RP7 Stakeholder Consultation WEB - Flipbook - Page 29
Q9. Do you agree with our
proposed RP7 innovation
principles?
Finally, we acknowledge that innovation
is fast-paced and we simply cannot
determine at this stage all the projects
and initiatives that we should be
involved in out to 2031. We also
acknowledge the administrative burden
on both NIE Networks and the Utility
Regulator associated with re-opener
mechanisms and wish to minimise
this as much as possible. Therefore,
we are proposing alongside a suite of
fully developed innovation projects, to
include a ‘Network Innovation Fund’
whereby, as and when innovation
projects arise from NIE Networks or
wider industry, a light touch regulatory
approval process would ensue to
enable cost recovery. We would agree
up front as part of the business plan
process the criteria that these projects
would have to meet.
On top of your feedback on our
approach to innovation in RP7, we
want to understand what you feel is an
appropriate scale of allowance. In RP6
our innovation allowance amounted to
approximately 2% (approx.£6m) of our
total Network Investment Plan.
Q10. Do you feel that a similar
percentage would be appropriate
for RP7? This would represent
approximately £20m which would
result in an average annual cost
on the domestic electricity bill
of £2.77. For our commercial
customers this represents an
annual cost between £11 for a
small business and £172 for a
medium business.
4.2.4Step 4: Touch the
network once
associated with the larger assets, may
actually pay for the cost difference.
Whilst we will deploy customer and
network flexibility where this represents
the optimum option for our customers,
there will be a step change in network
reinforcement required over the next
number of price controls to facilitate
net zero. We will minimise customer
disruption and maximise cost efficiency
by aiming to ‘touch the network once’.
We will achieve this by:
We believe that through modelling and
monitoring we will be able to invest
in the network in the right place, at
the right time and at the right cost.
There is however a considerable lead
time in upgrading primary substations
(33kV/11kV or 33kV/6.6Kv), particularly
where this requires the purchasing of
new land and planning permission.
Using our monitoring and forecasting
capability, we will assign every primary
distribution site a Load Index (LI). This
will indicate how much of the available
capacity at each site is forecast to be
utilised in a regulatory period. During
RP6, it has been our policy to only
upgrade sites where load is forecast to
breach the available capacity for more
than 9 hours in a year. These sites are
called LI5s.
-Working with the Utility
Regulator to reform our current
Statement of Connection
Charging (SoCC). Currently
the connecting customer pays
for reinforcement at the voltage
level they connect to and one
level up. Changing this so that
the network reinforcement would
be part of our price control
would promote a more holistic
approach to developing capacity
on the distribution network.
-Ensuring that when we invest
in the network due to load or
generation growth, we are
installing assets with enough
capacity to last until 2050.
-Reviewing our specifications to
ensure that when we replace
assets due to their condition or
connect new customers to the
network the assets are suitably
sized for the future.
This approach requires a longer term
view of network investment and is
driven by the significant step change in
investment required to deliver the 2050
net zero target. We believe by adopting
this approach we will optimise the value
for money for consumers and minimise
disruption. In practical terms, this may
lead to a small increase in investment
in the short term but a much larger
saving in the medium and longer term.
For example, increasing our minimum
capacity specification for underground
cables will increase associated costs
by less than 5%, but critically minimises
the risk that we will have to replace the
same cable before the end of its life
and avoids incurring the same cost and
disruption before necessary. There is a
small risk that the anticipated demand
does not materialise at a localised
level and the assets remain oversized.
However, our initial analysis shows
that the reduction in network losses
Given the forecasted speed of growth
in LCT connections by the end of the
RP7 period, and to avoid the electricity
network becoming a blocker to this
growth, we believe that it is prudent to
review our approach to all sites where
available capacity is forecast to be
breached in the period, including those
sites where the breach is less than 9
hours in a year (LI4s). The options we
are considering are:
1)Continue to invest in LI5 sites
only in RP7. This approach will
keep customer costs as low as
possible in RP7 but increases the
risk that the network could become
a blocker to decarbonisation;
however, where possible, we will
procure Flex at LI4 sites to help
manage the risk.
2)Investing in all sites forecast
to become overloaded in RP7
(LI4 and LI5 sites). This option
represents the least risk of the
network becoming a blocker to
decarbonisation but at a higher cost
within the RP7 period – potentially
an additional 76 pence per annum
for the average domestic customer.
For our commercial customers
this represents an annual increase
between £3 for a small business
and £47 for a medium business.
On the basis of our LCT uptake
forecasts, it is our belief that
these sites will need investment
in the medium term and that this
investment will not be nugatory.
RP7 Stakeholder Consultation
29
