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PPL's U.K. Operations

PPL’s Western Power Distribution (WPD) owns and operates four electricity distribution networks in the central and southwest England and south Wales.  It is our job to keep the lights on for 7.8 million customers: slightly more than one-fourth of all customers in Great Britain.

 WPD

WPD Preparing for Next Regulatory Review Period

WPD is regulated by the U.K. Office of Gas and Electricity Markets (Ofgem), which carries out periodic reviews of our business. Ofgem ensures that WPD efficiently manages and enhances its networks in the interest of customers while allowing WPD the ability to earn a fair return.

We are planning for the next review period: an 8-year period from April 1, 2015, to March 31, 2023. Ofgem has proposed a new approach for regulating network companies, called RIIO.

RIIO

RIIO-ED1  

Ofgem has applied RIIO to the high-voltage electricity transmission network, the high-pressure natural gas transmission network and the low-pressure natural gas distribution network. The first price control review for electricity distribution under the RIIO framework is referred to as RIIO-ED1, where ED1 stands for “Electricity Distribution 1.”

  RIIO-ED1 is designed to:

  • Encourage Distribution Network Operators (DNOs) to deliver safe, reliable and sustainable network services at long-term value for money to consumers
  • Enable DNOs to finance the required investments in a timely and efficient way
  • Remunerate DNOs according to their delivery for consumers

RIIO-ED1 and WPD

RIIO-ED1 contains changes for all electricity distribution companies regulated by Ofgem. WPD’s record of best-in-class performance in operational and customer service metrics, and its strong financial performance, demonstrates that WPD’s business model is well suited to embrace change while delivering results.

WPD has created the well-justified business plans required by Ofgem for each of our four electricity distribution companies under RIIO-ED1.  These plans were submitted July 1, 2013, following the schedule established by Ofgem. 

RIIO-ED1 Timetable
Timing Milestone
March 2013 Strategy decision published 
July 2013 DNOs submit and publish business plans 
November 2013 Initial assessment and fast-track Draft Determination published
February 2014 Fast-track Final Determination published
March 2014 Non-fast-track DNOs resubmit & publish business plans
July 2014 Non-fast-track Draft Determination published
November 2014 Non fast-track Final Determination published
December 2014 Statutory Consultation on license modifications
April 1, 2015 New price control period commences

Fast-Track Final Determination

Ofgem announced on Feb. 28, 2014, that it has accepted in full, subject to a cost of equity change, the business plans submitted by all four WPD subsidiaries for the RIIO-ED1 price control period. The WPD subsidiaries were the only DNOs to be selected by Ofgem for early completion of the price control review process.

Base revenues have been set and WPD companies will realize benefits of fast tracking, including the ability to collect additional revenue during the price control period, totaling about $35 million annually, greater revenue certainty and a higher level of cost savings retention.

The cost of equity for WPD subsidiaries was set at 6.4 percent in an Ofgem decision announced Feb. 17, 2014.

WPD Stakeholder Engagement

A hallmark of RIIO-ED1 is the requirement to enhance stakeholder engagement. WPD has executed an extensive stakeholder engagement program focused on identifying our priorities, improving customer service, and consulting on our business plans.

As part of the stakeholder engagement process WPD provided a draft of the business plan to solicit stakeholder feedback prior to the submission to Ofgem. 

Supporting the U.K’s Low-Carbon Future

The U.K. has a bold target to reduce carbon dioxide emissions by 80 percent by 2050. Electricity networks are a key facilitator of the U.K.’s low-carbon energy future.

Ofgem has created a Low Carbon Networks Fund (LCNF) to enable electricity distribution companies to test new technology and new commercial arrangements to see what will best enable them to provide the service that customers will need in a low-carbon economy. WPD has been working on a number of wide-ranging projects that demonstrate its innovative commitment to the low carbon future.