RIIO-2 Regulatory Instructions and Guidance and Regulatory Reporting Packs

What this is about

Ofgem has published the updated Regulatory Instructions and Guidance (RIGs) and Regulatory Reporting Packs for the RIIO-2 price control period. These are the Excel templates and accompanying guidance that network companies must use to submit their annual cost, volume, and output delivery data. The updates cover Year 5 reporting for electricity transmission (RIIO-T2), gas transmission (RIIO-T2), and gas distribution (RIIO-GD2), and Year 3 reporting for electricity distribution (RIIO-ED2), which started two years later.

This is routine but consequential. The RIGs are the mechanism through which Ofgem holds network companies to their allowed expenditure. Every number in these templates feeds into totex performance assessments, which determine how overspend or underspend is shared between companies and consumers via the Totex Incentive Mechanism (TIM). Get the template wrong — or leave a reporting gap — and the regulator loses visibility of where money is actually going. Historically, ambiguities in RIGs reporting have allowed network companies to reclassify expenditure between categories, making it harder to identify where costs are running ahead of allowances.

Key points

Four sectors, two reporting years. The publication covers all four onshore network sectors. Electricity transmission, gas transmission, and gas distribution are submitting Year 5 data — their final year of the RIIO-2 period (2021–2026). Electricity distribution is submitting Year 3 data, reflecting the later start of RIIO-ED2 (2023–2028). The fact that three sectors are now reporting their final year matters: Year 5 data will be central to the close-out process and any true-up adjustments.

Proposed modifications alongside templates. Ofgem has published four separate notices proposing modifications to the RIGs — one for each sector. These are not just template refreshes. Modifications to the RIGs can change what network companies are required to report, how they categorise expenditure, and what narrative commentary they must provide. The notices are published under the relevant licence conditions, giving licensees a window to respond before the modifications take effect.

Scale of the reporting packs. The electricity transmission reporting pack alone is 33 MB. The electricity distribution packs total over 14 MB compressed. These are not light-touch exercises. Each pack contains hundreds of cost lines, volume measures, and output metrics that must reconcile with regulatory accounts. The granularity is the point — it is what allows Ofgem to track whether, say, a DNO's fault rate expenditure is consistent with the outputs it committed to deliver.

Narrative and commentary templates. The electricity distribution update includes separate commentary templates. These require licensees to explain variances from allowances in their own words — not just submit numbers. The narrative layer is where the real scrutiny happens: a 15% cost variance accompanied by a credible explanation is treated differently from one with no commentary.

What the data feeds into. The submissions determine: - TIM sharing factors — how overspend or efficiency savings are split between the company and consumers. A company that underspends keeps a share; one that overspends bears a share. The exact split depends on the company's totex performance. - Output delivery incentives — whether companies have met the service quality, reliability, and environmental targets embedded in their price control. - Close-out and true-up — for the three sectors finishing RIIO-2 this year, the Year 5 data will be the basis for final reconciliation between allowed and actual expenditure.

Accessibility gap. Ofgem notes that some files are not fully accessible and provides contact emails for alternative formats. For reporting templates that network companies are legally required to complete, this is a recurring issue — the packs are built in Excel with complex formatting that does not always translate to screen readers or alternative software.

What happens next

Submission deadlines. Network companies will need to complete and submit the reporting packs according to the timelines set out in their licence conditions. For Year 5 reporters (ET, GT, GD), this is the final submission of the RIIO-2 period.

RIGs modification process. The four modification notices are open for licensee responses. If no objections are raised within the statutory window, the modifications take effect and licensees must report against the updated templates. Any disputed modifications could delay the reporting cycle.

RIIO-2 close-out. For electricity transmission, gas transmission, and gas distribution, the Year 5 data will feed directly into the RIIO-2 close-out process. Ofgem will use the submissions to calculate final totex performance, determine true-up adjustments, and settle the sharing factors. The close-out methodology is published separately, but the data starts here.

RIIO-ED2 mid-period. For electricity distribution, Year 3 marks the midpoint of the price control. The data will inform Ofgem's assessment of whether any re-opener mechanisms need to be triggered and whether the RIIO-ED2 allowances remain appropriate for the remaining years.

RIIO-3 read-across. The quality and completeness of RIIO-2 submissions will shape how Ofgem designs the reporting framework for RIIO-3 (RIIO-ET3 and RIIO-GT3 are already in development). Persistent reporting gaps or reclassification issues in RIIO-2 data tend to produce tighter, more prescriptive templates in the next control period.