Has the UK already invented the utility of the future?

Has the UK already invented the utility of the future?

The plans also included details of how utilities expect to meet targeted outputs in six areas specified by Ofgem, including investments in smart meters and distribution automation. Utilities were able to design their own performance metrics and set their own targets (outputs) and time frames. The targeted output areas for which all utilities were to submit performance measures and targets included:

  • Safety
  • Environmental impact
  • Customer satisfaction
  • Reliability
  • Connections and access
  • Social obligations

As one can imagine, these business plans were significant undertakings, beginning with an extensive customer engagement process. For example, the business plan submitted by Western Power Distribution (owned by U.S.-based PPL Corporation) included a 160-page business plan and almost three thousand pages of supporting documentation. Westerns customer-engagement process included 24 stakeholder workshops, 7 customer panels, 8 customer focus groups, 6 customer-sited generation workshops, and thousands of interviews with typical customers (both residential and commercial), generation-owning customers, and low-income customers.

In an interesting twist designed to stimulate competition between the utilities, Ofgem may in its discretion award three types of approval in response to the business plans: fast track, proportionate approval, and approval with full scrutiny. Any utilities awarded fast-track approval will receive economic rewards in addition to those provided for in the standard RIIO model, including:

  • A rate bonus equal to 2.5 percent of expenditures
  • Relaxed scrutiny of costs

  • Retention of a greater proportion of any operating cost reductions achieved

  • Completion of the plan review process ahead of other utilities.

IOUs in the UK seem to be embracing these regulatory changes, choosing to see the glass as half full and doing their best to deliver outstanding business plans that meet customer and stakeholder needs while simultaneously advancing shareholder interests. Of course, the jury on the value of the RIIO model is still out, but Ofgem believes it will deliver on two primary objectives:

  • Encouraging distribution utilities to play a full role in the delivery of a sustainable energy sector

  • Requiring distribution utilities to deliver value for money services for existing and future consumers.

Source: SmartGridNews.com

Smart Grid Bulletin April 2018

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