SSE Regulatory News (SSE)

SSEN DISTRIBUTION PUBLISHES BUSINESS PLAN TO POWER COMMUNITIES TO NET ZERO

1 December 2021

Scottish and Southern Electricity Networks (SSEN) Distribution, a wholly owned subsidiary of SSE Plc, has today published its final business plan for RIIO-ED2. The plan includes proposals to invest around £4 billion, creating over 850 jobs over the price control period (2023-28).

SSEN Distribution plans to increase its investment by around a third in the north of Scotland and central southern England over the RIIO-ED2 period (2023-2028) to accelerate the transition to smart, flexible networks and meet the net zero challenge.

The proposed increase in investment to £3,994m will be delivered with no planned rise in distribution costs on customer energy bills, supporting a just and fair transition to net zero.[1]

Titled 'Powering communities to net zero', SSEN's business plan has been shaped by over 25,000 customer and stakeholder voices and sets out six clear goals that SSEN will deliver for customers and communities by 2028, namely to:

· Create a foundation for net zero by investing £1bn in strategic resilience across its networks

· Reduce the frequency and duration of power interruptions by 20%

· Achieve a customer satisfaction score of at least 92% in every contact area

· Support 200,000 customers in fuel poverty with targeted support and energy efficiency measures

· Facilitate the connection of 1.3m electric vehicles and 800,000 heat pumps on its network

· Cut its business carbon footprint by 35% aligned to a 1.5°C science-based target, accredited by the Science Based Targets initiative

This baseline investment could see the Regulated Asset Value (RAV) of SSEN Distribution grow to over £6.0bn by 2028. In addition, SSEN has proposed over £1bn of regulatory uncertainty mechanisms to help provide flexibility to meet customer needs, providing opportunity for future RAV growth.

The final business plan includes a reduction in baseline investment of £146m from the £4,140m initially proposed in SSEN Distribution's draft plan published in the summer, on the basis of increased efficiencies and innovation as well as through recalibration of the amount of funding to be agreed through the Uncertainty Mechanism.

SSEN's final RIIO-ED2 plan will now be assessed by Ofgem, with determinations published in 2022, ahead of the new price control commencing in April 2023 and running to March 2028.

SSEN Distribution's Business Plan was included within its parent company SSE Plc's recently announced, 'Net Zero Acceleration Programme'. The group-wide plans included an enhanced, fully funded £12.5bn strategic capital investment plan to 2026 alongside ambitious 2031 targets, aligned with net zero and a 1.5 degree science based target pathway. The plans included minority stake sales in both SSEN Transmission and SSEN Distribution (modelling assumption of early FY24) to unlock value and optimise investment.

Chris Burchell, Managing Director of SSEN Distribution, said:

"Networks will unlock the electrification of the economy with billions of pounds in investment to create modernised local electricity grids fit for a net zero future. Our RIIO-ED2 business plan will improve reliability, support the most vulnerable, cut carbon, get EVs on the roads and enable cleaner heating into homes as well as create hundreds of well-paid and secure green jobs in our regions.

"As energy policy and targets accelerate at pace, it's critical we invest at the right level now to meet this ambition and avoid a higher cost future. We now need Ofgem to support this aim by providing an agile price control framework which gives the certainty and flexibility required to meet evolving policy and customer needs."

Alistair Phillips-Davies, Chief Executive of SSE plc, said:

"Submitting our business plan today comes as we ramp up the execution of the SSE group's Net Zero Acceleration Programme. Collectively, SSE is investing nearly £7m each day, enabling over 20% of the upcoming UK electricity networks investment, the delivery of over 25% of the UK's 40GW offshore wind target and so much more to help the UK and other governments decarbonise.

"We are proud to be the UK's clean energy champion, powering change and tackling climate change through our specialism in electricity infrastructure. With the UK committing to an accelerated net zero timeline ahead of COP26, this is where the rubber hits the road and we see huge growth in our Distribution business as it brings net zero to the front door."

For more information, visit ssenfuture.co.uk.

Notes to editors:

· £3,994m investment includes £2,577m for SEPD licence area and £1,417 for SHEPD licence area. A further breakdown of costs is detailed in business plan finance chapter and associated annexes. 

· More information on SSE Plc's Net Zero Infrastructure Programme is available here.

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