IN Brief:
- Ofgem wants restoration allowances awarded to SP Distribution and SP Manweb to become formal Price Control Deliverables.
- The expenditure supports network changes required for Great Britain’s strengthened Electricity System Restoration Standard.
- The consultation closes on 30 October, two months before the national restoration standard compliance deadline.
Ofgem is proposing formal delivery conditions on electricity system restoration funding awarded to SP Distribution and SP Manweb, linking additional RIIO-ED2 allowances to defined outputs through a licence modification.
The regulator has opened a consultation on changes to Special Condition 3.2 of the companies’ electricity distribution licences. The proposed amendment would make expenditure approved through the Electricity System Restoration Re-opener subject to Price Control Deliverables, giving Ofgem a defined mechanism for measuring whether the funded work has been completed.
SP Distribution and SP Manweb are the two licensed distribution businesses within SP Energy Networks, covering central and southern Scotland and parts of north Wales and north-west England. Both are contributing to changes in the way Great Britain would rebuild its electricity system following a widespread or total shutdown.
The current Electricity System Restoration Standard requires sufficient capability to restore 60% of electricity demand in every region within 24 hours and 100% of national demand within five days. The target is due to be met by 31 December 2026.
Older black start arrangements relied heavily on a relatively small number of large power stations capable of restarting without an external supply. Changes in the generation fleet have made that model less suitable on its own as conventional synchronous stations retire and more generation connects through distribution networks or power electronics.
Restoration planning now draws on a wider combination of transmission and distribution assets. Distributed generators can be used to energise sections of local network and form temporary power islands, which can then be expanded and eventually reconnected with other restored areas.
Running those islands requires more than an available generator. Protection systems must operate correctly under network conditions that differ from normal interconnected operation, while control equipment has to manage voltage, frequency and the gradual reconnection of demand without destabilising the restored section.
Communications and switching arrangements also have to remain available after a severe system event. Operators need to establish which circuits can be energised, identify loads that can be restored safely and coordinate generation with demand as each section of network is rebuilt.
SP Energy Networks has already taken part in practical work on distributed restoration through the Distributed ReStart programme. Trials examined how distributed energy resources could establish and maintain local power islands before supporting wider system recovery, including the control arrangements required to coordinate several assets as a single restoration zone.
The latest Ofgem consultation deals with the funding mechanism behind further delivery rather than changing the technical standard. SP Distribution and SP Manweb applied through the Electricity System Restoration Re-opener during the June 2025 window for additional expenditure associated with restoration activity agreed with the National Energy System Operator.
Re-openers allow Ofgem to adjust a network company’s allowances where expenditure could not be determined accurately when the original price control was set. RIIO-ED2 covers the five years from 2023 to 2028, but requirements can change during that period as system needs, engineering scope or statutory obligations develop.
Ofgem assessed the restoration applications through a separate consultation earlier this year, examining the need for the proposed work and the efficient level of expenditure. The current process addresses how the resulting allowances should be attached to measurable obligations within the licence.
A Price Control Deliverable links revenue to a specified output rather than leaving the expenditure as a general allowance. If the corresponding work is not completed, is materially delayed or changes in scope, Ofgem has a clearer basis for adjusting the regulatory treatment.
That structure is particularly relevant for restoration work because the projects sit within a wider programme involving NESO, transmission owners, distribution companies and contracted restoration service providers. Individual pieces of network equipment or control capability only contribute to the standard when the wider restoration arrangement can operate as intended.
Distribution restoration can require changes to protection settings, control systems, communications, substations and operating procedures. Equipment installed for normal interconnected operation may behave differently when a smaller section of network is energised independently, particularly where inverter-based generation forms a large part of the available supply.
The restoration programme therefore combines physical investment with operational development. Network companies have to establish the technical capability to energise and control local sections, while procedures and agreements define how those sections are coordinated during an actual system emergency.
Ofgem’s proposed licence change would attach a defined regulatory output to the SP Distribution and SP Manweb element of that work. It does not alter the national restoration timescales or replace the engineering requirements already being developed with NESO.
The consultation closes on 30 October, leaving two months before the end-of-year compliance deadline for the strengthened restoration standard. Ofgem will then determine whether the additional allowances should carry the proposed Price Control Deliverables through the remainder of RIIO-ED2.
