A Comprehensive Review on the Evolution of Ofgem RIIO-ED1 Electricity Distribution Price Control Framework in United Kingdom

Abstract

Distribution of electricity has been considered as a natural monopoly that needs to be regulated in a proper effective way so that network companies don’t take benefits of their monopoly role. Customers should get what they pay for and they have the right to be supplied with the quality electricity on a reasonable, transparent and affordable price. This paper presents a novel approach to the regulation and pricing calculation of the electricity distribution network that brings together both technical and economic concerns. This Paper discusses the DNO’s key role in electricity distribution price regulation, surveys the current regulatory structure, the evolution of RIIO-ED1 since its introduction specifically focuses on the second year 2016-2017 price control. A key contribution of this study is to briefly discuss different stages of the distribution networks price regulation under gas and electricity regulatory body (Ofgem) in Great Britain, which are (1) RPI-X scheme, (2) DPCR and (3) RIIO-ED1. Finally this study presents the detailed structure of RIIO ED- 1 phenomena, compares with the current (2016-2017) and previous (2015-2016) year and discusses improvements in the Ofgem highly distributed network to ensure costumers to be supplied with the efficient high quality electricity.