Utility Week Live

14 Energy/Content & context The high road to RIIO I n a sector where operations are so tangibly defi ned by the regulatory environment, the introduction of a new price control regime – RIIO – will inevitably cause long rolling waves. To really understand how best to respond and keep responding, to the new regime however, we must answer one critical question - What does success for RIIO look like? It's a problem which is puzzling even those closest to the framework - now potentially subject to a CMA inquiry. Anna Rossington, head of RIIO-ED1 at Ofgem said at recent industry conference that it remains "a good question and I'm not sure I can fully answer it". At a Utility Week round table debate earlier this year, the same question arose. Loose aims were set out after some discussion (see box) but it was clear that there are varying perceptions and expectations from diff erent stakeholders. This year's Utility Week Live falls in the month the electricity networks join gas in the fi rst RIIO cycle. As they feel their way forward, any available lessons from those who are further down the line – though still on a learning journey themselves will undoubtedly be valuable. Rossington will join Chris Bennett, head of RIIO delivery at National Grid and Greg Bradley, partner at EC Harris in an energy seminar session which will shed light on their experiences of RIIO and their We've changed the culture of the business to ensure that employees are focused on the core responsibility of UKPN. Putting it simply, that is to keep the lights on and when the lights go out, to restore supply safely but as quickly as possible." Basil Scarsella, chief executive, UK Power Networks expectations for the future on day one of Utility Week Live. It's likely to be a lively debate given recent questions raised about the effi cacy of the RIIO regime in delivering cost reductions to consumers. In February, for example, a report from the Energy and Climate Change Committee criticised Ofgem's approach with RIIO. It said: "While we recognise that the new RIIO framework is an improvement on its predecessor, Ofgem has not yet created the conditions for the market to thrive and provide consumers with best value for money." ECCC chairman Tim Yeo went on to suggest the current system of network costs is "too complex" and market conditions should be improved in the short-term by conducting interim independent audits of price controls. These expressions of doubt about the price control regime are not the fi rst and they will not be the last as the energy industry grapples with the imminent rollout of smart meters and new expectations to leverage a rich world of customer data for better service delivery. At Utility Week's RIIO roundtable, Ofgem consumer challenge group member Sharon Darcy said: "You don't have to wait for the smart meter rollout to recognise that we live in a data-rich world. Smart metering will revolutionise things, but getting into the mindset of being a data business, a business that uses intelligence to drive decisions, is a journey the [network] companies are still on." To progress on that journey, energy networks will need to achieve cultural change and embrace new sills sets added Steve Adcock, Xoserve head of IT investment and solution delivery and a delegate at the same event. Setting the RIIO challenge in the context of the smarter energy world the UKs aspires to, Adcock said: "It is a challenge to build resilience and capacity to deal with peak demand/incidents in an effi cient way. It requires a very diff erent way of thinking about customer relationships and priorities. The expectation of 'always on' instant service may need to be better managed." In all, the range of challenges before networks in adapting to RIIO is certainly daunting and the amount of work required for reorientation of business processes should not be underestimated. But ahead of Utility Week Live's debate, Rossington is optimistic about the future of the framework and about the climate for learning. "The electricity distribution companies had the advantage of being able to learn from the fi rst two price controls, and I think we saw an evolution and an improvement in the quality of their plans. I hope all the companies have learnt from the process and next time round we'll see even better plans." Competition is at an all-time high; new deals for customers are over £100 cheaper than this time last year" Lawrence Slade, chief executive, Energy UK speakers The UK smart meter rollout will cost is required in the UK energy system by 2030 of infrastructure investment Up to an estimated What does look like? Attendees at Utility Week's network transformation round table in January were asked to defi ne their interpretation of success for RIIO. They said: 1 A better customer experience 2 A more reliable network 3 Learning how to achieve eff ective innovation in advance of bigger system challenges in ED2 4 Achieving end to end alignment of objectives within the network companies

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