RIIO-2 regulatory performance data: 2024
Data
- Publication date
- Industry sector
- Distribution Network
- Transmission Network
This data file provides Ofgem's view of network companies' regulatory financial performance during the third year of RIIO-2 for Gas Distribution, Gas Transmission and Electricity Transmission (GD&T) companies and first year for Electricity Distribution (ED) companies.
Return on Regulated Equity (RoRE) is Ofgem’s measure of the financial return achieved by shareholders from a licensee during a price control period. RoRE is calculated and reported annually through the Regulatory Financial Performance Report (RFPR). As required by Ofgem, each licensee published its RFPR for the relevant period on their websites in September 2024. This data file consolidates those individual RFPR publications, providing a comprehensive view of actual performance through 2023/24 and forecast data through to the end of the current price control period i.e. 2025/26 for GD&T and 2027/28 for ED. RoRE reflects how companies’ allowed returns are influenced by differences between actual and planned expenditure, incentives and finance costs (interest and tax).
The RoRE figures indicate modest operational out-performance driven by efficiencies in operating costs, capital expenditure and incentives. However, certain companies significantly outperformed their allowed finance costs, primarily due to how high inflation interacts with the debt allowance methodology. Where inflation is higher than a long run assumption (typically 2%) some companies can outperform. Importantly, this effect is symmetric, had inflation dropped below the long run assumption by the same magnitude, companies would have underperformed by an equivalent amount. Ofgem has consulted on this anticipated financial outperformance in August 2023 and available policy measures. We have decided in the RIIO-3 SSMD to amend the methodology to address this issue going forward.