During this price control period, we are seeking to support SONI during the energy transition to deliver an electricity system that promotes whole system outcomes that matter to consumers, such as greater decarbonisation, grid security and lower energy bills.
As it delivers whole system outcomes, we encourage SONI to take an open, flexible and collaborative approach to the consideration of new ideas and technologies that could have the potential to support the energy transition process.
This consultation proposes a price control framework which works together to support SONI as it provides real value for consumers through high quality service, during a time of significant change. At the heart of our approach, is our desire to build on our existing price control framework to support SONI in delivering whole system outcomes.
Our key price control proposals include:
- putting in place an outcomes focused, evaluative performance framework, with financial rewards and penalties, to promote high levels of performance from SONI and deliver whole system outcomes, adding value for consumers.
- adapting our approach to cost remuneration to incentivise delivery of whole system outcomes.
- providing a total cost allowance of £79m (which compares to the SONI business plan submission of £121m).
- bringing more consistency to our use of uncertainty mechanisms with the approach to cost remuneration.
- setting an allowed return on SONI’s Regulatory Asset Base (RAB) of 3.79% applied to a CPIH-indexed RAB - which is 1.29% lower than SONI’s request. We also propose an allowed margin on revenue collection activities in respect of the recovery of system services costs, and an adjustment to allowed return for asymmetric risk.
Written responses to our draft determination consultation should be received no later than 5pm on 14 September 2020.
Please also see the recently published financial model used in the analysis of SONI's Business Plan.