Scottish and Southern Electricity Networks (SSEN) Distribution notes the publication of Ofgem’s Sector Specific Methodology Decision (SSMD) for the ED3 regulatory price control for electricity distribution, which will run from 2028 to 2033.
ED3 will determine the pace and extent to which Britain electrifies its economy over the coming years to ensure sustainably lower energy bills that are less exposed to global shocks while continuing to deliver the resilience our customers expect.
We welcome Ofgem’s view on the important role for DNOs in enabling the benefits of increased electrification and supporting economic growth, and agree that a combination of increased network investment, supported by flexibility, will be required to best achieve this aim and accelerate critical connections.
Ofgem’s publication outlines a number of financial considerations which will require further detailed assessment, development and decision, including potential adjustments to the Totex Incentive Mechanism (TIM) and options to reduce gearing. It is important that any proposed changes to the regulatory framework reflect current market conditions and provide a well-calibrated incentive package. This will balance the risk for investors and customers whilst supporting the delivery of critical investment at the required pace.
At SSEN Distribution, we're well advanced in the development of a stakeholder-led ED3 business plan which is focused on delivering what our customers and communities need and want from their distribution network. This includes taking a multi-decade view of capacity needs and working backwards to determine what is essential to do in this five-year period, and how to deliver it in the optimal way.
We'll continue to engage constructively with Ofgem and policy-makers, reflecting stakeholder views and advocating for a regulatory and policy environment that strikes the right balance between enabling the pace of investment in electricity distribution we know is required with making the right choices in the interests of current and future consumers.