Page type: primary-anchored (mirrors RIIO-ET3 Final Determinations)

Last updated: 2026-04-05

RIIO-ET3: Electricity Transmission Price Control (2026-2031)

RIIO-ET3 is Ofgem's price control for the three electricity transmission owners in Great Britain -- NGET, SHET (SSEN Transmission), and SPT (SP Transmission) -- running from 1 April 2026 to 31 March 2031. It was set as part of the broader RIIO-3 package alongside gas transmission (GT3) and gas distribution (GD3), with Final Determinations published on 4 December 2025.

Source: RIIO-ET3 canonical extraction

What RIIO-ET3 is for

The electricity transmission network carries power at high voltage from generators to the distribution networks that serve homes and businesses. The network is being fundamentally reshaped by the energy transition: generation is shifting from centralised fossil fuel plants to dispersed wind and solar sites, requiring new lines, substations, and upgrades in locations that never had heavy grid infrastructure. RIIO-ET3 sets the revenues that the three transmission owners are allowed to collect from consumers to fund this investment while keeping the lights on.

Scale of investment

Ofgem has approved £10.7bn of upfront baseline funding for ET (2023/24 prices), an increase of £1.8bn (+20%) from Draft Determinations. But this baseline is only the floor. The total prospective investment pipeline for ET over the period could exceed £70bn, depending on how quickly demand grows and which projects identified in NESO's Centralised Strategic Network Plan proceed. Around £44bn is already committed (including projects under the existing ASTI fast-track framework). Further funding will be released in-period through re-openers and CSNP-linked mechanisms as project costs and timing crystallise.

Across all three RIIO-3 sectors (ET, GT, GD), Ofgem approved £28.7bn upfront within a total pipeline of around £90bn.

How the framework works

Baseline and adjustments

Each TO receives a baseline totex allowance -- Ofgem's estimate of what an efficiently-run company needs to spend over five years. This covers both capital investment and operating costs. The baseline is not fixed for the period: a suite of "uncertainty mechanisms" allows adjustments.

Cost sharing (TIM)

If a company spends less than its allowance, it keeps a share of the saving (and consumers get the rest). If it overspends, it bears a share of the overrun. The sharing proportion is set by the TIM incentive rate. For ET, a new "stepped TIM" has been introduced that provides stronger incentives for early and on-time project delivery, not just cost minimisation.

Outputs and incentives

Companies are required to deliver specific outputs in return for their allowed revenues. These range from hard licence obligations (breach = enforcement action) through PCDs (funding clawed back if outputs not delivered) to ODIs (financial rewards/penalties for performance against targets). There are also reputational incentives.

Financial parameters

The cost of equity allowance for ET is set at 5.70%, with an overall WACC (semi-nominal) ranging from 5.53% to 5.74%. Gas networks received a slightly higher cost of equity (6.12%) reflecting different risk profiles. Ofgem applies a 1% per annum ongoing efficiency challenge to all sectors. Revenue is indexed to CPIH inflation.

Key mechanisms specific to ET

ASTI and CSNP-linked investment

The Accelerated Strategic Transmission Investment (ASTI) framework, established in 2022, provides fast-track approval for large strategic onshore transmission projects identified initially by the Holistic Network Design and now by NESO's Centralised Strategic Network Plan. RIIO-ET3 embeds CSNP as the primary planning input, with automatic approval for key CSNP-identified projects and independent technical support for cost assessment.

Pre-Construction Funding (PCF) and Advanced Procurement Mechanism (APM)

ET-specific mechanisms to fund early-stage project development and de-risk supply chain procurement ahead of full project approval.

Delivery incentives

Strengthened delivery incentives encourage TOs to reduce system bottlenecks, connect customers more quickly, and deploy innovative approaches like Dynamic Line Rating to maximise the capacity of existing assets.

Uncertainty mechanisms

Two standard re-opener windows per year (April and October, one week each). Default materiality threshold: 0.5% of annual average ex ante base revenue multiplied by TIM rate. For NGET, this equates to a £53.2m application threshold; for SHET £26.3m; for SPT £16.2m.

Key cross-sector re-openers available to ET: - DEP Re-opener: for decarbonisation and environmental policy changes (Authority triggered only) - CAM Re-opener: for transferring outputs/revenue between companies (no windows, submit any time) - Resilience Re-opener: new, for physical security and government/NESO mandated resilience activities

ET-specific re-openers include the Load Re-opener, Non-Load Re-opener, and CSNP Re-opener, all of which qualify for Real Price Effects adjustments.

Business Plan Incentive

The BPI rewards high-quality, ambitious business plans and penalises poor ones, measured in basis points of Return on Regulatory Equity (RoRE). Results: SPT performed best (+11.8 bps, +£12.5m over 5 years), SHET moderate (+2.6 bps, +£4.9m), NGET minimal (+0.2 bps, +£0.7m).

NARM and asset risk

The Network Asset Risk Metric framework holds companies accountable for maintaining and replacing assets by measuring the risk reduction they deliver. For RIIO-3, Ofgem adopted a Hybrid Funding Mechanism that combines upfront funding certainty with in-period delivery reviews. Notably, NGET is excluded from the core NARM framework due to concerns about its asset prioritisation approach -- it will instead receive funding through PCDs with enhanced scrutiny and must adopt the full NARM model by the next price control.

Bill impact

Network charges for a dual-fuel domestic consumer with median use are expected to rise by about £108 by 2031, of which £30 relates to ET grid capacity upgrades. However, Ofgem estimates the new ET capacity will reduce constraint costs (payments to generators when the grid cannot transmit their power) by about £80 by the end of the period. The net impact of RIIO-3 on bills is estimated at about £30/year (£2.50/month). Revenue profiling smooths the initial charge increase in 2026/27 by about £11, with costs rising more steeply later in the period.

Timeline

• September 2022: RIIO-3 process launched
• October 2023: Framework Decision
• July 2024: Sector Specific Methodology Decision
• December 2024: Business plans submitted
• July 2025: Draft Determinations
• December 2025: Final Determinations
• February 2026: Licence modification decisions
• 1 April 2026: RIIO-3 starts

Defined terms

See canonical source file for full defined terms register.

Cross-references

• Electricity Transmission Licence SLCs -- licence conditions modified to implement RIIO-ET3
• Electricity Act 1989 -- statutory foundation
• NESO/ESO Licence -- NESO's CSNP role
• RIIO-ED3 (linked but separate price control, starting 2028) -- see riio-ed3.md

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