SSEN Distribution publishes ambitious £4.1bn business plan to 'power communities to net zero'
Scottish and Southern Electricity Networks (SSEN) Distribution, a wholly owned subsidiary of SSE Plc, has today published its ambitious draft business plan for 2023 to 2028, setting out how it will accelerate investment in its networks and services to power communities to net zero.
Responding to the legally-binding net zero targets from UK and Scottish Government and the central role of local electricity networks in achieving them, SSEN's stakeholder-led plan balances the need to accelerate investment in the smart, flexible electricity system of the future, while keeping costs down for consumers.
It also responds to stakeholder and customer feedback, proposing improvements to services, increased reliability and resilience; and further support for those most vulnerable, particularly in light of the ongoing social and economic impact of Covid-19.
The draft business plan sets out six clear goals that SSEN will deliver for customers and communities by 2028:
· Reduce the frequency and duration of unplanned power interruptions by 20%
· Create a foundation for net zero by investing £1bn in strategic resilience across its networks
· Achieve a customer satisfaction score of 9.2 or more (out of 10) in every customer contact area
· Support 200,000 customers in vulnerable situations with targeted fuel poverty, personal resilience or energy efficiency measures
· Facilitate the connection of an additional 1.3 million electric vehicles and 800,000 heat pumps
· Reduce its business carbon footprint by at least 35%, aligned to a 1.5c science-based target.
To deliver this plan, SSEN has proposed £4.1bn in baseline investment over the five-year RIIO-ED2 period which represents an increase of around 35% on the equivalent period in RIIO-ED1.
Of this investment, £400m will be allocated to improving service for customers and digitalising systems; £2.2bn will be invested in asset reliability and resilience, creating a foundation for net zero, and over £1bn will help accelerate net zero for communities, including proactive investment to deliver an additional 2GW of new network capacity. All expenditure, including general running costs of £500m, is subject to a year-on-year efficiency saving of 0.5%.
This baseline investment could see the RAV of SSEN Distribution grow to over £6.0bn by 2028. In addition, SSEN has proposed over £900m of regulatory uncertainty mechanisms to help provide the necessary flexibility to meet customer and network needs as the pace of change and policy evolves, providing opportunity for future RAV growth.
Due to the transition of the regulatory depreciation period for new network assets from 20 to 45 years, ongoing efficiency savings, and lower financing costs, the baseline investment is consistent with no planned increase in network charges on customer bills. Precise bill impacts will be known at determination stage, including assessment of allowed expenditure, any adjustment to financial parameters and treatment of uncertainty mechanisms.
Chris Burchell, Managing Director, SSEN Distribution said:
"The need to transform our energy system to address the climate emergency has never been clearer and it is critical that local electricity networks are an enabler rather than a constraint as we work toward a shared net zero goal.
"Our ambitious stakeholder-led plan provides the efficient investment today to meet the net zero challenge, while also keeping bills down for current bill payers. It is essential this is supported by agile regulatory framework that helps deliver a network where customers can switch to EVs and other net zero technologies with ease at a time they choose.
"We will continue working with our customers and stakeholders over the coming months to further refine our proposals and help strengthen our plan to power communities to net zero."
The draft plan, submitted to Ofgem's Independent Challenge Group today, is the result of extensive stakeholder engagement, which will now continue ahead of its final submission to Ofgem in December 2021. Ofgem will provide a draft determination on the business plan in Spring 2022 with final determinations in December 2022.
· Scottish and Southern Electricity Networks (SSEN) Distribution, operating as Scottish Hydro Electric Power Distribution (SHEPD) and Southern Electric Power Distribution (SEPD) under licence, powers 3.8 million homes and businesses in communities across the north of Scotland and central southern England.
· SSEN Distribution's draft RIIO-ED2 business plan can be viewed on www.ssenfuture.co.uk.