05 September 2019
RIIO is an important new part of the UK’s framework for regulating energy network businesses, designed to benefit the companies, their customers and the environment.
It will achieve this by doing what regulators do best – acting as ‘surrogate customers’ in markets which are naturally monopolistic, to drive new waves of innovation and efficiencies, which are normally only found in competitive markets. The UK regulator, Ofgem, operates through price controls, setting the amount of money (allowed revenue) that network companies earn. But RIIO is going much further than just ‘setting prices’. It now obliges companies to create and implement business plans which will deliver:
• Networks which perform how customers want them to perform and which are value for money
• Smart grid networks that reduce carbon emissions and improve how people live
• Good returns on investment for shareholders for the companies that perform well