Utility Week

36 | APRIL 2023 | UTILITY WEEK Transmission Conference report RIIO3 may focus on fast-track investment Senior fi gures from the energy sector gathered at the Future Networks, Heat & Transport conference to discuss progress on delivering a fl exible and resilient system and the challenges of decarbonisation. O fgem's director of networks told Util- ity Week's conference in Birming- ham that the regulator is considering whether its recent approach to fast-tracking investment in electricity transmission net- works could become the "new normal" for price controls. Rebecca Barnett discussed how its approach could evolve for the RIIO3 process, which for gas and transmission companies begins in 2027. She highlighted how last December Ofgem introduced a streamlined regula- tory framework called Accelerated Strategic Transmission Investment (ASTI), which will initially cover 26 projects with a collective value of around £20 billion. Barnett said: "There's now more investment than ever going through uncertainty mechanisms. At what point does that start to undermine the ex-ante settlement approach of RIIO? Our ASTI framework for electricity transmission goes beyond any uncertainty mechanism; we eŒ ectively set up a parallel framework for the delivery of £20 billion-worth of new network at speed." She added that the Future System Opera- tor's (FSO) role in system planning will mean changing the current roles of trans- mission companies. She continued: "So do the ASTI-like tar- geted reviews or some form of direct procure- ment, possibly led by the FSO, become the new normal for electricity transmission at least? And given the long term view needed in all of this, is it still useful to have ' ve yearly periodic reviews? Or at least in some areas should we take a diŒ erent approach? "We also recognise that RIIO2 has grown to be a substantial regulatory machine which requires eŒ ort from both industry and us to operate. So the key question is, is the RIIO framework still a sensible anchor for the wider work? Or has it become a time- consuming tail wagging the dog?" Ofgem is now consulting on the matter as part of its strategic review of network regu- lation, having released an open letter last autumn setting out some high-level themes. Barnett insisted that the regulator is not "seeking change for change's sake" and that it wants to ensure it keeps pace in the chang- ing energy system, meeting customer needs

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