ESO RIIO-2 Business Plan – Annex 3 Stakeholder Report 9 December 2019 Contents
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CONFIDENTIAL ESO RIIO-2 Business Plan – Annex 3 Stakeholder report 9 December 2019 Contents Introduction ..........................................................................................................2 1. A plan informed by our stakeholders .............................................................3 2. Our independent stakeholder group.............................................................18 3. RIIO-2 Challenge Group.................................................................................99 4. A summary of our engagement activity – who and how...........................128 5. How stakeholder feedback has shaped our plan.......................................158 5.1 Regulatory Framework.......................................................................................................... 158 5.2 The changing energy landscape: scenarios....................................................................... 167 5.3 Theme 1: Ensure reliable, secure system operation to deliver electricity when consumers need it ....................................................................................................................... 172 5.4 Theme 2: Transforming participation in smart and sustainable markets........................ 186 5.5 Theme 3: Unlocking consumer value through competition.............................................. 219 5.6 Theme 4: Driving towards a sustainable whole energy future ......................................... 232 5.7 Digitalisation and open data unlocking zero carbon system operation and markets.... 263 5.8 Cost-benefit analysis............................................................................................................. 269 5.9 Technology underpinning our ambition.............................................................................. 274 5.10 Driving focus on customers and stakeholders ................................................................ 281 5.11 People, culture and capability............................................................................................ 282 5.12 Metrics and measuring performance................................................................................. 283 6. Stakeholder list.............................................................................................292 A plan informed by our stakeholders Introduction As we embark on this unprecedented opportunity to develop a new regulatory framework and business plan for the ESO, we need the insight and support of our customers and stakeholders so we can make sure that we focus on the right areas. Our plan must reflect stakeholders’ needs and ultimately drive value for consumers. Our stakeholders have played a vital role in the production of the Business Plan. In the Business Plan, chapter 2 - A informed by our stakeholders, explains our overall stakeholder engagement strategy. The content from that chapter has been reproduced and expanded upon here, to allow you to read this Stakeholder report without referring back to the main Business Plan. In each chapter of the Business Plan, we have specifically demonstrated how stakeholder feedback and our understanding of consumers’ needs now and in the future has helped shape our proposals. This Stakeholder report provides more comprehensive details on our engagement approach and stakeholder feedback we have received in support or challenge of our proposals in the main document. This report summarises the discussions we had at the various engagement events where we took detailed notes when talking with stakeholders. We have organised this report into five sections: 1. A plan informed by our stakeholders – This details our approach to engagement and how we have understood a broad range of views from across industry and from end consumers. It is largely a repeat of the what is within the main document. 2. Our independent ESO RIIO-2 Stakeholder Group – This details the set-up of our stakeholder group and Chair, the role of the group and how their feedback has helped shape the development of our Business Plan. 3. RIIO-2 Challenge Group – This provides further information on our interactions with Ofgem’s RIIO-2 Challenge Group, including what information we presented and submitted, the Challenge Group’s feedback and how that has shaped our plan. 4. A summary of our engagement activity – This details the different types of channels we have used for engagement, the topics they covered and the representation of different stakeholder groups at each interaction. 5. How stakeholder feedback has shaped our plan – This provides a detailed summary of stakeholder feedback we have received in developing our plan, structured by topic, channel, the feedback we received and how it shaped our plan. Summaries of this feature in the main Business Plan document. ESO RIIO-2 Annex 3 - Stakeholder report●9 December 2019●2 A plan informed by our stakeholders 1. A plan informed by our stakeholders 1.1 The importance of stakeholder views In this report, we set out what we have learnt from our engagement, and how we have structured our stakeholder engagement programme. The ESO continuously engages stakeholders and our RIIO-2 specific engagement is a natural extension of this. The summary of how stakeholders’ views have shaped our proposals can be found in the main Theme chapters 4 to 8, in Our engagement objective part 2 of the Business Plan, however further details by Theme We are committed to and activities are all recorded in this supplementary working with our customers Stakeholder report. and stakeholders to help shape the future of the In the creation of this plan we have used stakeholder and energy market and consumer insight from a variety of sources, including: understand how best the academic research ESO can deliver value for our customers and webinars consumers. Through workshops enhanced stakeholder engagement we will be able bilateral meetings to create a plan that reflects surveys their needs. consumer research Alongside all these activities we have also, where possible, sought to use existing engagement channels in place across the ESO and utilise this stakeholder insight in the development of our plans such as Power Responsive and the Future Energy Scenarios (FES)1. Over 600 individual stakeholders were consulted as part of the FES engagements in 2019. Their views on the future of energy and the constructive challenge they provide in developing the FES are critical to understanding the landscape we will be operating in and therefore the activities we propose. The engagement activities we have carried out during the development of our Business Plan are all set out in figure 1 on the next page. We have also embraced an enhanced engagement approach through the introduction of our ESO RIIO-2 Stakeholder Group (ERSG). Comprising members from across the industry, its role was to scrutinise the production of our plan and how effective we have been at engaging stakeholders. The group will submit a report to Ofgem that sets out their views on our engagement activity and the development of our Business Plan, which will be published on our website by 23 December 20192. 1 http://fes.nationalgrid.com/ 2 https://www.nationalgrideso.com/about-us/business-planning-riio/ESO-RIIO-2-Stakeholder-Group ESO RIIO-2 Annex 3 - Stakeholder report●9 December 2019●3 A plan informed by our stakeholders Figure 1 Stakeholder engagement overview3 3 Please increase page zoom to 200 per cent to view this diagram ESO RIIO-2 Annex 3 - Stakeholder report●9 December 2019●4 A plan informed by our stakeholders 1.1.1 Engagement key themes Feedback from stakeholders has encouraged, supported, challenged and guided us towards our ambitious Business Plan. Similarly, the broad knowledge and experience of ERSG has created an environment of robust challenge and strong support to elevate the level of ambition in our plan. This builds on our current role and capabilities to reflect the evolving role we can play as system operator in the future. We have received a lot of support for the level of ambition we have put forward in our Business Plan. ERSG in particular has been positive about it and this has also been supported by a range of stakeholders beyond the Strongly welcome the ESO’s group. efforts to put forward an ambitious plan that sets The main points we have learnt through our stakeholder engagement are that we need to: clear goals and reflects stakeholder feedback. be ambitious and proactive, creating benefits for Trade association consumers and delivering a high-quality service in all that we do set ourselves up strongly to deliver against the plan, including establishing the culture needed to deliver the proposals through all levels of the organisation adopt a principle of open data to help facilitate transparent and efficient markets transform our engagement approach to involve stakeholders throughout RIIO-2 in the development and execution of our major deliverables be mindful of how our proposals are dependent on wider industry change initiatives work closely with Transmission Owners (TOs) and Distribution Network Operators (DNOs) to ensure a joined-up experience for market participants and connection customers across transmission and distribution make sure our funding model drives us to be ambitious and enables us to respond flexibly to new challenges as they arise, with strong incentives to deliver benefits for consumers over and above our day-to-day role be transparent on our shared services costs and how they have been calculated.