Shifting Priorities for UK Electricity Distribution Network Operators Due to COVID-19

This blog was coauthored by Mark Livingstone and Alex Jakeman

Restrictions Are Having a Profound Effect on How DNOs Ensure Safe, Reliable Networks

Our reliance on power has rarely been so evident as it has been in the last few weeks. Thousands of engineers across the UK continue to work 24/7 to operate and maintain the electricity networks that serve hospitals, households, and businesses. Although distribution network operators (DNOs) have had to adapt their operations to minimize the spread of the coronavirus, so far, we have not noticed any significant change to the reliability of UK electricity supplies. 

A few examples of how DNOs in the UK are quickly adapting their operations include the following:

• De-prioritizing low priority work, such as the provision of new connections and meter replacements. Instead, DNOs are focusing on high priority work, such as fault repairs and safety-critical services that ensure the reliable, safe supply of electricity. This is aligned with guidance from the energy regulator, Ofgem. 
• Modifying working patterns. Where possible, staff are working from home and key frontline operational staff, such as network control engineers or field engineers, are maintaining strict social distancing to minimize possible transmission of COVID-19. 
• Analyzing how short- and long-term changes in demand profiles effect maintenance schedules and requirements for load-related network reinforcement.
  

DNOs Will Face Further Operational and Financial Challenges

Ofgem has published guidance for regulatory flexibility that describes how the current regulatory framework for DNOs (RIIO-ED1) will be flexed to allow network operators to focus on essential high priority work. Although this regulatory flexibility provides some level of comfort to DNOs, it does not provide carte blanche to amend previous regulatory commitments. Guidehouse anticipates that DNOs will face several challenges in the coming months and years. More specifically, these challenges include:

• Increased documentation requirements. DNOs will need to distinguish the drivers for any deviations from previous plans and be investigation ready with strong documentation to justify any decisions to Ofgem and customers. 
• Financial constraints. DNOs will need to continue delivering their planned RIIO outputs with lower revenues that are a result of reduced electricity demand. 
• Operational constraints. Physical distancing requirements are reducing the efficiency at which field teams can deliver work, resulting in a growing backlog.
• Supply chain challenges. DNOs may face challenges with acquiring long lead items such as high voltage transformers that are purchased from global suppliers.

DNOs Must Review and Adapt Plans and Processes to Deliver the Best Outcomes for Customers

Over the next weeks and months, DNOs will need to evaluate, plan, and mitigate the short- and long-term impacts of COVID-19, including managing the diverse challenges described above. In their planning, we anticipate DNOs will be busy with the following: 

• Developing workflow management processes and systems that enable them to document the reasons for postponing work programs.
• Reviewing and prioritizing work programs that were postponed or are linked to future load growth.
• Exploring methods to ramp up the delivery of work to meet output targets within a reduced timeframe, while still maintaining safe delivery of outputs. 
  
• Developing plans for how to bring people back to the workplace in a safe manner, while also developing track and trace processes to deploy if members of staff test positive or are suspected to have the virus. 
  
• Re-assessing cyber risks that are an increasing threat as a result of new working environments.
  

The unprecedented change that comes with COVID-19 poses several challenges. Successful DNOs will address these challenges with well-defined strategies and processes to ensure the best outcomes for employees, customers, and shareholders. 

We invite you to contact us to set up a time to discuss this blog or other topics: 

• Ben Grunfeld, Partner, Energy Providers, Europe
  
• Shannon Graham, Director, Solutions, Europe