Northern Powergrid goes deep on customer engagement in ED2 incentive push

Northern Powergrid says it is pushing deeper into customer engagement than ever before ahead of the next price control.

With Ofgem seemingly set on frugal returns, the DNO hopes to be able to present the regulator with robust evidence to support spending plans that have been built around customer priorities.

Its new microsite gives customers 12 core areas to consider and asks them to ‘build their own network’ in terms of prioritising those areas – e.g. reliability, decarbonisation, customer service, connections.

Head of regulation and strategy, Jim Cardwell, said its ‘Emerging Thinking – Supporting Material’ document is informed by 3,500 customer engagements to date.

Over the next 12 months, the DNO aims to reach tens of thousands of stakeholders before submitting final spending plans to the regulator for the period 2023-28.

“The aim is to give them a voice to express their choices about how they want the network to run out to 2028 … while staying away from the regulatory dynamics and focusing on the customer angle, what it is they want from us,” said Cardwell.

“It’s not even a business plan yet, this is about informing a business plan. We’ve gone early to get as many voices involved as possible and have spent a good amount of time to ensure it is accessible,” he added.

Even uninformed customers will “get something out of it,” he suggested. “The key thing is about putting some prices tags on some of the proposals, demonstrating a range of options … and gauging which [aspects] customers favour to take into account when we build the business plan.”

Cardwell said the DNO is trying to “divorce ourselves from the industry insider mindset” and give people clear choices without resorting to “clutter and industry acronyms”.

Asked whether DNOs were concerned about Ofgem slashing returns as it has for transmission and gas distribution proposals, and what a ‘good’ level of return might look like, Cardwell underlined the importance of rewards and incentives rather than a headline rate of return on capital employed.

“We are a big supporter of incentive-based regulation. We would like a well evidenced (by us and the regulator), fair settlement that gives us a set of targets that we are held to account on, whether we out- or under-perform.”

Having “incentives in place for us to do the right thing for our customers is what success looks like,” added Cardwell.

Hence stepping up its customer engagement programme. “It enables us to have that conversation with Ofgem about the design of the next price control. We hope it will help set the framework,” said Cardwell.

“Ofgem should expect to see well-evidenced, justified plans. This is a key part of how we are generating that evidence and justification.”

Details here.

Microsite here.

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