Glossary of terms

Bill Impacts

Bill impacts – further information
  • These bill impacts are based on assumptions, forecasting tools and financial models. Bill impacts for ‘2028 onwards’ are an indication as to the likely future impact that your preferred 2023 option may have on your bills beyond 2028.
  • These indicative figures have been rounded which can result in the same bill impact figure where input cost differences are low.
  • The 2028 and beyond indications do not take into account the interdependence between the strategic outcomes.
  • These indications do not currently factor in continuous improvements to our business and operations efficiency and cost savings, which may offset some of the increases in bills.
  • Each service option has a different weighting based on their cost to maintain and upgrade (e.g. Net Zero has a higher weighting than Customer Service).
  • Business modelling - This indicative and exploratory model uses Band 1 non-domestic tariff. Bill impacts for non-domestic consumers will be dependent upon business, size and operation.  
Network Costs

Ofgem calculates network costs using the Ofgem Supply Market Indicator (SMI) – this is a 12-month forward look at the pricing trends and costs which make up an average energy bill. On average network costs account for approximately 1/5 of a domestic energy bill (2019 Total average annual domestic dual fuel bill £1184 (£572 gas, £612 electricity). Electricity distribution charges are set regionally based on the cost of efficiently running the network across the region. These charges vary between regions as the cost of distribution varies considerably (due to geography, infrastructure and population density). Charges vary within regions according to the type of supply taken (voltage and number of rates). 

Closely Associated Costs (CAIs)/Business Support Costs (BSCs)

The running costs of the business, including back office, salaries, etc.

Common Distribution Charging Methodology (CDCM)

A methodology that calculates standard charges by customer type.

High Value Projects (HVP)

These are more ‘one off’ expenditures e.g. reparation of large subsea cables.

Load related expenditure (LRE)

The installation of new assets to accommodate changes in the level or pattern of electricity or gas supply and demand.

Non load related expenditure (NLRE)

The replacement or refurbishment of assets which are either at the end of their useful life due to their age or condition, or need to be replaced on safety or environmental grounds.

Total operating and capital expenditure (totex)

Total of capital expenditure (capex) plus operational expenditure (opex).

Weighted average cost of capital (WACC)

This is the weighted average of the expected cost of equity and the expected cost of debt.

If you have any further questions about the financial modelling used in this survey, please contact us at YourED2Plan@sse.com 

General

Business carbon footprint

A reputational incentive to encourage DNOs to consider the direct carbon impact of conducting their operations and to be proactive in the reduction of emissions.

Distribution Network Operators (DNO)

A DNO is a company which operates the electricity distribution network which includes all parts of the network in Great Britain. There are 14 DNOs in GB which are owned by six different groups.

Distribution System Operators (DSO)

As DNOs actively manage the local levels of demand, whilst at the same time accommodating varying amounts of generation onto the network, they will start to behave like system operators (balancing local demand and supply on their networks).

Electric Vehicle (EV)

Vehicles that utilise electric motor(s) or traction motor(s) and are powered by either an external power station, on-board electrical generators, or stored electricity.

Low carbon technologies (LCT)

Technologies that produce power with substantially lower amounts of carbon dioxide emissions than is emitted from conventional fossil fuel power generation. This includes low carbon power generation sources such as wind, solar, hydro and nuclear. Household LCTs include electric vehicles, electric heating, heat pumps, etc.

Net zero

This refers to the balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere. In order to meet the 1.5c global warming target set out in the Paris Agreement, global carbon emissions should reach net zero by 2050 in the UK and 2045 in Scotland.

OFGEM

The Office of Gas and Electricity Markets, supporting the Gas and Electricity Markets Authority, is the government regulator for the electricity and downstream natural gas markets in Great Britain. OFGEM works to ensure the electricity wholesale and retail markets are competitive. They regulate distribution and transmission networks and manage the commercial tender process for offshore transmission projects.

RIIO electricity distribution 2 (RIIO-ED2)

The second RIIO price control review to be applied to the electricity distribution network operators. This price control will run for a period of 5 years between 2023 and 2028. ED3 refers to the price control period post 2028.

SEPD

SEPD is SSEN’s distribution network area in central southern England.

SHEPD

SHEPD is SSEN’s distribution network area in the north of Scotland.

Worst-served customers

Customers who live in remote hard to reach areas of the network, who may experience more frequent outages. Customers experiencing 12 or more higher voltage interruptions in a three-year period, with a minimum of three per year.