RIIO
Revenue = Incentives + Innovation + Outputs
Industry BodiesOfgem's price control framework that determines how much network operators can charge - it sets revenue allowances and incentivises efficiency, innovation, and customer service over 5-year periods.
RIIO is the regulatory framework Ofgem uses to control the revenues of electricity and gas network companies. It replaced the previous RPI-X framework and runs in multi-year periods, currently RIIO-ED2 (2023-2028) for electricity distribution.
How RIIO works:
- Revenue allowance - Ofgem sets the total revenue each network can recover
- Incentive mechanisms - Networks can earn more (or less) based on performance
- Innovation funding - Dedicated allowances for network innovation projects
- Output targets - Service quality, reliability, and customer satisfaction metrics
Current price control periods:
- RIIO-ED1 (2015-2023) - Electricity Distribution (completed)
- RIIO-ED2 (2023-2028) - Electricity Distribution (current)
- RIIO-T2 (2021-2026) - Transmission
Why RIIO matters for your bills: The RIIO framework ultimately determines the total pot of money that DNOs can recover through DUoS charges. When you see year-on-year changes in distribution charges, these largely reflect Ofgem's RIIO determinations about what network investment is needed and what return companies should earn.
ED2 priorities: The current RIIO-ED2 period focuses heavily on preparing networks for net zero, including EV charging infrastructure, heat pump connections, and accommodating more distributed generation.
Related terms
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