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NETWORK / 20 / OCTOBER 2017 T he next regulatory set- tlement for networks will be tougher on investors, but simpler, Ofgem's senior partner for networks, Jonathan Brearley, told delegates at the Network Asset Performance conference in Birmingham in September. Brearley reiterated com- ments, first made in an open letter to the market this sum- mer, that "the next set of price controls will be tougher on investors than this one". He said it was crucial to maintain public confidence in the price control. Brearley promised that a tougher price control wouldn't mean the end of investment, including investment in innova- tion. He said: "It does look as if returns may come down, and we think we can do that within a price control that delivers the sort of customer benefits we have seen to date." Ofgem recently concluded its first consultation on the overarching framework for the next regulatory settlement, EvEnt nEt work AssEt PErformAncE confErEncE 21 sEPtEmbEr, birminghAm Under pressure Energy networks must cope with a fast-changing landscape while satisfying a tough-talking regulator that they're delivering value for money. RIIO-2. Two of the main points for debate are the length of the settlement, with some suggest- ing it should go back to five years from the current eight to mitigate growing uncertainty; and the question of whether the transmission and distribu- tion price controls, and the gas electricity price controls, should be aligned. Brearley acknowledged: "It's pretty clear nobody is very good at predicting the future." A key architect of Electricity Market Reform during his time as the senior civil servant at the Department of Energy and Climate Change, he referenced the recent contracts for differ- ence auction which saw offshore wind clear at £58/MWh, saying: "That's 60 to 100 per cent less than we would have thought at the time." Brearley added "uptake [of renewables, eg solar panels] has accelerated way beyond what we would have thought". Other speakers at the confer- ence, organised by Network, highlighted the rapid growth in renewables and the pressure this puts on network capac- ity. They also highlighted the innovation that has emerged to mitigate the pressure. UKPN's head of regulation and strategy, Suleman Alli, said: "In 2010, we would have had 800 connection applications [for generation] per annum – that's gone up to 9,000 per annum. You can't cope with an influx like that unless you innovate." There was a con- sensus among speakers that a series of solutions will be required as networks meet the energy transition, or what Alli called a "medley" of solutions. These include innovation and new technology; whole-system solutions and new models of cross-vector working; changing consumer behaviour and smart technology in the home and on the grid. This will drive the smarter use of assets, with maintenance and replacement carried out on the back of risk assessment. Views from the speakers: Phil Lawton, practice manager – power systems, Energy Systems Catapult. "The future is not just going to be an extension of the past." Suleman Alli, director of strat- egy and regulation, UK Power Networks. "Innovation is not about spreadsheets, it's about the people in the business." Philip Dingle, director, Lucy Electric. "We must understand the value and implications of the data available."