Agreeing the purpose of Smart Grid incentives and regulation

Smart Grids and innovation in electricity distribution utilities can provide a variety of benefits: they can deliver cost savings and thereby reduce the cost to rate-payers; they can raise standards of service, such as reducing interruptions experienced by consumers; or they can allow the utility to deliver a wider scope and provide new services within its existing cost base. Smart Grid techniques are increasingly a topic within rate reviews and regulatory settlements. This paper illustrates the experience within Great Britain of the electricity distribution network price control settlement known as RIIO-ED1. The paper illustrates the importance for utilities, government agencies and regulators to clarify which of the objectives, or whether all the objectives, are being pursued with Smart Grids. Without a common language, a technique may be offered to improve customer service, and yet be allocated a cost reduction target or vice versa.