SSEN Transmission response to Ofgem's RIIO-T3 Price Control Draft Determination

SSEN Transmission notes today's publication of Ofgem's Draft Determination for the RIIO-T3 price control period, which comes at a critical juncture in the country's transition to a cleaner, more secure and more affordable energy system.

Investment in the electricity transmission network is the key enabler to achieving these national objectives and bringing down consumer bills by enabling the rapid deployment of homegrown, low-carbon electricity generation, underpinning the UK Government's Clean Power 2030 Mission and the Scottish Government's net zero ambitions.    

SSEN Transmission acknowledges Ofgem's recognition of the criticality and unprecedented nature of this national infrastructure challenge and notes there has been some positive movement following the regulator's Sector Specific Methodology decision in July 2024.

However, based on an initial assessment, Ofgem's Draft Determination does not go far enough to deliver the investible, financeable and ambitious framework required to unlock the unprecedented levels of investment needed to deliver lower and more stable bills. In particular:

• the approach to setting baseline total expenditure allowances fails to fund the investment necessary to deliver a clean power system by 2030. The methodology adopted does not reflect the true, evidence-based costs that are required to develop, build and maintain a reliable electricity transmission network in the north of Scotland
• the proposed Cost of Equity is not commensurate with globally competitive market rates, robust market evidence, and the significant business risks of investing in electricity transmission
• the proposed capitalisation rate, and asset lives, do not provide adequate cash flow measures given the significant increase in uncertainty mechanism expenditure required
• the proposed incentive regime is at an early stage and therefore requires further development to give sufficient confidence this will be a balanced and investable package that incentivises strong performance and delivers for consumers

SSEN Transmission will now consider Ofgem's Draft Determination in detail over the coming weeks and will continue to work constructively with Ofgem, Government and wider stakeholders to ensure Ofgem's Final Determination delivers an investible, financeable and ambitious price control settlement to underpin the unprecedented levels of investment required to deliver a cleaner, more secure and more affordable energy system to meet the needs of current and future generations.

Find out more about SSEN Transmission's plans for the RIIO-T3 period.