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Ofgem publishes 2019 Annual Iteration Process for network price controls

Publication date29th November 2019Information types

  • Press releases

Policy areas

  • Electricity – distribution
  • Electricity – transmission
  • Gas – distribution
  • Gas – transmission

Ofgem has today published the results of the 2019 Annual Iteration Process (AIP) for energy network companies under its network price controls. 

As part of the ‘Revenue = Incentives + Innovation + Outputs’ (RIIO) price controls for network companies, we make annual adjustments to the revenue that we allow the energy network companies to collect through the AIP.

The AIP updates base revenues across Ofgem’s four price controls (electricity distribution, gas distribution, electricity transmission, and gas transmission) for the next regulatory year (2020/21).

This year’s AIP has reduced the allowed revenue that network companies will collect relative to the assumptions made at the start of the price controls by around £965 million (2018/19 Prices), saving consumers money on their bills. This reduction is driven by the following factors:

  • Cost of Debt – Lower interest rates in debt markets have resulted in a lower cost of debt allowance compared to the level set at the start of the price controls.
  • Allowed Expenditure – On the whole, network companies are spending less than the amounts assumed at the start of the price controls, therefore we make a proportionate reduction to their allowed revenue.

We have published updated price control financial models (PCFMs) for the four price controls, here:

RIIO-ET1 Financial Model following the Annual Iteration Process 2019

RIIO-GT1 Financial Model following the Annual Iteration Process 2019

RIIO-GD1 Financial Model following the Annual Iteration Process 2019

RIIO-ED1 Financial Model following the Annual Iteration Process 2019

For media queries contact Ofgem media manager Ruth Somerville 0207 901 7460/ 07766 511 470 ruth.somerville@ofgem.gov.uk 

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