Sustainability challenges in regulating electricity distribution networks

Miss Rita Shaw, Electricity North West / University of Surrey 

The price-control regulation of Great Britain’s regional electricity distribution networks was created in response to the post-privatisation efficiency challenge. The regulatory system has evolved into a complex framework of standards (including for security, customer service, facilitation of competition and asset management) together with a suite of financial incentives (around cost efficiency, customer interruptions, electrical losses, innovation and distributed generation). The poster/ paper will consider the incentives on the network businesses (DNOs) to support development of a low-carbon economy in the current regulatory framework. It will address the question: can the regulatory focus on competition and efficiency in distribution networks be reconciled with also achieving sustainable and secure energy services?

The paper will review the extent to which sustainability objectives have been implemented in existing regulation, and examine the effect of specific scenarios on the DNOs eg changing demand behaviour, low-carbon generator connections. In April 2008 Ofgem is due to publish a consultation on the 2010-2015 distribution network price control. In addition, a comprehensive review of regulatory approach has recently been announced by Ofgem, reporting summer 2010, to confirm whether an RPI-X based system of incentive regulation should continue in the long-term beyond 2015.  The paper will discuss the extent to which these future developments will be sufficient to overcome the limitations of existing regulation.

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