We want to remove the Performance Metrics (PMs) in the incentive governance document and reporting requirements for PMs, adding other performance requirements instead.
We would like views from electricity distribution network operators (DNOs) and the energy suppliers and energy industry bodies they work with.
The DSO incentive was to be made up of three evaluation criteria:
However, it was not possible to implement the performance metrics part of the incentive for RIIO-ED2. This was due to concerns with data quality a lack of historical data and methodological issues.
For the introduction of the incentive, we developed guidance. The guidance was set out in the Distribution System Operation Incentive Governance Document. The Governance Document outlines the processes and criteria used to assess performance; the reporting requirements; and the methodology we will use to determine an incentive reward or penalty.
As the performance metrics have been removed from the incentive, we need to amend the Governance Document to reflect this. The first year of operating the DSO incentive has highlighted a number of areas where improvements could be made. We have also updated the Governance document to reflect a number of proposed changes needed.
The current RIGs contain reporting requirements for the performance metrics for the DSO incentive. These requirements need to be amended to reflect that the performance metrics have been removed from the incentive. We have also worked with the DNOs on new reporting requirements that seek to provide more quantified performance metrics for the next control period. We have proposed adding three new reporting requirements to the RIGs.
This consultation is intended to make sure that the governance document reflects the nature of current incentive and captures any improvements that may be required from the first year of the operation of the incentive. We are also consulting on proposed new reporting requirements to the RIGs.
We plan to publish a decision in March 2025 and any changes will take effect from April 2025.
Please respond with your views by 14 February 2025.
Please send us your response by emailing riioed2@ofgem.gov.uk.