RIIO-2 Annual Iteration Process 2024 for Transmission and Gas Distribution
Reports, plans and updates
- Publication date
- Industry sector
- Distribution Network
- Transmission Network
This page contains the results of the 2024 Annual Iteration Process (AIP) for the Electricity Transmission (ET), Gas Distribution (GD) and Gas Transmission (GT) licensees under the RIIO-2 network price controls.
This AIP updates Allowed Revenues across network price controls for the next regulatory year (2025/26). This page contains the results for ET2, GD2 and GT2 price controls only. Special Condition 8.2 in the ET, GD and GT licences, provides for the Gas and Electricity Markets Authority (‘the Authority’) to do the following by 31 January or as soon as is reasonably practicable after 31 January:
(a) carry out the Annual Iteration Process for the ET2, GD2 and GT2 Price Control Financial Models (PCFM) (as each of those terms are defined in Special Condition 1.1 of the special licence condition); and
(b) give licensees at least 14 days’ notice before it publishes the value of the following terms:
i. for ET, Adjusted Revenue term (ADJRt) and the Allowed Revenue Term (ARt) in accordance with the calculation set out in Special Condition 2.1 (Revenue restriction),
ii. for GD, Adjusted Revenue term (ADJRt) and the Allowed Revenue Term (ARt) in accordance with the calculation set out in Special Condition 2.1 (Revenue restriction),
iii. for GT, Adjusted Revenue term (ADJRt) and the Allowed Revenue Term (ARt) in accordance with the calculation set out in Special Condition 2.1 (Transportation owner revenue restriction), and
iv. for GT, System Operator Adjusted Revenue term (SOADJRt) and the System Operator Allowed Revenue term (SOARt) in accordance with the calculation set out in Special Condition 2.3 (System operator revenue restriction).
The Authority gave the ET and GT licensees notice of the value of ADJRt, ARt, SOADJRt and SOARt on 16 December 2024, and for GD licensees on 14 January 2025 There were no representations made by any licensee. The reason for and effect of this publication is to revise the PCFM Variable Values to re-calculate the values for the terms listed at paragraph (b) of this webpage.
The published values for ADJRt, ARt, SOADJRt and SOARt following the 2024 AIP are shown within the ET2, GD2 and GT2 Price Control Financial Models published on this page.
Real Price Effects model
The RIIO-2 Price Controls include an allowance for differences between the Price Index applied to Allowed Revenue and certain input price indices. We refer to these differences as Real Price Effects and these are reflected in the calculation of Allowed Revenue within the Price Control Financial Model through the term RPEt.
The model used to calculate the RPEt values that have been used for the 2024 Annual Iteration Process for the ET2, GD2, and GT2 Price Control Financial Models, is published on this page.
WACC allowance model
The RIIO-2 Price Controls include an allowance for the licensee’s estimated Weighted Average Cost of Capital (WACC), which is calculated in accordance with the provisions of the ET2, GD2, and GT2 Price Control Financial Handbooks.
The model used to calculate the cost of debt and risk-free rate values that have been used for the 2024 Annual Iteration Process for the ET2, GD2 and GT2 Price Control Financial Models, is published on this page.