National Grid is funded by a price control mechanism which is agreed with and
set by Ofgem.
Historically the Price Control Review was over a five year period and based
on a retail price index model with an element of incentivised efficiency
savings; this funding model was known as RPI-X.
This has served the customer well and has delivered reduced network costs for
customers by up to 50 per cent since 1990.
The UK energy sector is now facing a number of challenges in providing safe,
reliable and secure energy which will also be sustainable in a decarbonised
Project Discovery identified that £200 billion of investment will be required
in the next ten years within the energy industry in order to secure sustainable
energy supplies and keep costs as low as possible for consumers. £32 billion of
this falls within Ofgem’s remit and this is where RIIO will come in.
Ofgem has introduced a new regulatory framework to replace RPI-X known as
RIIO: Revenue= Incentives + Innovation + Outputs
The RIIO model offers network companies real incentives for securing
investment and driving innovation. This is to ensure the delivery of
sustainable energy networks for current and future customers at the lowest
The period of the next Gas Distribution and Transmission Price Control
Review, on which we are now consulting, is from 2013 to 2021.
... real incentives for securing investment and driving innovation...
We want to know and understand your priorities to ensure we continue to
deliver energy safely, reliably and efficiently whist at the same time
delivering a service we are proud of for every customer, every time.
If you have any queries that relate to both our transmission and distribution
businesses, or you’re not sure which, please email us at firstname.lastname@example.org.