SSEN Transmission has issued its response to Ofgem's Draft Determination for the RIIO-T3 price control period, expressing significant concerns that the proposed framework does not provide the investible and ambitious environment needed to deliver the scale of investment required for a cleaner, more secure, and affordable energy system. The RIIO-T3 period is critical for achieving the UK Government's Clean Power 2030 Mission and the Scottish Government's net zero ambitions.

While SSEN Transmission acknowledges Ofgem's recognition of the critical and unprecedented nature of this national infrastructure challenge, and notes some positive movement since the regulator's Sector Specific Methodology decision in July 2024, its initial assessment indicates several key shortfalls.

SSEN Transmission highlights that:

• Baseline total expenditure allowances are insufficient: The methodology for setting these allowances "fails to fund the investment necessary to deliver a clean power system by 2030." The adopted approach "does not reflect the true, evidence-based costs" required to develop, build, and maintain a reliable electricity transmission network in the north of Scotland.


• Proposed Cost of Equity is uncompetitive: The suggested Cost of Equity is not deemed "commensurate with globally competitive market rates, robust market evidence, and the significant business risks of investing in electricity transmission."

• Capitalisation rate and asset lives inadequate: The proposed capitalisation rate and asset lives "do not provide adequate cash flow measures given the significant increase in uncertainty mechanism expenditure required."

• Incentive regime requires further development: The proposed incentive regime is at an early stage and needs "further development to give sufficient confidence this will be a balanced and investable package that incentivises strong performance and delivers for consumers."

SSEN Transmission will now undertake a detailed review of Ofgem's Draft Determination in the coming weeks. The company remains committed to working constructively with Ofgem, the Government, and broader stakeholders to ensure that Ofgem's Final Determination establishes an investible, financeable, and ambitious price control settlement. This is deemed crucial to underpin the unprecedented levels of investment necessary for delivering a cleaner, more secure, and more affordable energy system to meet the needs of current and future generations.