety. This includes £1 billion in strategic resil- ience and £235 million on ensuring the safety of its teams and the public. SSEN plans to spend £90 million on the resilience of high-voltage (HV) and low-volt- age (LV) underground cables in the context of climate change. It has also proposed £23.5 million to further scale up automation, with a plan to upgrade 450 circuits. Just over £1 billion in the plan is allocated to accelerating net zero, with allowances for further funding through uncertainty mecha- nisms. This would see £542 million invested to support the connection of an estimated 1.3 million EVs and 800,000 heat pumps across SSEN's patch, which covers central southern England and the north of Scotland. However, the plan makes clear that " ex- ibility will be at the heart of the distribution system of the future and therefore requests £75.1 million for investment in delivering the distribution DSO role. A further £369 million is requested for delivering a "valued and trusted service" for customers and communities, including increasing support for vulnerable custom- ers, with an expectation of helping 200,000 households. The bulk of the allowance (£267 million) in this section of the business plan would go towards digitalisation and improved telecoms services. The plan also includes £544 million for general running costs. (EVs) hit the roads and 5GW of additional low-carbon generation connected to its net- work over the ¢ ve-year period. Its average annual contribution to the typical household energy bill is forecast to fall from £102 to £90 for customers in the south of Scotland but rise from £122 to £131 for those in the North West of England and North Wales. "It is essential Ofgem supports us by providing an agile regulatory framework that helps deliver a network where customers can switch to EVs and other net zero technologies with ease." CHRIS BURCHELL, SSEN DISTRIBUTION MANAGING DIRECTOR "Our electricity distribution system will face the biggest changes to its design and operation for half a century." FRANK MITCHELL, CEO, SPEN

• Cover