View
4
Download
0
Category
Preview:
Citation preview
Annex 4A.25: SP Manweb – Company Specific Factors
RIIO-ED2 Business Plan
December 2021
RIIO-ED2 Business Plan
1
Contents
1. AN INTRODUCTION TO THIS ANNEX ............................................................................................. 2
1.1 BPI signpost .............................................................................................................................. 4
1.2 Meeting Ofgem’s criteria for a Company Specific Factor ......................................................... 4
1.3 List of Figures ............................................................................................................................ 6
1.4 List of Tables ............................................................................................................................. 7
2. BACKGROUND AND CONTEXT OF THE INTERCONNECTED NETWORK ................................. 8
2.1 History of our Unique Network .................................................................................................. 8
2.2 Three principles of the SP Manweb interconnected network .................................................... 9
3. INTERCONNECTED NETWORK PERFORMANCE AND COSTS ................................................ 12
3.1 Overview ................................................................................................................................. 12
3.2 Higher network reliability ......................................................................................................... 13
3.3 Additional benefits of the interconnected network .................................................................. 15
3.4 Case Study 1: EV car park ...................................................................................................... 18
3.5 Case Study 2: Large Solar Photo Voltaic (PV) Connection to the EHV network .................... 19
3.6 Incremental costs of our interconnected network ................................................................... 20
4. OUR LONG TERM NETWORK STRATEGY AND INNOVATION .................................................. 27
4.1 Underpinned by customer and stakeholder engagement ....................................................... 27
4.2 The cost of whole system transition ........................................................................................ 28
4.3 Our long-term strategy to maintain benefits and reduce costs ............................................... 29
4.4 Enabled by innovation ............................................................................................................. 30
4.5 Case Study: Southport Network Transition ............................................................................. 31
4.6 Additional cost mitigating measures........................................................................................ 32
4.7 Wider industry activity and innovation ..................................................................................... 32
4.8 Future learning in LV automation ............................................................................................ 33
5. COMPANY SPECIFIC FACTOR (CSF) BUSINESS PLAN ............................................................ 35
5.1 What is the SP Manweb CSF .................................................................................................. 35
5.2 Approach to defining the CSF ................................................................................................. 35
5.3 Review and assurance ............................................................................................................ 37
5.4 Contents of this chapter .......................................................................................................... 39
5.5 Summary of M25 memo table costs ....................................................................................... 40
5.6 Load related expenditure ........................................................................................................ 41
5.7 Non-load related expenditure .................................................................................................. 48
5.8 Network operating costs .......................................................................................................... 80
6. GLOSSARY ..................................................................................................................................... 97
RIIO-ED2 Business Plan
2
1. An introduction to this annex
The SP Manweb network is unique due to its
alternative, interconnected or ‘meshed’ design,
adopted from its outset in the late 1940s and
inherited when the electricity supply industry was
privatised.
Over half of our network – predominantly that in
urban areas across Merseyside, Cheshire, and
Wirral – is operated fully interconnected at all
voltage levels. The primary system is wholly
configured to support this interconnected operation.
Put very simply, interconnected operation means
power can flow through more than one path to reach
its destination in normal operation. By comparison,
most GB distribution networks have a traditional
‘radial’ design, in which power typically has a single route.
This unique design provides embedded benefits to
our customers, including excellent reliability in terms
of reduced interruptions, better facilitation of LCTs,
and a network that is more readily adaptable to
changing demand.
Figure 1: Customer interruptions per 100 customers
Showing average performance benefit of SP Manweb
Urban Networks for the period 2016-2020. “Urban
networks” showing underground network areas with 25%
or more X-type (fully interconnected and unit protected)
secondary substations, which supply approx. half of all
customers. Data from 2018/2019 NAFIRS QoS HV
Disaggregation Reporting Pack.
Urban areas of the SP Manweb network, which
supply nearly half of connected customers,
experience an outage due to a high-voltage network
fault approximately once every 45 years – this is
nearly twice as good as the best performing licence
area in GB. For over 92% of the faults experienced
on our 33kV network, no customer supplies are lost
due to the resilience in our network design and
interconnected operational arrangements.
Extensive engagement has shown that our
customers consider network reliability to be of
utmost importance. Therefore, it can be concluded
that the interconnected network caters better for this
key customer priority.
In the SP Manweb interconnected network areas,
customers are off supply for nearly 22 minutes
(63%) less per year on average than customers
connected to other distribution networks. We
estimate that the value of this network performance
benefit is in the region of £12.9m per annum, using
the socialised cost of supply interruptions from the
Ofgem cost benefit analysis methodology.
The interconnected design is more scalable than an
equivalent radial network, accommodating
reinforcement as and when it is required. This is
advantageous given that, whilst the overall direction
towards Net Zero is clear, there is still uncertainty
around how and when distribution networks will
need to increase capacity. Further benefits of the
interconnected network can be realised in the
connection of LCTs, distributed generators,
facilitation of flexible connections, capacity released
through intelligent network control and automation,
and reducing technical network losses. This
complements our strategy to deliver successful
Distribution System Operation (DSO).
However, these benefits are brought about by
several key legacy design and engineering
characteristics unique to our network. These
characteristics result in additional costs associated
with operating, maintaining and modernising the
network.
They are associated with greater volumes of assets,
and increased asset and network complexity
compared to a radial network. These additional
costs, all related to the unique interconnected
design, form the basis of the SP Manweb Company
Specific Factor (CSF) adjustment. They equate to
£116.8m, which is 7.0% of the RIIO-ED2 Totex plan.
RIIO-ED2 Business Plan
3
Figure 2: SP Manweb Unique Network Cost
Adjustments (£millions)
The expenditure is distributed throughout our RIIO-
ED2 Totex plan and justified by our robust series of
Engineering Justification Papers (EJPs). This annex
identifies and collates the individual CSF
expenditure areas that are affected by SP Manweb’s unique design.
We have calculated the CSF using tried and
accepted approaches, refreshed with new
information and up-to-date assumptions. It also
takes account of Ofgem’s feedback from the RIIO-
ED1 determinations and relevant working group
meetings and against a backdrop of the changes
being seen as we transition to Net Zero. To validate
our approach, the costs and benefits associated
with our unique network have been scrutinised
through both internal and external assurance.
In RIIO-ED2, we must continue to ensure we are
providing best value for money to our customers,
whilst meeting our customers’ evolving needs in delivering Net Zero and operating a safe, reliable,
and efficient distribution network. Our plans for the
interconnected network must continue to meet this
objective.
The costs of wholly moving away from the existing
interconnected design are prohibitive financially and
logistically – in essence it would involve “re-wiring” our whole network.
We estimate this would more than double the
distribution component of the customer bill over the
next forty years, whilst eroding the embedded
benefits of the existing interconnected system.
In RIIO-ED1, supported by innovative network
developments, we have progressed ways to
minimise the additional costs associated with the
unique network where this is possible without a
significant reduction in benefits. This can be
achieved in parallel with refurbishment or
reinforcement work at ‘fringe’ areas of our fully
interconnected regions.
This ensures that we will continue to best meet our
customers’ needs at the lowest possible cost.
This annex sets out in detail how we have
calculated the CSF adjustment. It also describes the
activities we are undertaking to mitigate the
additional costs associated with the CSF in the
longer term, so we maintain the benefits it provides
customers, whilst minimising the cost to customers
in its ongoing upkeep and management.
An overview of the content of each chapter is as
follows:
Chapter 2: Background and context – this explains
what is unique about the Manweb network, a brief
history of how it came about, and a summary of the
benefits.
Chapter 3: Network performance and costs – this
chapter sets out the network performance benefits
of our unique network compared to a radial
equivalent, and also explains why this results in
higher costs.
Chapter 4: Our long-term strategy for the
interconnected network – this sets out our strategy
for development of the SP Manweb network in RIIO-
ED2 and beyond and explains the innovation that
we have undertaken to support this.
Chapter 5: CSF business plan – this sets out in
detail the additional costs that result from the unique
network as set out in the Business Plan Data Tables
(BPDTs) under the M25 Company Specific Factor
memo table. It demonstrates how we have
calculated these costs.
1,661.1
1,544.3
19.7 82.0
15.2
1,400
1,450
1,500
1,550
1,600
1,650
1,700
SPM Totex Loadrelated
investment
Non-loadrelated
investment
NetworkOperating
Costs
AdjustedTotex
withoutCSF
£M
Regulatory Expenditure Category
RIIO-ED2 Business Plan
4
1.1 BPI signpost
Ofgem BP Guidance No Annex Page Number
5.26 See Section 1.2 for further details.
1.2 Meeting Ofgem’s criteria for a Company Specific Factor
Company Specific Factor criterion How we have met this requirement
The Regional or Company Specific Factor
in question is clearly defined.
Section 2.
The SP Manweb Company Specific Factor is its unique
interconnected and unit protected design.
The fundamental design has wide-reaching impacts on the
volumes, cost and complexity of multiple assets and operational
practices that are not shared with any other DNOs. Almost
every area of the network is different to an equivalent radial
system.
Is the cost impact of the Company
Specific Factor material in nature?
Material cost impact will be more than
0.5% of a DNO’s gross unnormalised total expenditure. DNOs should use this ‘soft’ materiality threshold as a guide when
submitting a Company Specific Factor.
Section 5.5
The SP Manweb Company Specific Factor represents 7.0% of
the RIIO-ED2 Totex plan.
DNOs should clearly explain the rationale
for how they have grouped costs together.
Unrelated cost categories should not be
grouped together simply to exceed the
materiality threshold.
Section 5
All additional costs are directly related to the unique engineering
design and operation of the unit-protected, interconnected
network as compared to an equivalent network of radial design.
Is the Company Specific Factor unique in
nature?
The Company Specific Factor should be
limited to a single DNO or a small number
of DNOs. Only claims that reflect a
material asymmetry between DNOs are
justified.
Sections 2 and 3
The SPM is unique in that it operates in meshed ‘groups’ rather than radial spurs from the top downwards. The primary network
is unique in this regard, it is fully interconnected to support
interconnection at lower levels.
In the LV system, there are similarities to the London Power
Networks (LPN) region, which has a number of areas of LV
interconnection. LPN does not have the same unit protection
system at LV as Manweb, which is described in Section 2.2.-
Three principles of the SP Manweb interconnected network.
Nevertheless, we have drawn comparisons to the LPN network
throughout this document where applicable. In particular, within
the reliability comparison (Chapter3 – Interconnected Network
Performance and Costs ) and in our consideration of innovation
(Section 4.7 – Wider industry activity and innovation).
RIIO-ED2 Business Plan
5
Is the Company Specific Factor outside
the control of an efficient company?
DNOs should demonstrate that, where
possible, they have mitigated the
additional costs associated with the
Company Specific Factor.
Section 2.
The engineering design has been unique since its conception in
the late 1940s and was inherited. The design is integral to the
operation and hence the correct functioning of the network. This
is detailed in Chapter 2 – Background and Context.
However, there are ways we can try to control or limit the costs
to our customers, where it is in their best interests (i.e. where it
doesn’t lead to a significant reduction in performance). We
outline how we seek to make cost improvements in Chapter 4 –
Our Long Term Network Strategy and Innovation.
Throughout Chapter 5, we have discussed measures taken
directly to reduce the additional costs associated with the
interconnected network CSF, and any wider cost mitigation
activities we are undertaking as business as usual in the
creation of an overall, efficient business plan that are of
relevance to the interconnected network CSF.
Is the cost related to the Company
Specific Factor excluded from our other
adjustments, such as Regional Factors or
as part of our approach to cost
assessment?
If the cost is accounted for by other
adjustments, we will consider whether
there is any remainder that is not, and
whether the remainder passes our
materiality test.
Section 5.5
Yes, it is excluded from other adjustments.
There must be a high evidential bar for
the acceptance of Regional and Company
Specific Factor submissions.
Section 5 (see 5.6, 5.7, and 5.8)
Company Specific Factor (CSF) Business Plan, we have
presented a detailed methodology of how the costs associated
with the Company Specific Factor are derived. We have
discussed alternative approaches where applicable, and
explained how we have made balanced assumptions.
Our approach to deriving these costs has been subject to
multiple reviews and we have sought independent assurance.
Section 3 – Interconnected Network Performance and Costs
provides a detailed summary of the key cost drivers but also the
benefits afforded by our unique interconnected and unit
protected design.
Also see Annex 7.1c for the External Assurance report
completed by S&C Electric on this Annex.
RIIO-ED2 Business Plan
6
1.3 List of Figures
Figure 1: Customer interruptions per 100 customers .............................................................................................2
Figure 2: SP Manweb Unique Network Cost Adjustments (£millions) ...................................................................3
Figure 3: System of networks for distribution of electricity .....................................................................................8
Figure 4: Industry typical and SP Manweb typical configuration ............................................................................9
Figure 5: Distance (top) and unit (bottom) protection .......................................................................................... 10
Figure 6: Customer Interruptions in GB underground networks .......................................................................... 14
Figure 7: Customer Minutes Lost in GB underground networks ......................................................................... 14
Figure 8: Customer Interruptions in EHV networks ............................................................................................. 14
Figure 9: Customer Interruptions in LV networks ................................................................................................ 14
Figure 10: Customers per fault in EHV networks ................................................................................................ 14
Figure 11: Customers per fault in LV networks ................................................................................................... 14
Figure 12: Supply at a single end of a feeder vs. supplied by both ends of a feeder leads to ‘tapered’ vs. ‘distributed’ cable loading .................................................................................................................. 16
Figure 13: Proposed EV car park at Orford Street (brown lines - LV feeders, red circles - substations) ............ 18
Figure 14: Schematic connection of Orford Street EV car park .......................................................................... 18
Figure 15: Left: Typical 33kV SP Manweb connection. Right: Equivalent 33kV radial connection. .................... 19
Figure 16: Mean Equivalent Asset Value (as used by Ofgem in ED1) of HV and EHV switchgear across all
DNOs, in £ per customer ................................................................................................................... 21
Figure 17: Volume of pilot wires per million customers, across all DNOs (from 2020 DNO asset register) ....... 21
Figure 18: Volume of primary substations per million customers, across all DNOs (from 2020 DNO asset
register) ............................................................................................................................................. 21
Figure 19: Volume of batteries per million customers, all voltage levels, across all DNOs (from 2020 DNO asset
register) ............................................................................................................................................. 21
Figure 20: Fault infeeds for an LV fault in the SP Manweb interconnected network........................................... 22
Figure 21: Fault infeeds for an LV fault in a radial network ................................................................................. 22
Figure 22: LV fault detection and clearance activities in a typical radial network ............................................... 23
Figure 23: LV fault detection and clearance activities in the SP Manweb unit protected, interconnected network
........................................................................................................................................................... 23
Figure 24: Areas of Liverpool City Centre showing extensive reinforcement and overlay that would be required
to convert to a radial design. Top shows existing network in blue and green, bottom shows
alternative transformers and cable overlay in red. ............................................................................ 28
Figure 25: Overview of our Long-Term Network Strategy for the interconnected network ................................. 29
Figure 26: Existing Southport X and Y type 6.6kV network group ...................................................................... 31
Figure 27: Transitioned Southport network to a Y type 11kV configuration with automation .............................. 31
Figure 28: Challenge and review timeline ........................................................................................................... 38
Figure 29: The number of primary transformers in SPM Manweb compared to industry average and our
calculated radial equivalent, per 100,000 customers (left) and per TWh distributed (right) ............. 53
Figure 30: System of networks for distribution of electricity (as per Figure 3) additionally showing location of
primary switchgear ............................................................................................................................ 55
Figure 31 – Mean Equivalent Asset Value (MEAV) of switchgear per 100km of EHV network .......................... 55
Figure 32: Secondary (HV) transformers in the SP Manweb network (not to scale), showing example LV
feeders and services. ........................................................................................................................ 57
Figure 34: Industry volumes of pilot wire (from V1 DNO Asset Register 2019) .................................................. 64
Figure 33: Left: Primary sites per TWh distributed, Right: Primary sites per 100,000 customers. Showing SP
Manweb compared to SP Distribution, industry average and industry median. Source: V1 asset
register. ............................................................................................................................................. 66
Figure 35: 33kV Cable Faults – RIIO-ED1 first five years showing the high anomalous values for both SPM and
SPD ................................................................................................................................................... 82
RIIO-ED2 Business Plan
7
Figure 36: 33kV Cable Faults – RIIO-ED1 first five years showing SPM fault volumes showing Trif Joint and
Non Trif Joint related with the median/average of other UK DNOs excluding outlier SPD ............... 83
Figure 37: 33kV Cable Faults – RIIO-ED1 first five years showing SPM fault rates per km showing Trif Joint and
Non Trif Joint related with the median/average of other UK DNOs excluding outlier SPD ............... 83
Figure 38: 33kV Cable Faults during 2018 showing Trif Joint and other fault causes against ambient air
temperatures recorded ...................................................................................................................... 84
Figure 39: LV network arrangements comparing typical radial configuration with SPM’s interconnected arrangements .................................................................................................................................... 86
Figure 40: LV network faults by district area against the level of interconnection ............................................... 86
Figure 41: Typical thermovision inspection image showing 33kV ‘hotspot’ ........................................................ 88
Figure 42: X-type unit protection with HV CBs at each secondary substation .................................................... 90
Figure 43: Typical 33kV urban interconnected network (left) and typical 33kV rural interconnected network
arrangement (right) ............................................................................................................................ 93
1.4 List of Tables
Table 1: Connection scenarios for example EV scheme at Orford Street ........................................................... 19
Table 2: SP Manweb Special Case additional cost summary ............................................................................. 25
Table 3: Summary of costs attributed to the CSF by spending category ............................................................ 40
Table 4: Load related expenditure plan – top down costs ................................................................................... 41
Table 5: Non-load related expenditure plan – asset modernisation and refurbishment ...................................... 48
Table 6: Network operating costs expenditure plan ............................................................................................ 80
RIIO-ED2 Business Plan
8
2. Background and Context of the Interconnected
Network
This chapter gives a brief history of how our unique
network came about and explains what makes it
unique.
2.1 History of our Unique Network
At the time that Manweb came into being in 1948,
the electricity distribution industry was entering a
new era of development, which resulted in the
system that we are familiar with today: as
generators got larger, distribution networks, which
originally comprised of circuits of all voltages from
LV to 132kV emanating from single, localised points
of supply, were beginning to adopt an integrated
method of distribution with a standard design
philosophy.
By the late 1950s, the newly established Central
Electricity Generating Board (CEGB) was
developing a 275kV and later the 400kV nation-wide
transmission system. This development saw most
generation connect at large, centralised power
stations to benefit from economies of scale. Power
was then transported via the transmission system to
several bulk supply points within local distribution
networks, as is the case today.
It was also a time for huge growth in supply and
demand: the amount of electricity supplied between
1950 and the early 2000s grew relatively steadily
from 50TWh to over 350TWh, except for a brief
decline in the 1980s.
In the mid-1950s, the Manweb Chief Engineer, took
his distribution network design philosophy in a
unique direction.
As the demand grew, simply increasing the lengths
and capacities of the distribution feeders left large
number of customers exposed in the event of a
network fault at the top of the feeder. Other
distribution networks overcame this by duplicating
transformers at each substation to provide
redundancy. However, Manweb opted for an
interconnected design philosophy, which instead
supplies feeders from both ends (i.e. the feeders
interconnect two or more substations into a group).
This design philosophy is based on higher
transformer utilisation, as loading is shared among
neighbouring transformers, with each voltage layer
providing support to the voltage layer immediately
above (LV, HV, EHV and 132 kV) via
interconnection. This results in a fully integrated and
meshed network, demonstrated by Figure 3.
At the time of its inception, this design philosophy
led to lower costs and excellent network
performance. As will be described in following
sections of this Annex, whilst the reliability benefits
are still enjoyed today, maintaining the
interconnected network comes with additional costs.
Figure 3: System of networks for distribution of
electricity
RIIO-ED2 Business Plan
9
2.2 Three principles of the SP Manweb
interconnected network
The three underlying principles of the Manweb
interconnected network design were established as
follows:
2.2.1 Uniformity
Traditional, radial networks tend to radiate outwards
from bulk supply points (connected to the 132kV
system) to EHV (primary) substations, from which
HV networks radiate.
Traditional HV networks can be constructed as
‘looped’ radial circuits that return to the same
substation, or as an ‘interconnector’ to an adjacent
primary substation to provide post-fault support and
resilience. In all cases, the circuit must be run with a
split or ‘normal open point’.
Traditional LV networks, whilst having the capability
to offer interconnection in the event of faults or
outages, are also normally run radially. Historically,
LV cables are tapered as distance from the
transformer increases.
By comparison, an interconnected network
comprises a mesh of uniform circuits (more dense at
lower voltages), with each layer fed from the voltage
1 ‘Firm’ refers to the capacity rating of a substation or group of substations that can be maintained even
level above. Transformers and cables tend to be
uniform in size, such that at each voltage level there
is a standard rating for circuits and design for
switchgear, protection and relay settings. Between
each voltage level there is also a standard
transformer rating. This allows for a ‘plug-and-play’ network configuration.
2.2.2 Interconnection
Figure 4 shows a radial primary (EHV) substation in
an industry typical configuration with a firm1 capacity
of 24MVA, compared to a typical group of three
primary substations in SP Manweb, with a similar,
combined firm capacity of 20MVA.
Figure 4: Industry typical and SP Manweb typical
configuration
in abnormal/fault conditions, transformers can
operate above their ratings.
Uniformity
Similar sized components such as cables
and transformers at all voltage levels, and
uniformity of application
Interconnection
Circuits run between substations with all
switches predominately in the ‘closed’ position – like a mesh
Unit protection
Accurate fault locating by checking at
current entering and leaving ‘zones’, and fault isolation without the loss of supplies to
customers
RIIO-ED2 Business Plan
10
In the typical radial configuration, the primary
substations supply several secondary (HV/LV)
substations along each feeder, which are not
connected in normal operation. The loading will
reduce along the feeder. (Note: only two radial
circuits are shown for simplicity, but there would be
more at full capacity.)
By contrast, in the typical SP Manweb configuration,
feeders supplying the secondary substations
(typically rated at 0.5MVA) are connected to a
primary substation and fed from both ends in normal
operation, with the ability to be fed by either end.
Just over half of the SP Manweb network is solidly
interconnected at all voltage levels – this is termed
‘X-type’. Of the remaining network, just over half again is solidly interconnected at 33kV and HV but
less so at LV – termed ‘Y-type’. The remainder, mainly in our rural areas – just under a quarter of
the whole network – is designed and operated as a
radial network with single transformers feeding a
non-interconnected HV and LV system.
2.2.3 Unit protection
Key to the operational value of the X-type network is
a concept called unit protection, which accurately
locates a fault by checking the current entering and
leaving ‘zones’. This gives the SP Manweb
interconnected network a very high reliability of
supply in terms of very low customer interruptions.
In a radial network, traditional distance protection is
typically used. Fault isolation is achieved by opening
the source circuit breaker to de-energise the whole
circuit and downstream LV circuits until the fault is
isolated and supplies restored.
To reduce the impact, radial EHV substations
normally have two transformers (one to back up the
other) and HV feeders are arranged to have
switchable back-feeds to reduce duration of
interruption. The transformers are each sized to
meet the entire load on the substation. Under
normal conditions neither unit achieves greater than
50% utilisation.
Customers will be without power until the fault is
located and either manual switching, remote
telecontrol switching or automation switching is used
to restore the non-faulted sections to service with
some customers off for repair time or alternative
supply restoration.
In the X-type network, HV/LV substations are
configured in unit protected zones. For the same
HV fault on a unit protected system, it can be
pinpointed to a specific location. The protection
system would automatically isolate the faulted
section of HV cable section and the in-zone HV/LV
transformer. Supply to the neighbouring HV/LV
substations would be unaffected, fed from the
primary transformer at either end. The occurrence of
a single fault rarely results in lost load or customer
interruptions.
Additional protection equipment and switchgear is
required on the X-type network to summate the
current on the incoming and the outgoing feeders,
and to isolate faulted sections of HV circuit as well
tripping a LV ACB on the LV board to prevent back
feeds from the surrounding interconnected LV
network.
The LV supplies downstream of the isolated HV/LV
substation would also be unaffected, fed from the
neighbouring HV/LV substations, ensuring supplies
to all customers are maintained. The resultant
network configuration is shown in Figure 5.
Figure 5: Distance (top) and unit (bottom) protection
RIIO-ED2 Business Plan
11
Today, this design philosophy still brings significant
embedded benefits, including higher reliability,
increased asset utilisation and ability to
accommodate new connections.
However, the ongoing operational and capital
investment costs to maintain performance are
greater due to the additional plant, switchgear,
protection equipment and civils requirements the SP
Manweb network requires compared to a typical
DNO with a radial designed network.
Our strategy is to ensure that we appropriately
balance the benefits of the interconnected network
with the costs of providing them (see Chapter 4 of
this Annex).
RIIO-ED2 Business Plan
12
3. Interconnected Network Performance and Costs
This chapter sets out the network performance
benefits of our unique network compared to a radial
equivalent and explains, at a high-level, why this
results in higher costs.
3.1 Overview
Benefits of an interconnected network include:
• Significantly lower number of interruptions to
supply through interconnection and unit
protection.
• Higher utilisation of assets and standardised
component sizes leading to a more
adaptable and scalable network, reducing
the risk of uncertainty about the future.
• Improved facilitation of customer uptake of
Low Carbon Technologies (LCTs) through
the capability of sharing loads amongst
circuits.
Extensive engagement has shown that customers
and stakeholders consider system supply standards
to be of utmost importance. Therefore, it can be
concluded that the interconnected network caters
better for this key customer priority.
As we transition towards Net Zero, and as our
customers increasingly depend upon electricity
networks to live their lives, as well as for their
heating and transport needs, these benefits will
become increasingly valuable.
With enhanced network performance and
incremental benefits in supply reliability, it is also
recognised that the costs associated with SP
Manweb’s unique network are marginally higher than the GB average.
We have also developed a long-term strategy (see
Chapter 4) that will ensure these costs are
minimised further in the longer term.
RIIO-ED2 Business Plan
13
3.2 Higher network reliability
The SP Manweb interconnected network offers
some of the best reliability in GB in terms of lowest
number of customer interruptions, with the X-type
(unit protected) network offering the best reliability of
any network type.
Any single fault or failure on an interconnected
network will rarely result in any loss of supply, even
for a short period of time. This can be seen in
published data on Customer Interruptions (CI) and
Customers’ Minutes Lost (CML).
Overall, SP Manweb has the lowest rate of CIs in
GB except for LPN (owned by UK Power Networks),
supplying London. However, LPN is an outlier with
excellent reliability due to being a wholly
underground network, with part interconnection.
Disaggregated analysis has been undertaken to
examine the enhanced performance benefits
associated with the fully interconnected or ‘X-type’ areas of the SP Manweb network compared to wider
industry. This analysis shows that the rate of CIs on
the X-type network, which supplies just over half of
all our customers, outperforms even LPN in
performance.
3.2.1 Ensuring a like-for-like comparison
Most of the X-type network areas are underground
(UG), and these areas largely correspond to our
urban network. Therefore, in assessing network
performance we compare RIIO-ED1 performance to
date for our underground interconnected network
with the underground networks from other GB
DNOs. Underground networks outperform overhead
equivalents, (due to transient weather and air borne
debris type faults), therefore it is more appropriate,
in the context of the CSF, to compare equivalent
network types for supply reliability and security
performance.
It is also important to note we have used
disaggregated fault data that enables us to show the
respective fault performance of our X-type and Y-
type areas of our HV network to allow us to compare
our unique interconnected underground HV network
with the underground HV network of other DNOs.
As part of our review, we have considered network
size, topology and voltage in comparing network
performance and reliability.
3.2.2 Faults on the HV network
A review of CIs and CMLs caused by faults on the
HV network, which make up the majority (two thirds)
of all faults that result in customer interruptions, has
shown significantly better performance in the
network with HV interconnection.
3.2.2.1 Customer Interruptions (CIs)
Figure 6 shows the number of CIs per year is less
than half that of LPN.
However, it is important to note that the areas of the
network that are not interconnected do not perform
this well. It is important that we consider this, and
the priorities of customers in these regions, within
our longer-term strategy (see Chapter 4).
3.2.2.2 Customer Minutes Lost (CMLs)
When there is a fault on the network that results in
an interruption, it is our responsibility to make sure
we safely and securely restore the supply in the
least time possible.
SP Manweb has a higher Average Time off Supply
(ATOS), largely due to the complexity of the network
and the requirement for an enhanced voltage and
insulation test regime before restoration switching,
and partly because interruptions on the X-Type
interconnected network are generally harder to
repair i.e. they will normally consist of two faulted
pieces of equipment or apparatus.
Despite this, the X-type network also outperforms
LPN on CMLs by over 20% as shown in Figure 7.
RIIO-ED2 Business Plan
14
Figure 6: Customer Interruptions in GB underground
networks
Figure 7: Customer Minutes Lost in GB underground
networks
3.2.3 Faults on the rest of the system
The available dataset for interruptions caused by
faults in other areas of the network during RIIO-ED1
(making up one third of all faults that result in
customer interruptions) is not as detailed: the data is
not disaggregated into network type.
Nevertheless, analysis of the overall figures shows
that SP Manweb’s performance is good when
compared to the rest of the industry for faults in the
EHV network (Figure 8), and is industry leading for
the LV network (Figure 9). The number of customers
affected per fault is the lowest in the industry owing
to the interconnected design (Figure 10 & Figure
11).
Figure 8: Customer Interruptions in EHV networks
Figure 9: Customer Interruptions in LV networks
Figure 10: Customers per fault in EHV networks
Figure 11: Customers per fault in LV networks
RIIO-ED2 Business Plan
15
3.3 Additional benefits of the
interconnected network
3.3.1 An adaptable network
The SP Manweb interconnected network uses
standardised network components throughout,
generally smaller than in a radial network. Grid
transformers are generally 60MVA, primary
transformers are generally 7.5/10MVA and ground-
mounted secondary transformers are generally
0.5MVA. Compared to 90-120MVA, 20-24MVA and
1MVA units respectively, in radial networks.
Similarly, conductors do not taper along the length
of feeders and we generally only adopt two sizes for
new build equipment. This enables access to
economies of scale and efficiencies in procurement
and engineering design.
Because current in an interconnected system is
supplied from multiple source infeeds, or as a
minimum from both ends, on a balanced system, the
maximum current compared to a radially fed system
is split. Although the system is based around high
utilisation, in many instances, depending on the
comparative cable sizes, this effectively increases
tolerance to peak loads.
This uniformity of equipment and ratings, along with
the ability to operate at high utilisation factors,
provides opportunity for expansion in line with
network growth and facilitates reinforcement by the
addition of a new transformer with minimal cable
laying and no change to protection or settings.
Overloaded feeders can be resolved by installing a
new in-feed near the mid-point. In radial networks,
the introduction of new or larger substation can lead
to circuits having to be replaced or reinforced due to
the non-uniformity of the network.
Conversely, if demand falls in an area, substations
in a meshed network can be more easily
decommissioned, and their equipment used
elsewhere.
Whilst the asset volumes and network complexity
can increase the cost of network reinforcements on
a per MVA basis, smaller network reinforcements
can be implemented with shorter lead times, and
defer the need for larger, more expensive
reinforcements if more time is needed for the final
requirements to evolve. This reduces the risk of
stranded assets.
In the transition to Net Zero, there will be compound
factors at play. On the one hand, the more
adaptable interconnected network may be more
resilient in the face of future network uncertainty.
However, given the scale of the forecast increase in
demand and generation on our network, this will
result in increasing numbers of significant
reinforcements.
In an interconnected network, reinforcement comes
at a higher cost – as discussed in more detail in
Section 5.6.
3.3.2 Supporting the Distribution System
Operator transition
The adaptability of the interconnected network
supports our business in its transitioning into a
Distribution System Operator (DSO), where network
constraints caused by demand and fluctuating local
generation are managed through smarter
technologies, network automation, demand
reduction or levelling schemes, and the provision of
new services such as flexibility – where we pay
generators and consumers to change their patterns
of supply and demand.
In the near-term, uncertainty in the uptake of new,
smarter technologies and markets, maximizing
optionality in the network can be very beneficial.
Interconnected networks may have many more
options to reconfigure demand and generation
uniformly across the network. In many cases
meshed networks are more robust and capable in
accommodating changes in load patterns and
locations.
Our DSO strategy for RIIO-ED2 is to deploy all
necessary DSO infrastructure including the
centralised systems and all network / field
infrastructure, that will enable DSO functions and
activities, including Active Network Management
and flexibility services. This deployment has been
considered across both our SP Distribution and SP
Manweb licence areas, taking into consideration the
different network topologies (considering Grid
Groups for SPM and Grid Supply Points for SPD)
with prioritisation based on capacity requirements
RIIO-ED2 Business Plan
16
from our Distribution Future Energy Scenario
(DFES) forecasts.
The application of DSO technology has a consistent
approach across both licence areas. However, for
DSO within SP Manweb, further considerations
have been made on the additional optionality that is
offered by the meshed network.
This benefit will be further enhanced in ED2 by SP
Energy Networks’ ambitious monitoring proposals,
which cover installation of:
• Innovative active fault level monitoring
across constrained locations on our HV and
EHV network to help safely accommodate
more renewable generation.
• Substation monitors to improve network
visibility.
• Widescale LV network monitoring,
combined with extensive use of smart meter
data.
This monitoring has benefits on any network, but in
particular will help to characterise the more complex
flows in an interconnected network. This will give us
the information required to expand our network
when there is a need, reducing the risk of asset
stranding.
Figure 12: Supply at a single end of a feeder vs. supplied by both ends of a feeder leads to ‘tapered’ vs.
‘distributed’ cable loading
RIIO-ED2 Business Plan
17
3.3.3 Facilitating Low Carbon Technologies
The increase in Low Carbon Technology (LCT)
loads poses challenges to the performance and
design of both HV and LV systems due to its effects
on steady state current, steady state voltage
regulation and harmonics. LCT generation affects
net loading and influences steady state current,
steady state voltage regulation and harmonics.
It is widely recognised that an interconnected
network design has benefits when adapting to meet
new levels of LCTs, including increased demand
from domestic electric vehicles and electric heat
pumps, as well as low-carbon distributed
generation. This is due to the following advantages:
• Unit protection is more advanced than
typical radial system protection and is more
tolerant to bi-directional power flows,
meaning distributed generation can be
accommodated without too many complex
changes to protection systems.
• The parallel paths for power place less
demand on the system above, deferring
costs for network reinforcement.
• The interconnected network means there is
a wider distribution of reactive power, which
supports local voltages.
In future, against unprecedented increase in LCTs
to meet the transition to Net Zero, our distribution
network like any other requires significant
expenditure for network investment as the smaller,
more incremental headroom release solutions
become less effective. Furthermore, the cost of a
particular network intervention in interconnected
networks to release headroom is generally higher
than the cost of a similar intervention in radial
networks.
Nevertheless, the better facilitation of LCTs has
been subject to multiple independent reviews and
assessments, demonstrating that the interconnected
network continues to provide a benefit in this regard.
It also provides additional network performance
benefits to generation customers in terms of
increased security of connection, improved voltage
regulation and power quality.
For RIIO-ED1, we completed a detailed assessment
of our network using the Transform model that
showed the need for intervention in meshed
networks as a result of distributed generation is
lesser than in radial networks. An independent
analysis validated the outputs.
Independent consultants PB Power (now part of
WSP) also conducted a detailed review supporting
the view that accommodation of LCTs is facilitated
by the interconnected LV network design2. Many
DNOs are exploring the benefits that interconnection
brings to the Net Zero transition (see Section 4.7).
The benefits are more tangibly demonstrated by the
two case studies overleaf.
Case Study 1: Looks at the capacity to connect a
large EV load for a public EV charging car park; a
growing problem faced by many urban networks.
Case Study 2: Looks at the connection of a large
distributed, renewable generation.
2 2014 00363 – 001: Assessment of Special Case
for SP Manweb Operating an Interconnected
Network, PB Power, March 2014
RIIO-ED2 Business Plan
18
3.4 Case Study 1: EV car park
As heat and transport is increasingly electrified in the move to Net Zero, the demand on GB distribution
networks is increasing. This will be particularly challenging in more built-up areas, where network reinforcement
will be more expensive and more challenging due to space limitations and access issues.
We have reviewed the interconnected, underground urban networks for sites that may see large connections
and have modelled a potential EV car park connecting to the highly interconnected LV network in the
Warrington area compared to what would be possible in the average, radial equivalent.
Figure 13 shows the possible connection point at an existing car park on Orford Street, Warrington and Figure
14 shows the simplified network schematic including interconnection of the LV feeders.
Figure 13: Proposed EV car park at Orford Street (brown lines - LV feeders, red circles - substations)
Figure 14: Schematic connection of Orford Street EV car park
RIIO-ED2 Business Plan
19
Feasible options for the connection are shown in Table 1 – either connection between substation A and
substation B, between substation A and substation C, or connection to all three.
Table 1: Connection scenarios for example EV scheme at Orford Street
Public EV Car Park Supply
Arrangement
Connection Option Max Network Capacity
Available (kVA) Sub A Sub B Sub C
Interconnected Yes Yes Yes 350
Interconnected Yes Yes No 300
Interconnected Yes No Yes 170
Average Radial Equivalent - - - 160
Modelling the network capacities and maximum connection capacities of each case, as well as the theoretical
average radial connection, reveals that in every interconnected option for this connection the maximum supply
is greater than for a radial equivalent, on average - 23% higher.
3.5 Case Study 2: Large Solar Photo Voltaic (PV) Connection to the EHV network
This case study illustrates some of the benefits that the interconnected network brings to distributed generators
seeking a new point of connection to the distribution system. A typical example might be the connection of a
solar photovoltaic farm in north Wales, with a potential export capacity of 28MVA.
For a typical radial connection, a new, larger circuit and bus bar extension would be required to provide the
desired capacity, shown on the right of Figure 15. In this example, this would involve a 7.5km distance to the
point of connection at the 132/33kV Grid Substation, which is not uncommon. A second parallel circuit would
also be required for security, otherwise the solar farm would be constrained for faults and planned outages
(abnormal conditions).
The SP Manweb interconnected 33kV network connection is shown on the left of Figure 15. The connection is
facilitated by ‘looping in’ to a nearby interconnected 33kV circuit providing a ‘system-normal’ 28MVA export capacity, generally requiring less new cabling.
The interconnected connection offers increased security under abnormal conditions. The export capacity is
constrained to ca. 19.7 MVA by local monitoring, rather than fully constrained as in a single radial connection.
The solar farm may also benefit from slightly improved voltage regulation and power quality.
Figure 15: Left: Typical 33kV SP Manweb connection. Right: Equivalent 33kV radial connection.
RIIO-ED2 Business Plan
20
3.6 Incremental costs of our
interconnected network
With enhanced network performance and
incremental benefits in supply reliability, it is also
recognised that the costs associated with SP
Manweb’s unique network are higher than the GB
average.
We have a long term strategy (see Chapter 4) that
will ensure these costs are minimised in the longer
term. Key to ensuring our customers get the best
possible value for money is ensuring we accurately
recognise where these costs come from.
The additional costs are underpinned by the three
principles of our network (uniformity, interconnection
and unit protection), which result in a handful of
related, key design and engineering characteristics.
These characteristics result in a series of related
additional asset and operational costs.
A summary of the additional costs associated with
the interconnected network is shown later in this
document in Table 2, but the key differences are as
follows.
3.6.1 Greater volumes and complexity of
assets
Predominantly, the costs associated with the
interconnected network are driven by the higher
volume of assets required compared to an
equivalent radial network. A number of these assets,
some of which are exclusive to SP Manweb’s network, also have added complexity when
compared with radial equivalents, in turn increasing
asset cost.
The notable differences are as follows:
• More primary substations and transformers.
We have more than twice the number of
primary transformers than average when
scaled by customers served, and a greater
number of substations than any DNO with
the exception of Scottish and Southern
Electricity Networks’ (SSEN) Northern Scotland network (SSEH), which operates
across the unique geography of the Scottish
Highlands and islands.
• Greater volume of and more expensive
switchgear. In traditional radial designed
networks, the circuit is controlled by the
switch or circuit breaker (CB) at the source
or infeed end of the circuit only. In
interconnected networks, where circuits are
fed from two (or more) substations, there is
additional switchgear at each end of the
individual circuits.
• Greater volume of protection and control at
primary and secondary substations. To
enact the unit protection, neighbouring
substations must be able to work together to
detect fault locations. This requires relays at
each end of the circuit, connected together
by pilot wires. The unit protection schemes
also require the use of dedicated battery
systems to operate.
• SP Manweb’s interconnected unit protection requires secure, well-heated/ventilated
buildings to remain serviceable. As a result,
SP Manweb has a larger number of brick-
built primary and secondary substations
than other DNOs with radial networks,
where open-compound and glass reinforced
plastic (GRP) style substations are more
common. These brick-built sites are
generally more expensive to install and
maintain.
These differences are demonstrated in Figure 16 to
Figure 19 overleaf. As a result, although the
interconnected network is a more adaptable network
allowing for reinforcement in smaller increments,
when reinforcement is required, this can be
considerably more expensive. Similarly, asset
management and network operating costs are much
higher in a number of areas.
RIIO-ED2 Business Plan
21
Figure 16: Mean Equivalent Asset Value (as used
by Ofgem in ED1) of HV and EHV switchgear
across all DNOs, in £ per customer
Figure 17: Volume of pilot wires per million
customers, across all DNOs (from 2020 DNO asset
register)
Figure 18: Volume of primary substations per million
customers, across all DNOs (from 2020 DNO asset
register)
Figure 19: Volume of batteries per million
customers, all voltage levels, across all DNOs (from
2020 DNO asset register)
0
100
200
300
400
500
HV EHV
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
UG OH
0
200
400
600
800
1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
132kV EHV HV
RIIO-ED2 Business Plan
22
3.6.3 Higher asset utilisation
The high utilisation factors offer many benefits in
terms of reduced investment costs in some areas,
however operating at higher utilisation leads to
some additional expenditure. Two key areas are as
follows:
• Link boxes. Interconnected networks
typically operate with the link boxes in their
‘closed’ position, with current flowing through the assets during normal operation.
Additionally, when a fault occurs, multiple
fault infeeds – shown in Figure 20 and
Figure 21 – impose significantly more
demanding requirements. Hence the
consequences of disruptive link box failures
in interconnected networks are far more
severe than in traditional radial networks.
• EHV cable fault rates. As above, operating
at higher utilisation factors increases the
fault level of the systems and the fault
current that flows at the time of a circuit
fault.
• Similarly, the unique interconnected
operational arrangements lead to higher
circulating Var’s (Reactive Power) in the
EHV system, which can result in higher
levels of stress on the cable compared to a
radial design, and greater carbonisation and
deterioration of insulation papers in the
cable in the vicinity of a cable fault.
Figure 20: Fault infeeds for an LV fault in the SP Manweb interconnected network.
Figure 21: Fault infeeds for an LV fault in a radial network
RIIO-ED2 Business Plan
23
3.6.4 Increased operational costs
As well as the higher operational costs related to the
greater volumes and complexity of assets (above),
there are also additional costs associated with the
network when it is under fault conditions.
Although our network performance is generally
much more resilient to faults, the process of fixing
faults that do occur takes longer in our unique
interconnected, unit-protected network.
In the interconnected LV network, fault restoration
and fault finding requires visits to multiple locations
for testing, fuse replacement or network Link Box
linking to ensure safe network operations before re-
energisation.
This is shown in Figure 22 and Figure 23 below.
Figure 22: LV fault detection and clearance activities
in a typical radial network
0800 - First Off Supply Call(s) (staff dispatched)
0830 - staff arrive on site @ Sub A
0840 - @Sub A Fuse(s) replaced [100% customers
restored, 40 minutes off supply]
0900 - Staff finish on site
Figure 23: LV fault detection and clearance activities
in the SP Manweb unit protected, interconnected
network
0800 - First Off Supply Call(s) (staff dispatched)
0830 - Staff arrive on site at (Sub A)
0840 - @ Sub A Fuse(s) Replaced [80% customers
restored, 40 minutes off supply]
0845 - Additional Network Points to Check
0915 - @Sub B Fuse(s) Replaced [No further customers
restored as already supplied by Sub A]
0930 - @Sub C Fuse(s) Replaced [Remaining 20%
customers restored, 75 minutes off supply]
0935 - Additional Staff required to check UG LBs
1015 - Additional Staff AOS
1100 - @LB1 All live, plans correct, No Back-Feed from
LB2
1145 - @LB2 All live, plans correct, No Back feed from
LB1
1050 - Confirmed 80% customers restored @ 08:40,
100% Restored at 9:15
1215 - Staff finished on site
RIIO-ED2 Business Plan
24
3.6.5 Costs of the Company Specific Factor
(CSF)
The RIIO-ED2 CSF is calculated to be circa
£116.8m, or £23.4m per year on average: this is
based on our forecast of planned volumes of
equipment and activities associated with
replacement, refurbishment, reinforcement and
maintenance expenditure in RIIO-ED2 (the detailed
derivation of this cost is presented in Chapter 5 of
this Annex).
This is 7.0% of the Totex value of the SP Manweb
RIIO-ED2 Business Plan3. In comparison, the cost
of the RIIO-ED1 CSF submission, combined with
the cost of the link-box reopener also specific to SP
Manweb (the equivalent of which is included in the
CSF in RIIO-ED2), is 7.5% of the whole cost of our
plan.
Our strategy (see Chapter 4 of this Annex) will
ensure that we continue to minimise this cost over
time where it is beneficial to our customers to do so,
in line with Ofgem recommendations from the RIIO-
ED1 final determinations.
3.6.6 Links to price control mechanisms
As discussed above, the SP Manweb
interconnected and unit protected network supports
greater performance in areas such as reliability,
time-to-connect and capacity utilisation.
However, as the CSF is not an area of expenditure
in its own right, there is no direct link to any Licence
Obligations (LOs), Output Delivery Incentives (ODIs)
or Price Control Deliverables (PCDs). These
mechanisms should be considered alongside the
Totex values in the relevant parts of the plan.
3 CSF adjustments have only been applied within the Load, Non-
Load, and Network Operating Costs parts of our plan – although
it is acknowledged that the complexity of SP Manweb’s unique interconnected network does influence the level of indirect and
business support costs – see Table 2.
RIIO-ED2 Business Plan
25
Table 2: SP Manweb Special Case additional cost summary
Cost category Comments
Primary transformers Interconnected network with standardised, lower capacity ratings means additional
transformers to modernise / refurbish compared to an equivalent radial network.
EHV outdoor Circuit
Breakers (CBs)
Outdoor EHV (33kV) circuit breakers (CBs) within SP Manweb’s interconnected network are unique. They are integral to the design and operation of the unit
protection system. There is no requirement for 33kV CBs at downstream 33kV
primary substations in a radial system.
EHV indoor
switchgear: Ring Main
Units (RMUs)
Indoor 33kV RMUs within SP Manweb’s interconnected network are unique. They are integral to the design and operation of the unit protection system. There is no
requirement for 33kV RMUs at downstream 33kV primary substations in a radial
system.
Pilot Wires
Extensive use of pilot wires for communication of protection devices between
substations is unique to SP Manweb’s unit protected network. Hardex, used on 33kV overhead lines, is also an obsolete asset that was designed to be self-
supporting.
Cables and link box
utilisation
More stress is placed on this equipment compared to equivalent radial system, as a
result of higher operating current – due to higher utilisation – and higher fault
currents – due to interconnected configuration and operation.
Primary and
secondary substation
battery systems
The unit protection schemes at primary and secondary substations require the use
of dedicated battery systems to operate. The extent to which batteries are required
is unique to SP Manweb. The incremental cost has been based on the difference
between the volumes of battery replacements and the difference in costs of assets
between the interconnected network and an equivalent radial network.
Secondary HV
switchgear: X-type
RMUs
The use of X-type RMUs is unique to SP Manweb’s interconnected HV network and the incremental cost for SP Manweb has been based on the difference in cost
between an X-type RMU and a traditional HV RMU used on a typical radial network.
Secondary X-type
transformers and LV
boards
The costs associated with X-type secondary transformers and X-type LV boards,
which includes a LV air CB (ACB) as part of the unit protection scheme, are more
than for an equivalent radial system due to different switchgear and protection
requirements. The more expensive asset cost has been applied to the volumes of
assets to be modernised.
Although there are slightly more secondary transformers in the SP Manweb network
compared to an equivalent radial network, we have not included this cost to be
conservative.
EHV & HV unit
protection
maintenance
The incremental cost of maintenance of unique assets within SP Manweb’s interconnected network has been compared with SP Distribution, to estimate the
difference with an equivalent radial network operator.
Primary & secondary
X-type substation civils
SP Manweb’s unit protection requires secure, well-heated/ventilated buildings to
remain serviceable, i.e. brick-built substations. We have included the cost of
continuation of our modernisation programme for brick-built primary and secondary
RIIO-ED2 Business Plan
26
Cost category Comments
substations. Civil costs associated with non-X-type substations, e.g. outdoor
compounds, are excluded.
Telecomms & IT
The incremental cost includes the difference in telecoms and IT O&M compared to
an equivalent radial system, due to increased numbers of substation sites
associated with SPM’s 33kV network.
Electricity System
Restoration (ESR -
Black start resilience)
A ‘black start’ is when a network has to restart from a complete blackout, which
requires particular arrangements. A programme of work is being undertaken to
improve the resilience of substation sites to black start. The incremental cost
includes the difference in black start resilience work compared to an equivalent
radial system, due to increased numbers of substation sites.
Costs not included
(Closely Associated
Indirects (CAI) and
Business Support)
There are some areas of higher cost that are not easy to quantify – such as
workforce costs, due to retention of more specialist knowledge associated with the
interconnected network, e.g. design, network analysis, project management, and
costs associated with a more difficult planning for X-type substations. These costs
are not included in the CSF submission, but the complexity of SP Manweb’s unique interconnected network, and the increased level of investment and
maintenance, influences the level of indirect and business support costs.
RIIO-ED2 Business Plan
27
4. Our Long Term Network Strategy and Innovation
The unique SP Manweb interconnected network has
a series of operational, performance and
investment-related benefits. However, these
additional benefits have an associated cost. As
customer priorities change, and as the energy
sector continues to evolve and innovate to meet the
UK and Welsh governments’ Net Zero targets, it is
our responsibility to ensure that our network
continues to provide best value for our customers
through reliable, efficient and sustainable operation.
Key to this is our strategy for the interconnected
network.
SP Manweb’s strategy and its supporting policies are designed with feedback from Ofgem during
RIIO-ED1 and developed through ongoing customer
engagement. It is designed to ensure we take all
feasible measures to mitigate the incremental costs
of the SP Manweb network.
Throughout RIIO-ED1, we have invested
strategically in innovation, leading to the
development of new network types and better value
X-type assets. These new innovations now underpin
our long-term plans for the interconnected network.
This chapter outlines the progress made in RIIO-
ED1, and our long-term strategy for the
interconnected network.
4.1 Underpinned by customer and
stakeholder engagement
We have undertaken several stages of stakeholder
engagement. In Phase 1, between October and
December 2020, we asked 91 stakeholders their
priorities that should guide our investments. 46
stakeholders placed “Ensuring that we keep electricity supplies reliable and secure” in their top
three priorities. An overall a score of 4.63/5 was
awarded to this priority.
In Phase 2 in late 2020, we undertook more in-depth
Stakeholder Engagement on Network Performance
via an online workshop – attended by
manufacturers, energy consultants, investors and
the industry association & business community –
and an online survey – completed by energy
consultants, the industry association & business
community and manufacturers. The discussion
points comprehensively showed support and
willingness for us to invest in network performance.
In addition to the stakeholder feedback above, our
customer engagement programme resulted in the
following key findings:
• For most customers resilience of the
electricity supply is extremely important,
with an average score of 7/10 and 8.5/10 for
commercial and domestic customers
respectively.
• When considering the electrification of
transport, heat and a low carbon future, all
commercial customers increase their score
to 10/10. In contrast, domestic customers
would maintain the same score.
The full portfolio of stakeholder and customer
feedback on network performance strategy can be
found in Annex 2.1 Co-creating our plan with our
Stakeholders.
We have also presented this Company Specific
Factor proposal specifically at both the Customer
Engagement Group and at our Future System
Strategy (FSS) CEG sub-group.
No major challenges were brought forward. The
group encouraged us to consider how the
interconnected network can be utilised to support
the DSO transition. We outlined that the application
DSO for SP Energy Networks has a consistent
approach across both licence areas. However, for
DSO within SP Manweb, considerations have been
made on the additional optionality that is offered by
the meshed network (Section 3.3.2).
The group acknowledged the network was an
inherited, legacy design that required additional
investment. They accepted our view that the costs
of transitioning the network from a legacy
interconnected design to a typical radial design are
prohibitive.
Finally, we have also learnt from engagement on
specific areas of the business plan that are of
relevance to the Company Specific Factor, notably,
our discussions with HSE and their relevance to the
RIIO-ED2 Business Plan
28
inclusion of link boxes within the Company Specific
Factor adjustment for RIIO-ED2. This is discussed
in the relevant cost area in business plan
methodology in Chapter 5.
4.2 The cost of whole system transition
We have considered the activities and costs
associated with transitioning the whole network to a
more traditional, radial configuration.
Although the costs are very difficult to quantify in
every detail, it is certain that they would be
significant.
Radial operation and removal of unit protection
would require a reconfiguring of the secondary and
LV network in the interconnected areas.
Furthermore, the entire primary system is designed
to support interconnected operation. To build in the
same level of resilience would require significant
reinforcement of this system across SP Manweb.
Full transition would require new transformers and
extensive re-laying of cable, as well as the laying of
new cable circuits, throughout the whole network
The whole SP Manweb network has an estimated
Modern Equivalent Asset Value (MEAV) of over
£8.5bn. We estimate the associated capital
expenditure would total between £5bn and £7bn,
adding over 30 pence per day on average to
customer bills when evaluated over the next forty
years.
This would more than double the typical distribution
component from RIIO-ED1 of the average annual
bill for SP Manweb customers. This does not
account for the societal cost of the loss of network
benefits associated with the interconnected system,
nor the considerable disruption to customers and
public.
Difficulties would be faced in accommodating new
equipment within existing sites, and in acquiring new
land in already congested urban areas. There would
also be a significant, negative environmental impact
associated with the required civils work and the
carbon footprints of the replacement assets.
As a whole system transition is therefore very likely
to be acceptable, we have developed a strategy that
looks for least regrets options to minimise the cost
of the interconnected network to customers in
targeted areas, whilst still providing good value for
money in terms of network benefits.
Figure 24: Areas of Liverpool City Centre showing extensive reinforcement and overlay that would be required
to convert to a radial design. Top shows existing network in blue and green, bottom shows alternative
transformers and cable overlay in red.
RIIO-ED2 Business Plan
29
4.3 Our long-term strategy to maintain
benefits and reduce costs
Our strategy is focused on maximising the
embedded benefits that the interconnected network
provides to customers, and minimising the ongoing
costs to customers of its upkeep and ongoing
management.
Our customer engagement has reinforced our
position on maintaining the reliability of the network,
even where this comes at a slightly higher cost, with
88% of both domestic and commercial customers
saying that security of supply is very important, and
indicate a low appetite to accept any reduction in
performance.
However, we must endeavour to mitigate the
additional costs associated with the SP Manweb
interconnected network where this presents best
value for money to our customers.
Therefore, we must consider whether the
interconnected, unit protected network remains
viable in the longer term, particularly given the
availability of new innovation, the changes that the
transition to Net Zero will bring.
As discussed, the activities and costs associated
with transitioning the whole network towards a radial
configuration are prohibitive in terms of both
logistics and cost. We must therefore take a more
granular view of the opportunities to transition.
This is implemented through our newly updated
“Interconnected Network Transitioning Policy”,
which guides the way we design, operate, maintain
and modernise assets of SP Manweb’s uniquely interconnected network. Broadly, it assesses where
costs can be minimised without a significant
detriment to performance and reliability, by
transitioning the unit-protected X-type network to
non-unit protected ‘Y-type’ network in some areas.
The three key themes underpinning this are:
• Maintain: in fully X-type areas, our network
continues to provide excellent reliability.
Where there is no immediate need to
significantly reinforce the network, we will
operate efficiently but modernise only at the
end of asset life, replacing with modern
equivalent assets and retaining the full
benefits of the interconnected network when
cost-effective
Figure 25: Overview of our Long-Term Network Strategy for the interconnected network
RIIO-ED2 Business Plan
30
• Enhance: we will innovate to improve how
we monitor, operate, manage and extend
the asset life of our interconnected network.
For X-type networks, this means telecontrol
and telemetry that allow HV automation
along the feeder, and a faster response to
faults.
• For existing mixed X-Y-type areas, we will
enhance with new, innovative differential
protection and automation, allowing for a
degree of interconnection and its benefits
whilst reducing incremental costs.
• Transition: in areas of our interconnected
network, particularly the fringes and parts
with mixed network configurations, the full
interconnected benefits are not realised.
• In these areas we will proactively transition
to a non-unit-protected and more typical
radially configured network by replacing
assets, particularly at end of life as part of
planned or customer driven investment. This
will see a transition to the use of more
standard industry assets, and enhanced
technologies as above to maximise the
supply reliability benefits as far as
practicable.
We believe this three-fold approach is in line with
Ofgem’s expectations of progress carried over from RIIO-ED1, to consider moving towards a radial
network design at the fringes of the interconnected
network and perform a cost-benefit evaluation of
allowing network performance (CI and CML) to
move towards national averages.
4.4 Enabled by innovation
To support the activities within our policy for how we
manage the SP Manweb interconnected network,
we have made considerable progress during RIIO-
ED1 on innovative schemes using both existing and
new technologies. These initiatives have furthered
our knowledge of the opportunities for, and
challenges of, the ongoing management and
transition of our interconnected network.
We are trialling innovative alternatives that deliver
similar reliability benefits but at a lower cost using
modern solutions, including the use of automation to
facilitate remote network switching and active LV
monitoring equipment to reconfigure the
interconnected LV network.
A project in the Southport area has provided the
opportunity to transition an area of network
comprising both fully meshed sections of network
(X-Type) with radial and partially interconnected HV
circuits. This case study is provided overleaf.
It has been a successful project; however, there
were technological barriers to overcome relating to
the levels and positioning of LV automation required
to match the historical level of network reliability.
As a result, when applying this method in future it is
still important to consider each scheme on its own
merits, as set out in our Interconnected Network
Transitioning Policy. We have applied this learning
to our RIIO-ED2 plans – this is covered later in the
document, in Section Error! Reference source not
found..
Similarly, we are also trialling new design solutions
which enable lower cost connections using existing
technologies. Currently, the maximum size of an
additional Y-type substation between two X-type
substations in 500kVA. This innovative approach will
enable up to 1.5MVA connections to be offered in
our interconnected network providing customers
with lower cost connection options. Proof of concept
is expected before the end of RIIO-ED1, allowing us
to apply this in RIIO-ED2. This is covered in Section
5.6.2.
We also keep abreast of industry activity that may
support our interconnected operation, and we are a
fast follower of innovation.
We are involved in an innovation project “Active Response” with UK Power Networks and partners, which looks to trial a responsive, automated
electricity network that re-configures the network in
real-time, moving available capacity to areas with
peak demand.
RIIO-ED2 Business Plan
31
4.5 Case Study: Southport Network
Transition
The transition of a network group (in part or in full),
which has a mix of fully meshed HV/LV (X-Type)
circuits and radial (Y-Type) circuits will be driven by
other investment interventions as part of asset
condition modernisation and/or a secondary
reinforcement e.g. voltage uprating programme.
The Southport network met the transition criteria, as
it was an existing network group that operated at
6.6kV with a combination of both fully meshed and
partially interconnected circuits with approximately a
third of the group being X-type configured and the
remainder being of a mixed X- and Y- type
arrangement. Over 50% of the switchgear assets
were also at end of life (Health Index (HI) 5) and
approximately a third of the existing secondary
transformers were already dual ratio, i.e. 6.6/11kV.
Figure 26 shows the existing network arrangement
which provided the opportunity to combine the need
to uprate the network group from 6.6kV to 11kV,
thereby increasing overall capacity to accommodate
load growth and future connections, with the
modernisation plan to replace end of life switchgear
and transformer assets.
Whilst the network transition reduces future
operational, maintenance and modernisation costs,
the application of innovative technologies to
introduce automation switching points and
telecontrol capability is integral to the transition cost
benefit case.
The use of HV telecontrol and automation together
with automatic LV switching points to reconfigure
the network during fault conditions is required to
maintain supply reliability levels as close as possible
to fully meshed X-type parts of the network in
Southport. Figure 27 illustrates the network
transition proposals and introduction of automation
switching points to the HV circuits.
Outcomes and learning
The Southport transition scheme is still ongoing,
though the majority of the work is now complete.
The smart sectionalisers were critical to the LV
network switching and improvement of network
performance. These innovative products were not
ready for business as usual use on the project, and
so a new network configuration method was
designed using some of the existing technology (the
ACBs at the original X-type substations). We expect
nevertheless that this revised design will continue to
meet the requirements set out for the scheme.
However, for future network groups or HV circuits,
the options for transitioning must continue to be
considered and assessed on each scheme’s own
merits. This is because in areas of overall excellent
reliability, the modern automation may in fact reduce
the overall network performance.
We are continuing to proactively investigate
alternative technologies and learning in this area is
ongoing – see Section 4.7.
Figure 26: Existing Southport X and Y type 6.6kV
network group
Figure 27: Transitioned Southport network to a Y
type 11kV configuration with automation
RIIO-ED2 Business Plan
32
4.6 Additional cost mitigating
measures
To maximise value from existing and future
transformer fleet, we are looking at new
refurbishment options to defer eventual replacement
and may even, in the longer term, reduce the oil
replacement frequency. Given the uniquely high
number of primary transformers in SP Manweb, this
could result in a reduction in the Company Specific
Factors in future. (Primary transformer replacement
currently contributes £4.0m to the overall ED2 cost
adjustment – see Section 5.7.1.)
Innovative oil regeneration canisters are currently
being trialled in RIIO-ED1. These units, designed
and supplied by Global Transformer Solutions, are
fitted to valves at the top and bottom of a
transformer to allow oil flow while trapping
contaminants and insulation degradation products
such as water and acids. The aim is to slow
insulation degradation, thus extending transformer
usable life.
If successful, the use of this technology will be rolled
out in RIIO-ED2 to a carefully selected number of
grid 132kV and Primary 33kV transformers. Cost
savings may be realised from the deferral of
eventual replacement of the transformers, or
potentially from avoiding a complete oil change and
a reduction in oil sampling frequency if a condition-
based oil sampling regime is implemented.
Additionally, we are also collaborating with
manufacturers to establish new 33kV RMU designs
that have a more efficient configuration and,
therefore, a reduced unit cost. Currently, due to
obsolescence, a 33kV RMU is replaced with three
indoor circuit breakers (CBs) in every case.
We are developing a solution, which at double RMU
sites uses only four or five CBs in total, depending
on the network configuration at the site. At single
RMU sites, we are also developing another
reduced-footprint solution by using a CB in
combination with two switch disconnectors. We
estimate the new design could realise a 20-25% unit
cost saving if successful. (33kV RMU replacement
4 https://www.smarternetworks.org/project/prj_395/documents -
Closedown Report May 03, 2016
currently contributes £17.6m to the overall ED2 cost
adjustment across fault level reinforcement and
asset replacement programmes – see Section
5.7.2.)
4.7 Wider industry activity and
innovation
Following work done by the industry, network
interconnection has now been recognised to support
the early uptake of low carbon technologies such as
Electric Vehicles and solar PV. Other DNOs are
therefore targeting innovation funding to achieve
interconnection, and associated benefits, in LV and
HV networks.
Several innovation projects throughout RIIO-ED1
have focused on achieving more network
interconnection. These have further exemplified the
benefits that the SP Manweb interconnected
network already has.
Like SPEN, other DNOs continue to explore
methods of interconnection using cutting-edge grid
technologies. We are leading, following and
supporting innovation within the wider industry, to
support our future strategy.
Below is a summary of innovation projects carried
out or completed within RIIO-ED1, many of them
funded through Ofgem’s Low Carbon Network Fund (LCNF), Network Innovation Allowance (NIA) or the
Network Innovation Competition (NIC) mechanisms.
4.7.1 Innovation project highlights in RIIO-ED1
so far
The LCNF project FALCON, run by Western Power
Distribution (WPD), focused on releasing capacity in
suburban and rural areas through several
techniques - one of which was to implement and
operate a meshed network at 11kV. WPD includes
the following within its conclusions4&5:
“An overall reduction in CML and CI is seen where meshed networks are applied.”
5 http://www.westernpowerinnovation.co.uk/Documentlibrary/2015/Project-
FALCON-Engineering-Mesh.aspx
RIIO-ED2 Business Plan
33
“Installation increases complexity of the network, and introduces additional equipment requiring
inspection, maintenance and testing requirements.”
“A 5% reduction in losses was estimated on this trial network, though this should not generally be
assumed to be the case. “
Electricity North West (ENWL) targeted the use of
retrofit smart devices for fuses and link boxes to
form part of their innovation strategy in their RIIO-
ED1 business plan6.
The intended use of these devices is to create
interconnected networks and provide flexibility to
reconfigure networks in real time. ENWL assigned
£1.2m to develop and deploy these devices on low
voltage feeders to trial the performance. A number
of technical issues are restricting a business as
usual deployment such as condensation,
communications and water ingress, and so an
innovation project called ‘Intelligent Network meshing switch’ has recently been carried out with a view to address these issues7.
ENWL’s LCNF project Capacity to Customers (C2C)
proposed to make efficient use of spare capacity in
existing HV circuits to facilitate the connection of
new loads and generation8. The project explored the
redesign of the network to facilitate the closure of
normally open points; feeders were interconnected,
allowing spare conductor capacity to be released to
customers (for generation projects, new loads),
without compromising levels of security of supply.
ENWL includes the following within its conclusions9:
“On average, interconnected C2C operation (with closed HV rings) releases more demand and DG
capacity when compared to radial C2C operation
(with radial HV feeders).”
The ENWL Smart Street project explored five trials,
two of which looked at LV and HV interconnection.
ENWL provide the following within its conclusions10:-
“Analysis showed that the use of interconnection
particularly can have a positive effect on the majority
6 http://cdn2.enwl.co.uk/ENW_WJBP-PDF-Annexes-New.pdf
7 https://www.smarternetworks.org/project/enwl023
8 http://www.enwl.co.uk/docs/c2c-key-documents/c2c-submission-to-low-
carbon-networks-fund.pdf?sfvrsn=6
9 https://www.smarternetworks.org/project/enwlt203/documents -
Closedown Report Apr 14, 2015
of power quality metrics. There can be a negative
effect on fault level, but it is not shown to increase
beyond design levels – this should be monitored as
the demand and generation change on the network.”
“The LV network is more robust than previously thought. The monitoring and analysis has shown
that headroom does already exist to cater for the
adoption of some LCTs but as this adoption
increases, the use of voltage control and
interconnection can provide even more headroom,
thereby reducing the need for reinforcement.”
“Smart Street can deliver up to 15% reduction in losses depending on the network type, amount of
generation and levels of demand. The use of on-
load tap changers and interconnection provide the
greatest benefit for losses.”
The LCNF project Flexible Urban Networks - Low
Voltage (FUN-LV), led by UK Power Networks
(UKPN), looked at how to defer reinforcement of the
network by conventional means, particularly at LV.
It explored the use of power electronics (smart
devices) to make power distribution across low
voltage networks more efficient. The power
electronics can create ‘soft’ normally-open points
(e.g. points that can be opened and closed to
reconfigure the network) to provide load sharing
between substations. UKPN state the following
within their conclusions11:-
“Each of the three FUN-LV methods was proven
successful in sharing capacity between
neighbouring substations. … The project was
successful in proving first-of-kind technologies and
advancing tools available to DNOs in facilitating
solutions to a changing LV network.“
4.8 Future learning in LV automation
SP Energy Networks are partnering with UK Power
Networks in a multi-million innovation project, Active
10 https://www.smarternetworks.org/project/enwt205/documents -
Closedown Report Aug 09, 2018
11 https://www.smarternetworks.org/project/ukpnt204/documents -
Closedown Report May 09, 2017
RIIO-ED2 Business Plan
34
Response12, which continued from the FUN-LV
project.
This project is trialling a responsive, automated
electricity network that re-configures in real-time,
moving spare capacity to areas of peak demand.
The project predicts customer savings of £271
million and reduction of 448,000 tonnes of carbon
emissions by 2030.
The overarching aim of the project is to explore the
use of power electronics (smart devices) to enable
the deferment of reinforcement and facilitate the
connection of low carbon technologies and
distributed generation in urban areas, by meshing
existing networks, which are not meshed, and by
breaking down boundaries within existing meshed
networks.
The outcomes of this project will complement our
own work on network automation and controllable
network points, to support the possible transition of
substations from X-type to Y-type without reducing
operational benefits and network reliability.
We will continue to share our own learning and
support the wider industry in its development of
approach to interconnection. We commit to being a
leader and fast follower of innovation, and will
actively seek to adopt new approaches that will
support or improve our future transition strategy.
12 https://innovation.ukpowernetworks.co.uk/projects/active-
response/
RIIO-ED2 Business Plan
35
5. Company Specific Factor (CSF) Business Plan
This chapter sets out in detail the incremental
funding we’re asking for as part of the unique
Manweb Interconnected Network CSF, and how we
have calculated the adjustment, based on tried and
accepted approaches, refreshed with new
information and up-to-date assumptions.
5.1 What is the SP Manweb CSF
The SP Manweb Interconnected Network Company
Specific Factor is the adjustment to our business
plan accounting for the additional costs of our
unique network. They equate to £116.8m, which is
7.0% of SP Manweb’s RIIO-ED2 Totex plan, and
11% of the total Load, Non-Load and Network
Operating Costs areas of this plan.
The expenditure is distributed throughout plan and
the Totex is justified by our robust series of
Engineering Justification Papers (EJPs). The
relevant EJPs are referenced throughout the
remainder of this section.
This section identifies and collates the individual
expenditure areas that are affected by SP Manweb’s unique design.
The cost adjustments against the Company Specific
Factor for ED2, as well as the actual and remaining
forecast cost adjustments in ED1, will be reported in
the M25 Company Specific Factor memo table.
5.2 Approach to defining the CSF
Ofgem recognised the higher costs associated with
our interconnected network at both DPCR5 and
RIIO-ED1. Similarly an adjustment at RIIO-ED2 is
equally appropriate based on our overall investment
proposal.
Broadly, our approach is to identify the additional
assets and activities required for the inherited
interconnected network compared to a radial
equivalent. We have compared SP Manweb to our
other licence area, SP Distribution, as both networks
are on the whole managed and operated against the
same asset management policies. We have also
compared our costs to other GB DNOs.
Whilst the approach is consistent with the
submission made for ED1, we have reviewed all
aspects of our unique interconnected network
against a backdrop of change in the demands of the
network and the expectations of customers as we
transition to Net Zero.
We know from reviewing our ED2 CSF against the
new CSF regulatory definition that our ED1 CSF
was understated as it did not include all of the
activity additional costs that result from the
interconnected and unit protected network. These
are detailed in this chapter of the annex and
similarly we have removed some CSF costs
submitted in ED1 that are no longer applicable due
to factors that have changed, and we have
explained these within the new ED2 memo table
M25 for CSF.
Our methods are supported by independent external
review by PB Power (now part of WSP) and Mott
MacDonald, who conducted parallel bottom-up and
top down analyses, respectively. This approach was
accepted by Ofgem, and its independent
consultants, as part of RIIO-ED1 business case
submission.
We have netted-off areas where SP Manweb enjoys
a cost advantage from operating an interconnected
network relative to a radial design. For example, in
estimating the costs of greater levels of replacement
activity for substations and related equipment, we
have taken into account the lower unit costs of some
equipment.
The unique costs for SP Manweb interconnection
are based on a robust and objective cost estimate.
There are some areas of higher cost that we cannot
easily quantify – such as workforce costs due to
retention of more specialist knowledge associated
with the interconnected network, and costs
associated with a more difficult planning consent
process for X-type substations. These have not
been included into the additional costs for RIIO-
ED2.
In order to estimate our special case adjustment, we
have considered the actual costs of the SP Manweb
interconnected network with those of a notional SP
Manweb radial network.
RIIO-ED2 Business Plan
36
In deriving notional costs of the notional SP Manweb
radial network, we have used a combination of
engineering theory and comparisons with average
asset volumes across all DNOs using the V1 Asset
Register and the Mean Equivalent Asset Value
(MEAV) tables, taking into account both differences
in activity levels as well as unit costs, to ensure our
comparisons are fair and proportionate.
Where there is insufficient data at the level of detail
required for comparison, we have calculated the
extra costs of operating the SP Manweb
interconnected network based on comparison with
elements of SP Distribution’s network costs. We
consider SP Distribution provides a reasonable
basis for estimating SP Manweb costs as if it were a
radial network for the following reasons:
• SP Manweb and SP Distribution have a
similar demographic; many customers are
based in urban networks with SP
Distribution’s Glasgow and Edinburgh being
similar to SP Manweb’s Liverpool and
Chester cities in Merseyside and Cheshire.
• Both SP Manweb and SP Distribution have
extensive west coast and rural networks
areas constructed at 11kV in traditional rural
network design.
• SP Manweb and SP Distribution share the
same asset management, and operational
policies, and in general have similar unit
costs.
We have sourced the costs of the net additional
assets employed (greater number of substations,
switchgear etc.) and activities undertaken from our
Unit Cost Manual Annex 5A.5, which is the basis for
costing our investment plan.
The approach to our RIIO-ED2 CSF incorporates
the feedback from Ofgem on our RIIO-ED1 CSF in
each detailed cost area, and the feedback from
stakeholders on our overall business plan proposal
(as summarised in Section 4.1) in that we have
ensured network reliability remains a priority.
It also reflects the changes since RIIO-ED1 and the
assumptions in looking beyond in RIIO-ED2. Some
key assumptions used in RIIO-ED2 are:
• The number of primary sites in SP Manweb
are more than twice the volume than would
be found in an equivalent, radial network
(Section 5.7.8.1).
• The number of Primary transformers in SP
Manweb are 60% higher than would be
found in an equivalent, radial network
(Section 5.7.1).
• The cost to reinforce the network due to
load growth is higher than for an equivalent,
radial network: 39.3% more at EHV, 47.2%
more at 11kV and 23.2% more at secondary
(Section 5.6).
• Radial equivalent has 25% of the length of
pilot wire than an interconnected network.
• The length of pilot wire in SP Manweb is
four times the length that would be found in
an equivalent, radial network (Section
5.7.7.1).
All assumptions, and how these have differed from
RIIO-ED1, are included in the detailed methodology
sections later in this chapter (see Section 5.6
onwards).
A notable exclusion from the CSF submission is
Closely Associated Indirects (CAIs) and Business
Support costs. These costs arise due to indirect
activities associated with the interconnected being
more complex and time consuming than for a radial
network, for example project management,
engineering design, network analysis, and more
convoluted land and planning arrangements.
Whilst these have been acknowledged in all
previous submissions, including in DPCR5 and
RIIO-ED1, they have not been included in previous
CSF adjustments. As such, they have not been
included in this CSF valuation. However, it is
recognised that these costs are material and at least
proportional to the incremental direct costs, as such
they should be considered in the overall assessment
of the SPM CSF submission.
The CSF adjustment is directly linked to the
expenditure plans for RIIO-ED2, which are justified
in the EJPs (Annex 4A.23) and presented in
Business Plan Data Tables (BPDTs). Uncertainty,
and mitigation of deliverability risk, is dealt with in
the EJPs. Reduced or increased direct Totex will be
reflected in the CSF adjustment in the M25 memo
table.
RIIO-ED2 Business Plan
37
Key challenges in RIIO-ED2 to maintain the SP
Manweb urban networks have remained broadly the
same as in RIIO-ED1. These include:
• Ongoing maintenance of substation
environment to provide a safe, watertight
environment for X-type substations, this will
not only ensure safe operation of primary
equipment but will safeguard the integrity of
the associated unit protection equipment.
• Ongoing maintenance and repair of the
11kV and 33kV network communications
system (pilot wires), without which the
integrity of the associated unit protection
systems will fall into disrepair, with
significant deterioration in performance of
the protection systems and consequential
decrease in customer performance and
supply reliability.
• Maintenance and inspection of LV link
Boxes (including confirming network
configuration of the internal switching
points) utilised in the operation and control
of LV interconnected network.
• Ongoing maintenance of 33 kV RMUs and
circuit breakers used extensively on X-type
interconnected 33kV networks, unique at
downstream primary sites, and replacement
of 33kV RMUs due to asset condition and
fault level constraints.
• Ongoing maintenance of secondary
substation battery systems associated with
X-type networks – simple Y-type secondary
substations are generally battery free.
5.2.1 Deriving Unit Costs
The Company Specific Factor adjustments are
underpinned by our RIIO-ED2 Unit Cost Manual
(UCM) Annex 5A.5, as is the whole investment plan.
The UCM has been created using a meticulous
bottom-up approach to maximise accuracy.
In producing the UCM, we have analysed SPEN’s historical values, accounted for latest framework
13 Appendix A of our ED1 CSF annex:
https://www.spenergynetworks.co.uk/userfiles/file/201403_SPEN
_ManwebCompSpecificFactors_AJ.pdf
values, and compared unit costs to industry outturn
values – embedding efficiency wherever possible.
The UCM has been developed with Procurement
and reviewed throughout the development process
by subject matter experts.
5.3 Review and assurance
SP Energy Networks is continually aware of the
need to review and evaluate this position to ensure
it remains viable to retain the ‘X type’ network, and to consider alternative network designs and
solutions.
This ensures our customers continue to receive best
value for money, as well as a safe, sustainable and
reliable supply of electricity.
Of note, were the two independent consultant
reports carried out in 2014 to support the RIIO-ED1
CSF adjustment. These reports undertook in-depth
engineering analysis to give us a firm foundation
upon which to estimate the costs associated with
the interconnected network.
• PB Power (PB) (now part of WSP) reviewed
our strategy for managing and developing
the SP Manweb network, and the
associated incremental costs and benefits.
They reviewed detailed, asset-based
comparisons of the interconnected network
versus an equivalent, radial topology13.
• Mott MacDonald (MM) undertook theoretical
modelling of the development of the
interconnected network and compared this
to a radial design14.
The work done in the run up to RIIO-ED2 is
underpinned by a series of historical reviews and
evaluations instigated by SP Energy Networks, both
internally and externally. In compiling the cost
adjustment, all responsible engineers for the
scheme and asset expenditures have been
consulted, as well as liaising with the relevant
systems and operations experts across both SP
Manweb and SP Distribution.
14 Appendix B of our ED1 CSF annex.
RIIO-ED2 Business Plan
38
We have reviewed the approaches to ensure they
remain applicable in RIIO-ED2. On the whole,
methods have not changed substantially.
We have sought an independent review from
network experts TNEI on our methods for
calculating the load related adjustment.
This has confirmed they remain appropriate in RIIO-
ED2 in the context of the changes as a result of Net
Zero.
We have contracted independent experts S&C
Electric Company to review this Annex and the
evidence for the CSF proposal, which concluded
that the approach adopted is robust, accompanied
by strong supporting justification and clearly meets
the requirements outlined by Ofgem for RIIO-ED2
submissions15.
Figure 28: Challenge and review timeline
These reviews widely support that there are
substantive benefits associated with an X-type
configured network, supported our strategy for
managing future network development. They also
widely support that the network design is inherently
“smart” as it is designed to accept power flowing in either direction, and alternative paths are available
when there is a fault. They have recognised the
network more readily facilitates customer uptake of
low carbon technologies through ‘plug in’ substations and with minimal cable laying and
provides scalable reinforcement to meet changing
demand and generation.
The reviews also widely recognised that the SP
Manweb urban network design is generally slightly
more expensive to build and maintain.
15 Annex 7.1c - S&C Electric Company, RIIO-ED2 Business Plan
Company Specific Factors – Final Assurance Report, Nov 2021
Nevertheless, the repeated internal design reviews
have confirmed that the size and complexity of the
existing network does not allow a whole-system
change away from the X-type network without
significant capital spend, and a decrease in
performance of the network to existing customers.
We are also carrying out external assurance of the
methodology used to derive unit costs. This involves
an assessment of the accuracy of data sources,
adequacy of ongoing unit costs updates in line with
renewing framework contracts, and assessment of
risk associated with short term frameworks most of
which will have expired prior to RIIO-ED2.
RIIO-ED2 Business Plan
39
5.4 Contents of this chapter
A summary of the CSF adjustment by cost area as
reported in the M25 Company Specific Factor memo
table is shown in Table 3 overleaf. The remaining
sections of this chapter provide the detailed
methodology behind calculation of this adjustment
by detailed cost area.
In each spend category, we will provide where
applicable:
• The basis of the proposed costs (our
approach to calculating the CSF adjustment
in each area of the plan).
• A comparison to the RIIO-ED1 CSF and
reasons for any changes.
• The options considered and justification for
selected option.
• The optioneering undertaken in the
derivation of our business plan has been
carried out within the EJPs. However, there
are a few key areas where the outcome is
affected by the Interconnected Network
Transitioning Strategy – particularly, many
of the load-related reinforcement plans, and
in the management of the specific assets
key to the interconnected and unit protected
network. These considerations are
discussed.
• This chapter also describes how, in a few
areas, different ways of calculating the
Company Specific Factor adjustment have
been considered. This is particularly
important where engineering assumptions
have had to be made in calculating the
adjustment.
• Measures taken to reduce the costs
associated with the interconnected network.
• This includes measures taken directly to
reduce the additional costs associated with
the interconnected network CSF, and any
wider cost mitigation activities we are
undertaking as business as usual in the
creation of an overall, efficient business plan
that are of relevance to the interconnected
network CSF.
• Note – where we say that the same cost
mitigation measures apply as to the rest of
our Totex plan, for example, we mean
through making efficient, well-justified
investment decisions and carrying out
efficient purchasing and procurement.
• Relevance of the approach to key strategic
aims of our business plan.
RIIO-ED2 Business Plan
40
5.5 Summary of M25 memo table costs
A comprehensive summary of the constituent parts of the proposed interconnected network CSF is shown
below in Table 3. The methods and evidence for deriving each part of the adjustment then follows in the rest of
this chapter: Section 5.6 covers Load Related Expenditure (LRE), Section 5.7 covers Non-Load Related
Expenditure (NLRE), and Section 5.8 covers Network Operating Costs (NOCs).
The cost adjustments against the Company Specific Factor for ED2, as well as the actual and remaining
forecast cost adjustments in ED1, will be reported in the M25 Company Specific Factor memo table.
Table 3: Summary of costs attributed to the CSF by spending category
Spending
Category Activity
Cost
attributed to
CSF
(£m)
Direct Totex
within RIIO-
ED2 Plan
(£m)
CSF value
of Direct
Totex
%
Load
(§ 5.6)
CV1 Primary reinforcement £9.1 £50.6 18.0%
CV2 Secondary reinforcement £4.5 £88.3 5.1%
CV3 Fault level reinforcement £6.1 £17.3 35.1%
Non-load
(§ 5.7)
CV7 Asset Replacement £45.6 £285.0 16.0%
CV8 Asset Refurbishment £3.0 £27.9 10.7%
CV9 Asset Refurbishment £3.4 £14.4 23.5%
CV10 Civil works £3.5 £19.6 17.8%
CV11 Op & IT&T £21.0 £115.3 18.3%
CV12 Electricity System
Restoration (ESR Black Start) £0.6 £3.9 14.4%
CV14 Legal & Safety £2.0 £22.4 9.1%
CV16 Flooding £1.3 £4.3 30.0%
CV22 Environmental £1.5 £39.9 3.7%
Network
Operating Costs
(§ 5.8)
CV26 Faults £7.6 £120.8 6.3%
CV30 Inspections (thermovision) £0.1 £12.0 0.5%
CV31 Repair and maintenance
(R&M) £7.5 £52.9 14.2%
All Balance of Totex Plan - £786.5 -
Total £116.8 £1,661.1 7.0%
Note: In accordance with regulatory guidance, the total investment cost of some assets is split across multiple
CV categories within the BPDTs. For example, the costs associated with the replacement of a primary 33kV
transformer is split between CV7a (asset replacement) and CV7c (asset replacement civil driven costs) and
similarly with primary 33kV switchgear the costs are shown against all CV7 categories together with CV8 and
CV11 to cover associated battery and protection related costs. The make-up of asset total costs is reflected in
our unit costs. The table above shows the costs split over the CV categories.
RIIO-ED2 Business Plan
41
5.6 Load related expenditure
A breakdown of the CSF load related expenditure is shown in Table 4, and a detailed rationale for the individual
costs follows beneath.
Table 4: Load related expenditure plan – top down costs
Asset categories Calculation of CSF
Resultant CSF
adjustment
(£m)
CV1 – Primary reinforcement –
132/33kV (§ 5.6.1)
Cost of reinforcement 39.3% greater for an
interconnected system relative to a radial system 6.82
CV1 – Primary reinforcement –
33/11kV (§ 5.6.1)
Cost of reinforcement 47.2% greater for an
interconnected system relative to a radial system 2.29
CV2 – Secondary reinforcement
– HV & LV excluding services
and monitoring (§ 5.6.2)
Cost of reinforcement 23.2% greater for an
interconnected system relative to a radial system.
Applied only to the heavily interconnected / urban
areas in Merseyside and Wirral.
4.48
CV3 – Fault Level reinforcement
– 6.6kV to 11kV upgrade
(§ 5.6.3)
Cost of HV transformer in interconnected system
is £0.7k more expensive than an equivalent radial
system with plan to replace 38 as part of the CV1
voltage uprating plan and 86 as part of the CV3
voltage uprating plan
0.09
CV3 – Fault level reinforcement
– 33kV RMUs (§ 5.6.4)
33kV RMUs are unique to interconnected
networks and the cost (£353k) of each RMU
replacement is included with 17 to be replaced
during RIIO-ED2 across 15 primary sites.
5.99
Total 19.67
5.6.1 Primary reinforcement – 132kV/33kV and 33kV/11kV
Basis of proposed costs
To quantify load related costs, we have used the detailed engineering analysis undertaken by PB Power
(PB) (now part of WSP) and Mott MacDonald (MM) at RIIO-ED1 to estimate the cost differential between the
expansion of an interconnected system and an equivalent radial system to release capacity on the primary
network. This method was accepted in RIIO-ED1 by Ofgem and their appointed consultants DNV GL as an
approach to scale the additional cost associated with SP Manweb’s unique network.
The two consultants applied different approaches to the analysis with MM applying a top down theoretical
modelling approach and PB applying a bottom up approach based on a comprehensive evaluation of the
development stages of interconnected and radial networks. Further details of the two approaches can be
found in their respective reports.
The PB report estimated the cost of providing an incremental primary reinforcement of the 132kV/33kV
system by comparing two actual interconnected systems, namely the Warrington Group and Lostock Group,
with costs of hypothetical equivalent radial systems. They concluded on average the cost of reinforcement
was 39.3% greater per MVA for an interconnected system relative to a radial system at 132/33kV level.
For reinforcement at the 33kV/11kV level, the system may be in various stages of development. The PB
Power report estimated the costs of staged development of an interconnected system example and of an
RIIO-ED2 Business Plan
42
equivalent radial system. Both example systems were considered to have the same initial capacity and be
subject to the same demand increases. They concluded on average the cost of reinforcement was 47.2%
greater per MVA for an interconnected system. A more recent review of this approach has been undertaken
by consultants TNEI who confirmed the modelling and principles used were still relevant for ED2.
We have therefore applied these scaling factors to the relevant areas of the CV1 plan to provide primary-
level reinforcement.
There are five applicable 132kV/33kV schemes, amounting to a £24.16m Totex. We have applied the 39.3%
factor to this spend, to calculate a CSF adjustment of £6.82m, as follows: 24.16 × (1 − 11.393) = 6.82.
There are five applicable 33kV/11kV schemes, amounting to a £7.13m Totex. We have applied the 47.2%
factor to this spend, to calculate a CSF adjustment of £2.08m, as follows: 7.13 × (1 − 11.472) = 2.29.
See Table 4 for a summary of costs.
We have excluded from these calculations any expenditure associated with flexibility, automation, and the
addition of any STATCOMs, as these types of reinforcement are not considered in the PB Power report.
Changes from ED1
The methodology for calculating the cost difference between an interconnected and equivalent radial
network has not changed since ED1, which was supported by multiple internal and external reviews (see
Section 5.3). It is based on the 2014 analysis from PB and MM, which remains valid for the reinforcement
planned for RIIO-ED2. The analysis is based upon traditional expansion methods that upon comparison
remain broadly the same between ED1 and ED2. Furthermore, we have sought the views of independent,
specialist energy consultancy TNEI, who have significant working experience of our interconnected network.
It is also their opinion that the methods used in the ED1 consultants’ reports remain valid for ED216.
Our total CV1 ED2 CSF proposal of £9.1m has decreased from the CSF adjustment of £15.24m in ED1 (5-
year, 20/21 prices). This mirrors the overall CV1 load plan, which has reduced by a similar amount.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the same methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
For primary reinforcement, the reinforcement options in each scheme are considered within the relevant
EJP. We have selected only those schemes for which the preferred option has additional costs attributable to
the interconnected network, which for reinforcement at the 132kV/33kV level are:
• Formby-Southport 33kV circuit reinforcement (ED2-LRE-SPM-012-CV1-EJP)
• Weston-Basford 33kV circuit reinforcement (ED2-LRE-SPM-016-CV1-EJP)
• Connah’s Quay 132kV: new GT at Deeside Park (ED2-LRE-SPM-001-CV1-EJP)
• Radway Green 33kV: replacement GT (ED2-LRE-SPM-015-CV1-EJP)
• Maentwrog-Llanfrothen 33kV cable (ED2-LRE-SPM-005-CV1-EJP)
And for reinforcement at the 33kV/11kV level are:
16 SP Manweb Company Specific Factors (CSF) - Evaluation of Load Related Costs, Version 2, TNEI, May
2021
RIIO-ED2 Business Plan
43
• Middlewich: additional primary transformer (ED2-LRE-SPM-027-CV1-EJP)
• Acer Avenue: additional primary transformer (ED2-LRE-SPM-008-CV1-EJP)
• Sandbach: additional primary transformer (ED2-LRE-SPM-009-CV1-EJP)
In calculating the CSF adjustment, we considered applying analysis from the MM report to the same
schemes. The MM report concluded a similar cost differential of 44% at 132/33kV level and a higher cost
differential of 74% at the 33/11kV voltage level. Although the modelling approaches adopted by the two
consultants were very different, the two sets of results are broadly of a similar magnitude of order (with the
MM’s estimates being somewhat higher particularly at higher voltage levels). We have used the lower cost
differentials from the PB report to provide a conservative estimate for primary and 132kV reinforcement.
Using the MM report values, the CSF adjustment would be a higher value of £10.42m as follows: 24.16 × (1 − 11.44) + 7.13 × (1 − 11.74) = 10.42. We went for the more conservative analysis in line with our
approach in ED1.
Cost mitigation measures
There are no feasible options to move away from an interconnected system that relieve constraints on the
primary system without significant reconfiguration of large areas of network.
Relevance of approach to strategic aims
The CV1 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
Overall, load related network investment is designed to deliver the lower of the credible range from our
Distribution Future Energy Scenarios, which includes over 1GW of additional capacity and enabling
connection of 700k EVs, 400,000 heat pumps, and 4.7GW of decentralised generation. This strategy
protects customers from excessive early investment. However, as discussed in Section 3.3, the
interconnected network provides an adaptable network that is resilient to change.
5.6.2 Secondary reinforcement – HV and LV
Basis of proposed costs
To quantify load related costs, we have used the detailed engineering analysis undertaken by Mott
MacDonald (MM) at RIIO-ED1 to estimate the cost differential between the expansion of an interconnected
system and an equivalent radial system to release capacity on the secondary network. This is based on a
top down theoretical modelling approach of network expansion by the addition of more plant as the load
requires it. This model estimated that expenditure for reinforcing an interconnected system was about 23%
greater than for an equivalent radial system at the secondary level.
We have applied this factor to the relevant CV2 secondary (HV and LV) reinforcement areas. This excludes
services and OHL infrastructure. It also conservatively excludes LV monitoring and smart investment
expenditure, as this is not covered by the scope of the MM study. Any differences in these areas resulting
from the interconnected network are likely to be less significant.
We have accounted for reinforcement planned within the heavily interconnected regions only – namely in
Merseyside and Wirral, by scaling the CV2 spend by a factor of 55%. This is a conservative assumption, as
X-type substations and HV/LV interconnected network arrangements are found throughout all regions of the
SP Manweb licence area.
RIIO-ED2 Business Plan
44
The resultant applicable CV2 expenditure is £43.28m, leading to a CSF adjustment of £4.48m, as follows: 43.28 × 0.55 × (1 − 11.23) = 4.48.
See Table 4 for a summary of costs.
Changes from ED1
For secondary reinforcement, due to the relatively small expenditure in RIIO-ED1, this was excluded from
our CSF claim as the total contribution was small. However, RIIO-ED2 will see a significant investment into
secondary reinforcement in preparation for the Net Zero transition, particularly for the accommodation of
heat pumps and electric vehicles. The total CV2 expenditure in ED2 is approximately five times the ED1
expenditure (in 5-year, 20/21 prices). The CSF adjustment remains quite a small percentage (5.1%) of the
total CV2 expenditure in ED2, but it does lead to a now significant adjustment.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
The £43.28m expenditure in this area is driven by a model-based approach based on a ‘baseline view’ of the reinforcement requirements from the ED2 future energy scenarios. Details can be found in paper ref. ED2-
LRE-SPEN-002-CV2-EJP. Specific reinforcement options have not been considered on a case by case
basis.
Cost mitigation measures
Although no X-type to Y-type transitions are specifically planned, all secondary reinforcement interventions in
SP Manweb will be governed by our Interconnected Network Transitioning Policy. This means that X-type
substations should be assessed for transition based on a number of quantitative and qualitative criteria. This
includes, but is not limited to, if the level of interconnection on the LV network is low, if there is a mixed
configuration of X-type and Y-type substations on the HV feeder and a high (>=50%) number of Y-type
substations on HV feeder, if there is poorly performing protection equipment or if further development is
anticipated in future. If a specific reinforcement of the interconnected secondary system is flagged for
assessment, the whole life costs of both transitioning to Y-type and maintaining the X-type equipment will be
considered. The option that presents the best overall value will be selected, noting that transition will often
lead to an increase in customer interruptions.
Transition candidates are likely to only occur within the ‘fringe’ areas of our urban network. Our learning from
the Southport network transition scheme (Section 0) indicates that any such transition away from X-type is
unlikely to save significant costs in the initial period; the benefit is seen due to asset management, operation,
repair and maintenance savings in the longer term. As mentioned in Section 4.8, we are following the latest
innovations in LV automation that may allow us to complement our interconnected network technology at
lower cost.
As mentioned in Section 0, we are also trialling new design solutions which enable lower cost connections
using existing technologies. Currently, the maximum size of an additional Y-type substation between two X-
type substations is 500kVA. This innovative approach will enable up to 1,500kVA connections to be offered
in our interconnected network providing customers with lower cost connection options. It is mainly
connecting customers who will benefit from these savings.
Relevance of approach to strategic aims
The CV2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
RIIO-ED2 Business Plan
45
Overall, load related network investment is designed to deliver the lower of the credible range from our
Distribution Future Energy Scenarios, which includes over 1GW of additional capacity and enabling
connection of 700k EVs, 400,000 heat pumps, and 4.7GW of decentralised generation. This strategy
protects customers from excessive early investment. However, as discussed in Section 3.3, the
interconnected network provides an adaptable network that is resilient to change.
5.6.3 HV uprating schemes (6.6kV to 11kV)
Basis of proposed costs
During RIIO-ED2, three primary groups are planned to be uprated from 6.6kV to 11kV to relieve fault level
constraints and release additional network capacity under CV3. As part of this scheme, 86 X-type secondary
transformers need to be replaced. Another primary group, in which a further 38 X-type secondary
transformers need to be replaced, will release network capacity under CV1 primary reinforcement.
Unique to our interconnected and unit protected network, these X-type transformers have additional current
transformers (CTs) connected to the HV side to allow the unit protection schemes to operate. These CTs
require additional termination accommodation for the cable connecting the transformer to the X-type RMU.
This leads to a higher unit cost.
We have calculated this unit cost differential based on the difference between that of a standard transformer
and the higher-cost unit that includes the additional equipment and termination needed on SP Manweb’s unique 11kV network. The difference in cost is driven by additional fitting costs (£2.5k compared to £2.0k)
and the cost of additional CTs (6 off at ~£38 each). This leads to an additional cost of circa £0.7k per
transformer. This leads to a total CSF adjustment of £0.1m (£0.03m for HV uprating under CV1, and £0.06m
under CV3).
Changes from ED1
This adjustment has reduced quite significantly from the ED1 adjustment of £0.38m (in 5-year, 20/21 prices).
Partly this is due to the scale of the HV voltage uprating schemes planned for ED1 being bigger – in ED1 we
were required to replace a total of 256 X-type secondary transformers. Additionally, for the additional cost of
the CTs and terminations required in the X-type network, we have used the difference between HV
transformer unit cost in SP Distribution and SP Manweb. This leads to an underestimate of the CTs and
termination costs, but this is therefore a conservative adjustment. In the ED1 adjustment calculation, we
used the difference between the X-type and Y-type transformer unit costs, which is a greater difference of
£1.9k.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the same methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
The uprating of primary groups has been identified as having an increased potential for X-type transition, due
the volume of equipment replacement on the same HV feeders. In line with our Interconnected Network
Transitioning Policy (Section 4.3) we must make an assessment to identify whether transitioning provides
better overall value for money for our customers.
Cost benefit analysis has been carried out using the learning from our Southport network transitioning trial
(this project is described in Section 0). Although there are some avoided future costs relating to asset
maintenance, asset replacement and network operating costs, there is an upfront cost to the transition.
Additionally, some of the ongoing costs – such as maintenance of the civil assets (e.g. the brick-built
substation enclosures) cannot be reduced without proactive investment to change the substation housing
type to a cheaper alternative.
RIIO-ED2 Business Plan
46
Furthermore, the network performance of the existing groups in terms of CIs and CMLs is excellent. Any
known alternative solution to the LV interconnection would likely reduce this performance (noting the
technological challenges in the Southport project), and this comes through in the results of the CBA. As
mentioned in Section 4.8, we are following the latest innovations in LV automation that may allow us to
complement our interconnected network technology at lower cost.
Therefore, for ED2, best overall value was shown to be achieved through perpetuation of the X-type network
in these areas. We will review this position as the innovative LV interconnection technology develops and the
Southport scheme is finalised and has been tested at business as usual.
Details of this analysis can be found in the relevant EJPs: ED2-LRE-SPM-008-CV3-EJP Fault level
mitigation - HV group reconfiguration and ED2-LRE-SPM-031-CV1-EJP Bootle Canal Quarter Regeneration
Scheme.
Cost mitigation measures
As above, transitioning any of the groups to Y-type or radial design was not anticipated to provide best value
for the customer due to both higher costs and reduced longer-term benefits.
Relevance of approach to strategic aims
Increased fault level headroom enables the further connection of LCTs & distributed generators, completing
both our strategy to deliver successful Distribution System Operation (DSO) and also in the move towards
Net Zero. As discussed in Section 3.3, continuing the interconnected network in these primary groups
provides an adaptable network that is resilient to change.
Furthermore, the proposed works contribute further towards the Net Zero aim by reducing network losses in
all the groups to the tune of 3GWh per year.
5.6.4 Fault level reinforcement: 33kV RMU replacement
Basis of proposed costs
As discussed in Section 3.4.2, an outcome of the heavily interconnected networks is that the fault levels are
higher compared to radially fed networks. In general, for such networks, besides the connected levels of
generation and demand, the network configuration (i.e. the open and closed points on the network) dictates
the fault levels. With the growth of the network and in particular the addition of LCTs, fault levels are
increasing. The exceedance of the ratings increases the risk of failure during switching operations either as a
mechanical failure or electrical failure, which could be a health and safety concern.
Whilst the modern switchgear installed in SP Manweb network can generally withstand these higher levels,
to maintain the safe functioning of the interconnected and unit protected network, many of the 33kV ring
main units (RMUs) at the primary substations require uprating.
Our plan includes the replacement of 13 single 33kV RMUs and two double 33kV RMUs as a result of fault
level constraints across 15 primary sites.
As discussed in Section 3.6.1, the 33kV RMUs are unique to SP Manweb’s interconnected network and are a fundamental requirement to operation of the existing unit protection schemes with no radial alterative.
Therefore, the whole cost of the RMU replacement is considered as an additional cost relative to the cost of
operating a radial system. At a cost of £353k for each RMU, the associated additional load related cost is
£5.99m.
RIIO-ED2 Business Plan
47
Changes from ED1
The methodology for calculating the cost difference between an interconnected and equivalent radial
network has not changed since ED1, which was supported by multiple internal and external reviews (see
Section 5.3).
This adjustment has increased from that in ED1, which was £1.22m (in 5-year, 20/21 prices). This is due to
increased requirement and activity in this area – in ED1 only four 33kV RMUs we were required to be
replaced to resolve primary fault level constraints.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the same methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
Options for resolving primary fault level constraints that did not include the replacement of the 33kV RMUs
were considered. These were ruled out on the basis of cost, risk, performance and/or technology readiness.
Details can be found in EJP paper ref. ED2-LRE-SPM-011-CV3-EJP.
We considered whether, given the increased fault levels within the SP Manweb network, there should be a
further Company Specific Factor adjustment related to other activities in this area. However, fault level
constraints are a common problem faced by other DNOs and hence we considered that only the
replacement of the unique 33kV RMU switchgear was applicable to the Company Specific Factor as this
switchgear is used at downstream primary substations unlike a typical radial design that does not have 33kV
switchgear at similar located primary substation sites.
Cost mitigation measures
Overall, the selected option within the primary reinforcement EJP contains some real time fault level
monitoring in order to mitigate the number of RMUs requiring replacement. As above, details can be found in
paper ref. ED2-LRE-SPM-011-CV3-EJP.
To further reduce the additional costs associated with the SP Manweb interconnected network, we are
developing designs of lower cost modern equivalent 33kV RMUs as discussed in Section 4.6. Primary sites
with a double RMU arrangement will be replaced with 4 or 5-panel board (i.e. 4 or 5 circuit breakers (CBs))
and at single-RMU sites, we are a developing another reduced-footprint solution by using a CB in
combination with two switch disconnectors. We estimate the new design could realise a 20-25% unit cost
saving, subject to successful development of a modern equivalent 33kV RMU by approved manufacturers.
Relevance of approach to strategic aims
Increased fault level headroom enables the further connection of LCTs & distributed generators, completing
both our strategy to deliver successful Distribution System Operation (DSO) and to support the transition
towards Net Zero.
RIIO-ED2 Business Plan
48
5.7 Non-load related expenditure
Asset modernisation is required for a variety of reasons such as: to maintain or improve performance and
reliability of aged or poor condition assets, e.g. based on Health Index (HI) and criticality rating, or for
environmental improvements, and to ensure our primary substations remain resilient for extended duration
power outages known as ‘Black Start’ events.
A breakdown of the CSF non-load related expenditure is shown in Table 5, and a detailed rationale for the
individual costs follows beneath.
Table 5: Non-load related expenditure plan – asset modernisation and refurbishment
Asset categories
SP Manweb
Interconnected
Network
Equivalent Radial
Network
Resultant
CSF
adjustment
(£m) Asset type Spend category
CV
code Volume
Cost
(£k) Volume
Cost
(£k)
Primary
ground-
mounted
transformers
Asset replacement
(§ 5.7.1.1)
CV7a
40
314.36 25
369.24
3.99 CV7c
60.00
70.00
Asset refurbishment
(§ 5.7.1.2) CV9 19
37.15 12
37.15
0.26
Secondary
X-type
transformers
Asset replacement
(§ 5.7.3.1) CV7a 225
14.50 225
13.90
0.16
Asset refurbishment
(§ 5.7.3.2) CV9 327
4.62 -
-
1.51
Primary
switchgear –
33kV outdoor
CBs (air
insulated
busbars)
Asset replacement -
(§ 5.7.2.1)
CV7a
57
90.48
-
-
7.94
CV7c
9.00
-
CV7b
5.87
-
CV8
13.00
-
CV11
21.00
-
Asset refurbishment
(§ 5.7.2.2) CV9 65
25.00 -
-
1.63
Primary
switchgear –
33kV RMUs
Asset replacement
(§ 5.7.2.1)
CV7a
33
228.58
-
-
11.63 CV7c
65.00
-
CV7b
7.98
-
RIIO-ED2 Business Plan
49
Asset categories
SP Manweb
Interconnected
Network
Equivalent Radial
Network
Resultant
CSF
adjustment
(£m) Asset type Spend category
CV
code Volume
Cost
(£k) Volume
Cost
(£k)
CV8
21.00
-
CV11
30.00
-
Primary
switchgear –
33kV indoor
CBs (air
insulated
busbars)
Asset replacement
(§ 5.7.2.1)
CV7a
9
124.54
-
-
1.49
CV7c
12.00
-
CV7b
2.58
-
CV8
21.00
-
CV11
5.00
-
Pilot wires
Asset replacement –
33kV network Hardex
(§ 5.7.7.1)
CV7b 47.0
18.50 -
-
0.87
Asset replacement –
33kV Hardex protection
schemes (§ 5.7.7.1
CV7b 39.0
23.70 -
-
0.92
Asset replacement –
33kV network short
section UG repair
(§ 5.7.7.1)
CV7b 7.5
140.74 1.9
140.74
0.79
Asset replacement –
11kV network short
section UG repair
(§ 5.7.7.1)
CV7b 5
118.92 -
-
0.59
Asset replacement –
pilot wire with 11kV UG
cable overlays
(§ 5.7.7.1)
CV7b 23
30.75 -
-
0.72
Asset replacement –
pilot wire with 33kV UG
cable overlays
(§ 5.7.7.1)
CV7b 24
42.36 6
42.36
0.75
LV link boxes Asset replacement
(§ 5.7.6) CV7a 1,978
7.47 95
7.47
14.06
Secondary
switchgear
Asset replacement –
11kV X-type RMUs
(§ 5.7.4.1)
CV7a 458
18.75 458
18.34
0.19
RIIO-ED2 Business Plan
50
Asset categories
SP Manweb
Interconnected
Network
Equivalent Radial
Network
Resultant
CSF
adjustment
(£m) Asset type Spend category
CV
code Volume
Cost
(£k) Volume
Cost
(£k)
Asset Replacement –
11kV X-type CBs
(§ 5.7.4.1)
CV7a
134
28.02
134
8.54
3.83
CV7c
11.00
1.00
CV7b
0.05
-
CV11
1.15
2.08
Asset replacement – X-
type LV boards
(§ 5.7.4.1)
CV7a
89
11.52
89
10.08
0.13
Secondary
protection
Asset replacement –
11kV secondary
batteries (§ 5.7.5.1)
CV7b 4,175
0.38 380
1.07
1.17
Asset replacement –
11kV secondary battery
chargers (§ 5.7.5.1)
CV7b 550
0.83 54
2.01
0.35
Primary sites
Civil works – primary
substations (§ 5.7.8.1) CV10 390
15.12 186
21.56
1.89
IT&T – RTU
replacement (§ 5.7.8.3) CV11 1
3,183.01 0
3,183.01
1.67
IT&T – telecoms
improvement (§ 5.7.8.4) CV11 1
20,170.00 48%
20,170.00
10.56
IT&T O&M (including
pilot rentals) (§ 5.7.8.5) CV11 1
15,101.64 48%
15,101.64
7.91
Electricity System
Restoration (ESR)
(Black start resilience) –
DC supplies (§ 5.7.8.6)
CV12 63
5.00 45
5.00
0.09
Electricity System
Restoration (ESR)
(Black start resilience) –
telecoms (§ 5.7.8.6)
CV12 585
2.86 418
2.86
0.48
Substation security
(§ 5.7.8.7) CV14 523
4.50 249
4.50
1.23
Asbestos management
(§ 5.7.8.8)
CV14 1
389 0
389
0.20
Fire protection - Fire
Risk assessment
programme (§ 5.7.8.9)
CV14
1
639 0
639
0.33
RIIO-ED2 Business Plan
51
Asset categories
SP Manweb
Interconnected
Network
Equivalent Radial
Network
Resultant
CSF
adjustment
(£m) Asset type Spend category
CV
code Volume
Cost
(£k) Volume
Cost
(£k)
Fire protection - Primary
Site actions (§ 5.7.8.9)
CV14 530
1 253
1
0.14
Fire protection - Primary
Site embedded actions
(§ 5.7.8.9)
CV14
53
5 25
5
0.14
Flood resilience
(§ 5.7.8.10) CV16 1
2,462.19 48%
2,462.19
1.29
Transformer bunds
(§ 5.7.8.11) CV22 38
74.02 18
74.02
1.47
Secondary
sites
Civil works – secondary
substations (§ 5.7.9.1) CV10 2,020
2.65 1,251
3.01
1.59
Total 81.98
RIIO-ED2 Business Plan
52
5.7.1 Primary (EHV) transformers
5.7.1.1 CV7 – Asset replacement
Basis of proposed costs
As shown in Section 3.6 and supported by multiple internal and external reviews (see Section 5.3), our
unique network employs more primary transformers compared to an equivalent radial network, though these
transformers tend to be smaller in rating. Overall, this leads to a higher cost of transformer replacement in
the SP Manweb interconnected network. We have considered the replacement volume and unit cost for SP
Manweb over RIIO-ED2 and compared this with the MVA equivalents for a notional radial system.
Based on our asset age and condition profile SP Manweb plans to replace 40 primary (ground-mounted)
transformers in RIIO-ED2 to manage our Health Index HI5 assets which cost £374k each based on CV7a
(£314k for asset replacement) and the related CV7c (£60k civils associated with asset replacement) unit
costs in SP Manweb’s unit cost manual – this represents a total cost of £14.97m.
The typical transformer size in the interconnected network is 7.5/10MVA, compared to 12/24MVA in a radial
network (as used in our SP Distribution region). We therefore calculate that we would need to replace 40 × 7.512 = 25 primary transformers if SP Manweb were designed as a radial network, based on firm capacity
requirements17. However, the transformers for a radial network are larger, and more expensive, at a total unit
cost of £439k each (based on SP Distribution’s unit cost manual).
The difference between the two totals is the resultant CSF adjustment, £3.99m (shown in Table 5).
Changes from ED1
The methodology for calculating the cost difference between an interconnected and equivalent radial
network has not changed significantly since ED1; however, we have applied an updated (more conservative)
scaling factor to the number of transformers in our interconnected network compared to an equivalent radial
– this is discussed in more detail below.
Our ED2 CSF proposed adjustment has decreased slightly from the CSF adjustment of £4.34m in ED1 (5-
year, 20/21 prices). The decrease is due to the more conservative scaling factor. Overall, the adjustments
are similar as the programme of transformer replacement in ED2 has increased annually compared to ED1,
but not significantly.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
For primary transformer modernisation needs, the options are considered within the relevant EJP: ED2-
NLR(A)-SPEN-001-TX-EJP – Transformer Condition Modernisation Programme. The paper considers
various replacement and refurbishment options, and the optimum scheme is selected based on deliverability
and 45-year value.
In calculating the CSF adjustment, we re-considered the typical number of transformers than would be
present on an equivalent radial network. In ED1, we scaled the number of transformers according to force-
cooled ratio of 24MVA (typical SP Distribution rating) to 10MVA (typical SP Manweb rating). Whilst the use of
17 This is a change in approach from RIIO-ED1, which took the emergency rating and force cooled rating of
transformers as the basis for comparison (24:10). Upon a more detailed investigation of transformer usage (and
accounting for the higher utilisation), we believe the 12:7.5 ratio is a better reflection of transformer capacity.
This is also the more conservative comparison.
RIIO-ED2 Business Plan
53
the forced cooled ratings are a better representation of how transformers are utilised in practice (as
concluded by the PB Power review of our ED1 CSF adjustment), on closer inspection this may not account
for the lower transformer utilisation on traditional radial networks.
Use of the force-cooled ratio would indicate an equivalent 40 × 1024 = 17 primary transformers if SP Manweb
were designed as a radial network, leading to an adjustment of £7.51m. Therefore, our adjustment is
conservative to the tune of £3.51m.
We also considered the average transformer rating in SP Manweb compared to the average rating in SP
Distribution – which is virtually identical to the 7.512 ratio. Figure 29 shows the number of transformers in an
equivalent radial network (using the 7.512 ratio) for comparison, normalised by both customers numbers and
units distributed. This shows that our assessment is conservative when compared to industry average.
Figure 29: The number of primary transformers in SPM Manweb compared to industry average and our
calculated radial equivalent, per 100,000 customers (left) and per TWh distributed (right)
Source: 2019/2020 V1 asset datashare and 2019 RIIO 2019/2020 report supplementary data file.
Additionally, it is interesting to note that SP Manweb has one of the highest MWh distributed per customer in
the industry excluding LPN, which has a much higher MWh distributed per customer than the rest of the
industry due to its unique geography. (SP Manweb distributes 5.4% more MWh per customer than average
including LPN, and 7.3% more than average excluding LPN.) This also contributes to the higher average
transformer utilisation in the SP Manweb network.
Cost mitigation measures
There are no feasible options to move away from an interconnected system that reduce the volumes of
primary transformers that need to be modernised. However, we are undertaking a programme of transformer
refurbishment, which can be a more cost-effective option to replacement and has significantly lower initial
expenditure – this is discussed in the next section.
Relevance of approach to strategic aims
The drivers for primary transformer replacement across both of our licence areas are to maintain a safe and
resilient network and to maintain its performance and reliability for our customers. The additional costs
incurred by the SP Manweb interconnected network are necessary to ensure an equivalent level of benefit.
As discussed in Section 3.3, the interconnected network provides an adaptable network that is resilient to
change. This is due to the uniformity of transformer and cable size, and standard rating for circuits and
design for switchgear, protection and relay settings, which allows for a ‘plug-and-play’ of additional network. This means the replacement of primary transformers is consistent with future increases in demand, reducing
the risk of stranding.
0
20
40
60
80
SPMW Average Equivalent
radial network
Primary transformers (GM) per
100,000 customers
0
20
40
60
80
SPMW Average Equivalent
radial network
Primary transformers (GM) per TWh
distributed
RIIO-ED2 Business Plan
54
5.7.1.2 CV9 – Asset refurbishment
Basis of proposed costs
As part of our asset strategy for primary transformers, where possible and cost effective to do so, to extend
the life of the asset SP Manweb plan to refurbish primary transformers as part of RIIO-ED2 to further improve
the condition profile of our assets.
As our unique network employs more primary transformers compared to an equivalent, radial network, our
refurbishment volumes are also proportionately greater. We have assumed the cost of each refurbishment is
no different in the interconnected network compared to a radial equivalent; indeed, the unit costs are the
same in both SP Manweb and SP Distribution.
We plan to refurbish 19 primary transformers in RIIO-ED2. We therefore calculate that we would need to
refurbish only 19 × 7.512 = 12 primary transformers if SP Manweb were designed as a radial network, based on
firm capacity requirements. At an average refurbishment cost of circa £37k, this leads to a CSF adjustment
of £0.26m (shown in Table 5).
Changes from ED1
The cost of refurbishing an increased volume of transformers was not identified in ED1 Company Specific
Factor, so was not included. This is considered to be an omission in the ED1 CSF submission.
We have applied an updated (more conservative) scaling factor to the number of transformers in our
interconnected network compared to an equivalent radial – this is discussed in Section 5.7.1.1 above.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
For primary transformer modernisation needs, the options are considered within the relevant EJP: ED2-
NLR(A)-SPEN-001-TX-EJP – Transformer Condition Modernisation Programme. The paper considers
various replacement and refurbishment options, and the optimum scheme is selected based on deliverability
and 45-year value.
Cost mitigation measures
Transformer refurbishment is already considered a means to mitigate the costs of asset modernisation. It can
be a more cost-effective option to replacement and has significantly lower initial expenditure.
As discussed in Section 4.6, to maximise value from existing and future transformer fleet, we are looking at
new refurbishment options to defer eventual replacement and may even, in the longer term, reduce the oil
replacement frequency. Given the uniquely high number of primary transformers in SP Manweb, this could
result in a reduction in the Company Specific Factors in future price reviews beyond RIIO-ED2. Further
details of this work are given in Section 4.6.
Relevance of approach to strategic aims
This is in line with our programme of primary transformer replacement above (Section 5.7.1.1).
RIIO-ED2 Business Plan
55
5.7.2 Primary switchgear (33kV outdoor ground-mounted CBs, 33kV indoor ground mounted CBs and
33kV RMUs)
5.7.2.1 CV7 – Asset replacement
Basis of proposed costs
As introduced in Section 3.6, 33kV switchgear and circuit breakers (CBs) in downstream primary substations
– as shown in Figure 30 – are unique to SP Manweb. They are integral to the design and operation of the
unit protection system in SP Manweb’s interconnected network. This switchgear would not be required in
downstream primary substations in a radial network, and therefore there would be no associated costs. SP
Manweb has the highest switchgear Asset Value within the EHV network of any DNO, both absolute, and by
km of network as shown in Figure 31.
Figure 30: System of networks for distribution of
electricity (as per Figure 3) additionally showing
location of primary switchgear
Figure 31 – Mean Equivalent Asset Value (MEAV) of
switchgear per 100km of EHV network
In RIIO-ED2, we plan to replace 57 outdoor air CBs in RIIO-ED2, due to age and condition and to reduce our
risk exposure to Health Index HI5 assets and improve the reliability of our network. The total individual cost is
£139k each (of which circa £103k are the direct costs against CV7a and £36k are ‘other’ costs associated
with the replacement) resulting in a total cost of £7.94m. The full cost has been included in the CSF
adjustment.
In line with our CNAIM approach and asset modernisation strategy, SP Manweb also plan to replace 9
ground-mounted indoor air CBs, which are at primary sites, and a further 33 indoor RMUs. The total costs of
an individual indoor 33kV CB is £165k (the CV7a costs and ‘other’ costs being £124k and £41k respectively)
and a 33kV RMU is £352k (the CV7a costs and ‘other’ costs being £229k and £124k respectively) which is a
three-panel board comprising of three indoor CBs).
The total cost of the indoor 33kV switchgear is therefore £13.12m, the full cost of which has been included in
the CSF adjustment in line with previous price controls (shown in Table 5).
Changes from ED1
The methodology for calculating the cost difference between an interconnected and equivalent radial
network has not changed since ED1, which was supported by multiple internal and external reviews (see
Section 5.3).
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000£
k
RIIO-ED2 Business Plan
56
Our ED2 CSF proposed adjustments for outdoor and indoor switchgear have increased slightly from the CSF
adjustment of £5.96m and £8.99 in ED1 (5-year, 20/21 prices), respectively.
The increase in total cost is due to a rise in unit costs; £139k in ED2 compared to ~£80k planned for ED1 for
outdoor CBs, and £165k in ED2 compared to ~£110k planned for ED1 for indoor CBs.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be reported in the
BPDTs under the M25 Company Specific Factor memo table.
Other options considered
There are no feasible options to move away from an interconnected system that reduce the volumes of
primary switchgear that need to be modernised. However, we are undertaking a programme of asset
refurbishment, which can be a more cost-effective option to replacement and has significantly lower initial
expenditure – this is discussed in the next section.
For primary switchgear modernisation needs in SP Manweb in ED2, the options are considered within the
relevant EJP: ED2-NLR(A)-SPEN-003-SWG-EJP: SPD & SPM EHV (33kV) Switchgear Modernisation. The
paper considers various replacement and refurbishment options, and the optimum scheme is selected based
on deliverability and 45-year value.
Cost mitigation measures
As per Section 5.6.4 above, to reduce the additional costs associated with the SP Manweb interconnected
network, we are developing designs of lower cost modern equivalent 33kV RMUs. This is discussed in more
detail in Section 4.6. Double RMUs will be replaced with 4 or 5-panel board (i.e. 4 or 5 CBs) and at single-
RMU sites, we are a developing another reduced-footprint solution by using a CB in combination with two
switch disconnectors. We estimate the new design could realise a 20-25% unit cost saving, subject to
successful development of a modern equivalent 33kV RMU with approved manufacturers.
Relevance of approach to strategic aims
The drivers for primary switchgear replacement across both of our licence areas are to maintain a safe and
resilient network and to maintain its performance and reliability for our customers. The additional costs
incurred by the SP Manweb interconnected network are necessary to ensure an equivalent level of benefit.
As discussed in Section 3.3, the interconnected network provides an adaptable network that is resilient to
change. This is due to the uniformity of transformer and cable size, and standard rating for circuits and
design for switchgear, protection and relay settings, which allows for a ‘plug-and-play’ of additional network. This means the replacement of primary switchgear is consistent with future increases in demand, reducing
the risk of stranding.
5.7.2.2 CV9 – Asset refurbishment
Basis of proposed costs
In addition to primary switchgear replacement, where it presents a more cost-effective solution, we plan to
refurbish primary switchgear as part of RIIO-ED2 to further improve the condition profile of our assets.
We plan to refurbish 65 33kV CBs in RIIO-ED2 that are at downstream primary substations. The individual
cost is £25k per refurbishment, resulting in a total cost of £1.63m. The full cost has been included in the CSF
adjustment (shown in Table 5).
Changes from ED1
Although the refurbishment of assets unique to SP Manweb was identified as an additional cost in the ED1
Company Specific Factor annex, the cost was not included in the adjustment. This is considered to be an
RIIO-ED2 Business Plan
57
omission in the ED1 CSF submission; and in any case, there has not been a significant volume of 33kV
switchgear refurbishments that have taken place in ED1.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be reported in the
BPDTs under the M25 Company Specific Factor memo table.
Other options considered
For primary switchgear modernisation needs in SP Manweb in ED2, the options are considered within the
relevant EJP: ED2-NLR(A)-SPEN-003-SWG-EJP: SPD & SPM EHV (33kV) Switchgear Modernisation. The
paper considers various replacement and refurbishment options, and the optimum scheme is selected based
on deliverability and 45-year value.
Cost mitigation measures
Switchgear refurbishment is considered a means to mitigate the costs of asset modernisation. It can be a
more cost-effective option to replacement and has significantly lower initial expenditure.
Relevance of approach to strategic aims
This is in line with our programme of primary switchgear replacement above (Section 5.7.2.1).
5.7.3 Secondary (HV) transformers
5.7.3.1 CV7 – Asset replacement
Basis of proposed costs
Figure 32 shows the different secondary (HV) transformer arrangements in the SP Manweb network. The X-
type transformer setup provides the maximum level of LV interconnection, allowing connection at LV of
transformers on other HV feeders in the HV group. The Y-type transformer can provide a degree of LV
interconnection, allowing connection at LV of transformers on the same HV feeder. A radialised HV feeder,
supplying radial LV feeders, is shown to the right-hand side of the image for comparison.
Figure 32: Secondary (HV) transformers in the SP Manweb network (not to scale), showing example LV
feeders and services.
X-type, ground-mounted transformers are unique to the interconnected network, and have additional
components connected to the HV voltage side of the transformer in the form of additional current
transformers (CTs) to allow the unit protection schemes to operate. These CTs require additional termination
accommodation for the cable connecting the transformer to the X-type RMU.
RIIO-ED2 Business Plan
58
We plan to replace 225 indoor X-type HV transformers in RIIO-ED2 due to age and condition, and to reduce
prevalence of assets categorised as Health Index HI5. We have conservatively assumed that on a traditional
radial network, the same volumes of HV transformers would be replaced, though the additional complexity
would not be required.
The unit cost of the X-type transformer is approx. £0.7k more expensive, as discussed in Section 5.6.3. This
leads to a CSF adjustment of £0.16m (shown in Table 5).
Changes from ED1
The methodology for calculating the cost difference between an interconnected and equivalent radial
network has not changed since ED1, which was supported by multiple internal and external reviews (see
Section 5.3).
Our ED2 CSF proposed adjustment of £0.1 has decreased slightly from the CSF adjustment of £0.2m in ED1
(5-year, 20/21 prices). This is due to a smaller different in unit cost between the transformer types in ED2
than was planned for ED1.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the same methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
For HV transformer modernisation needs, the options are considered within the relevant EJP: ED2-NLR(A)-
SPEN-001-SWGTX-EJP – Asset Modernisation at Secondary Substations. The optioneering covers targeted
replacement and refurbishment compared to a replacement-only option.
Cost mitigation measures
In the creation of our plans, we have considered whether there are ways to reduce the additional cost
associated with the interconnected, unit-protected network through the application of our Interconnected
Network Transitioning Policy ESDD-01-013. This means that X-type substations should be assessed for
transition to Y-type or ‘i-Type’, or for several X-type substations along an HV feeder to be radialised. These
modifications remove some to all LV interconnection.
The assessment is based on a number of quantitative and qualitative criteria. This includes, but is not limited
to, if the level of interconnection on the LV network is low, if there is a mixed configuration of X-type and Y-
type substations on the HV feeder and a high (>=50%) number of Y-type substations on HV feeder, if there
is poorly performing protection equipment or if further development is anticipated in future.
For asset modernisation that is flagged by the initial assessment, the whole life costs of both transitioning
and maintaining the X-type equipment will be considered through detailed cost benefit analysis and the
option that presents the best overall value will be selected, noting that transition will often lead to an increase
in customer interruptions. However, for this programme of work, no options were flagged for detailed (cost-
benefit) analysis. For this asset modernisation driven programme of work, the decision to plan for like-for-like
replacement was selected using engineering judgement of the network locations of the assets for
replacement.
Relevance of approach to strategic aims
The driver for replacement of the X-type transformers is to maintain the excellent performance and reliability
for our customers, whilst maintaining a safe and resilient network. The additional costs incurred by the SP
Manweb interconnected network are necessary to ensure there is no reduction in network performance, in
terms of increased customer interruptions, or network safety. As discussed in Section 4.1 on customer and
stakeholder engagement, our customers consider network reliability to be of utmost importance. A reliable
RIIO-ED2 Business Plan
59
network will become even more important as customers rely on their electricity for an increasing proportion of
their energy needs, such as heating and transport, as part of the Net Zero transition.
5.7.3.2 CV9 – Asset refurbishment
Basis of proposed costs
As part of our asset strategy for secondary substations, we also plan to refurbish 327 HV transformers in SP
Manweb, where possible and cost effective to do so, to extend the life of the asset SP Manweb plan and
further improve the condition profile of our assets.
HV transformer refurbishment is not carried out in the SP Distribution network. The programme in SP
Manweb is predominantly driven by the X-type 11kV RMU replacement programme as the work involves
changing the transformer cable tails between the replacement X-type RMU and the transformer. The
refurbishment works also involves replacing the transformer cable back-box and the CTs associated with the
X-type unit protection scheme and for efficiency is co-ordinated wherever possible with the RMU
replacement.
The unit cost of the transformer refurbishment is £4.62k which is unique to SP Manweb’s network and as such we have allocated £1.51m towards the CSF (shown in Table 5).
Changes from ED1
Although the refurbishments of assets unique to SP Manweb was identified as an additional cost in the ED1
Company Specific Factors, the cost of HV transformer refurbishment was not included. This is considered to
be an omission in the ED1 CSF submission.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the new methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
For HV transformer modernisation needs, the options are considered within the relevant EJP: ED2-NLR(A)-
SPEN-001-SWGTX-EJP – Asset Modernisation at Secondary Substations. The optioneering covers targeted
replacement and refurbishment compared to a replacement-only option.
Cost mitigation measures
Transformer refurbishment is considered a means to mitigate the costs of asset modernisation, as it can be a
more cost-effective option to replacement and has significantly lower initial expenditure.
Relevance of approach to strategic aims
As above for HV transformer replacement, the driver for refurbishment of the X-type transformers is to
maintain the excellent performance and reliability for our customers, whilst maintaining a safe and resilient
network. This will become even more important as customers rely on their electricity for an increasing
proportion of their energy needs, such as heating and transport, as part of the Net Zero transition.
5.7.4 Secondary switchgear (11kV X-type RMUs and X-type CBs) and LV boards
5.7.4.1 CV7 – Asset replacement
Basis of proposed costs
Just as for primary sites, there is additional complexity in the switchgear at secondary substation to support
operation of SP Manweb’s unique unit HV protection scheme (known as Solkor). Firstly, an X-type RMU
RIIO-ED2 Business Plan
60
requires additional protection CT’s and small wiring compared to a standard 11kV RMU used on a traditional radial network, and its unit cost is circa £411 higher.
To maintain the reliability of our network in interconnected areas, we plan to replace 458 indoor 11kV X-type
RMUs in RIIO-ED2 to improve asset condition and to reduce the prevalence of assets categorised as Health
Index HI5. We have conservatively assumed that on a traditional radial network, the same volumes of RMUs
would be replaced, though lower-cost, Y-type RMU would be required. Therefore, we have compared the
unit costs of the X-type RMU to the Y-type alternative, and attributed the difference in cost to the
interconnected network.
As the unit cost of the X-type RMUs is £41 more expensive, a total CSF adjustment of £0.19m.
Additionally, unlike secondary CBs on a traditional radial network, the X-type CB is larger and more
expensive compared to a standard CB due to the complexity and requirements of our unit protection. We
have plans to replace 134 secondary network X-type CBs which are embedded within our 11kV network and
are an integral part of our unique unit protection system.
As the unit cost of an X-type CB is circa £28.6k more expensive, a total CSF adjustment of £3.83m.
Lastly, the X-type LV boards are also more complex as they have a LV air CB included as part of the unit
protection scheme to automatically isolate the LV board for a fault on the 11kV network. For this reason, the
X-type LV board has a higher unit cost that the radial equivalent. We have conservatively assumed that on a
traditional radial network, the same volumes of LV boards would be replaced, though lower-cost, traditional
LV boards would be required.
The unit cost of the X-type LV board is £1.5k more expensive. We plan to replace 89 LV boards in X-type
secondary transformers in RIIO-ED2 due to age and condition, leading to a CSF adjustment of £0.13m.
These adjustments are summarised in Table 5.
Changes from ED1
The additional cost and complexity of X-type RMUs was identified as an additional cost in the ED1 Company
Specific Factors, and the methodology for calculating this adjustment has not changed since ED1, which was
supported by multiple internal and external reviews (see Section 5.3). However, our ED2 CSF proposed
adjustment has decreased significantly from the CSF adjustment of £5.64m in ED1 (5-year, 20/21 prices).
The decrease in total cost is due to a reduction in volumes to be replaced in ED2 compared to ED1 – the
planned investment in X-type RMU modernisation in ED1 was £26.7m. This compares to £8.59m planned for
ED2 (and an additional £5.39m planned for X-type CB replacement). Furthermore, there is a smaller
difference in X-type RMU unit cost between the transformer types in ED2 than was planned for ED1.
The additional cost and complexity of X-type CBs was not identified in ED1 Company Specific Factors, so
the cost was not included. This is considered to be an omission in the ED1 CSF submission. Additionally, the
costs of the ACBs on the LV boards that are unique to SP Manweb were also omitted.
Including the new cost areas, overall, the HV switchgear cost adjustment associated with the interconnected
network have gone down slightly from £5.64m in ED1 (5-year, 20/21 prices) to £4.15m planned for ED2.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
RIIO-ED2 Business Plan
61
Other options considered
As above, the options for HV switchgear modernisation are considered within the relevant EJP: ED2-NLR(A)-
SPEN-001-SWGTX-EJP – Asset Modernisation at Secondary Substations. The optioneering covers targeted
replacement compared to the replacement of all Health Index HI5 assets.
Cost mitigation measures
As above, in the creation of our HV transformer modernisation plans, we have considered whether there are
ways to reduce the additional cost associated with the interconnected, unit-protected network through the
application of our Interconnected Network Transitioning Policy ESDD-01-013 – see Section 5.7.3.1 for
details.
For this asset modernisation driven programme of work, the decision to plan for like-for-like replacement was
selected using engineering judgement of the network locations of the assets for replacement.
Relevance of approach to strategic aims
The driver for replacement of the X-type switchgear is to maintain the excellent performance and reliability
for our customers, whilst maintaining a safe and resilient network. The additional costs incurred by the SP
Manweb interconnected network are necessary to ensure there is no reduction in network performance, in
terms of increased customer interruptions, or network safety. As discussed in Section 4.1 on customer and
stakeholder engagement, our customers consider network reliability to be of utmost importance. A reliable
network will become even more important as customers rely on their electricity for an increasing proportion of
their energy needs, such as heating and transport, as part of the Net Zero transition.
5.7.5 Secondary protection – 11kV batteries
5.7.5.1 CV7 - Asset replacement
Basis of proposed costs
As shown in Section 3.6 (see in particular Figure 19), the SP Manweb interconnected network requires
additional tripping batteries at secondary substations than is the case for radial networks, to support
operation of the X-type unit protection.
To estimate the additional cost, we have compared planned RIIO-ED2 investment in batteries and battery
chargers at secondary substations for SP Manweb’s interconnected network with that planned SP Distribution’s radial network, used for activities such as network automation or remote control. This is more conservative than comparing the volume of SP Manweb’s asset base to the industry average and scaling accordingly, as it accounts for any contribution to the total volume of batteries as a result of company-wide
design and investment policies. It also accounts for the slightly lower unit cost in SP Manweb.
Our planned investment in these assets in SP Manweb is £1.58m for batteries and £0.46m for chargers; the
planned investment in these assets in SP Distribution is £0.41m and £0.11m respectively. The difference in
these amounts results to a CSF adjustment of £1.52m (shown in Table 5).
Changes from ED1
The methodology for calculating the cost difference between an interconnected and equivalent radial
network has not changed since ED1, which was supported by multiple internal and external reviews (see
Section 5.3).
Our ED2 CSF proposed adjustment of £1.52 has increased slightly from the CSF adjustment of £1.0m in
ED1 (5-year, 20/21 prices). This is due to a slightly increased planned spend in these areas in ED2: £2.04m
in SP Manweb and £0.51m in SP Distribution, compared to £1.26m and £0.25m in ED1, respectively.
RIIO-ED2 Business Plan
62
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the same methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
For HV battery modernisation needs, the options are considered within the relevant EJP ED2-NLR(A)-SPEN-
001-PROT-EJP – Light Current, Protection and Pilots. It considers different options surrounding the timing of
battery replacement.
Cost mitigation measures
There are no feasible options that would move away from an interconnected system that reduce the volumes
of HV batteries that need to be modernised, and no innovations in this area. Therefore, the same cost
mitigation measures apply here as to the rest of our Totex plan.
Relevance of approach to strategic aims
The driver for replacement of the HV batteries is to maintain the excellent performance and reliability for our
customers, whilst maintaining a safe and resilient network. The additional costs incurred by the SP Manweb
interconnected network are necessary to ensure there is no reduction in network performance, in terms of
increased customer interruptions, or network safety. As discussed in Section 4.1 on customer and
stakeholder engagement, our customers consider network reliability to be of utmost importance. A reliable
network will become even more important as customers rely on their electricity for an increasing proportion of
their energy needs, such as heating and transport, as part of the Net Zero transition.
5.7.6 LV Link boxes
Basis of proposed costs
As shown in Section 3.6.3, interconnected networks typically operate with the link boxes in their ‘closed’ position to improve security of supply, with current flowing through the assets during normal operation.
Additionally, when a fault occurs, the presence of multiple fault level infeeds imposes significantly more
demanding requirements. Hence the consequences of disruptive link box failures in interconnected networks
are far more severe than in traditional radial networks. Link boxes are critical to network switching, to
minimise disruption to customers while working on the network and to restore supplies after a fault.
In RIIO-ED1, we saw the average annual link box disruptive failure rate increase by 1,045% with respect to
DPCR5 observed rates, due to asset age, condition and the interconnected nature of the SP Manweb
network. Both SP Manweb and UK Power Networks (UKPN), which operate interconnected networks,
experienced similar issues.
As a result, we developed a strategy to replace 8,008 link boxes at the end of their operational life, many of
which are located at highly challenging locations in the city centre and areas with limited accessibility.
Stakeholder feedback has been sought in the development of this strategy. SPEN has been in contact with
the HSE since disruptive failures volumes started to increase in 2015, and a number of workshops were
organised between HSE and SPEN to show the failed link boxes, while providing more information on the
extent of the damage, the last inspection and the outcomes of the inspection. The strategy is crucial to
ensure safety to the public and staff and aligns with HSE’s Guidance as stated in “Reducing Risks, Protecting People” (Health and Safety Executive, 2001).
In RIIO-ED1, Ofgem allowed an adjustment to SP Manweb's allowance to cover additional costs incurred
related to the efficient management of asset risk associated with link boxes, due to the >300% increase in
required Health Index HI5 link box replacements. The re-opener adjustment covered the direct costs of the
4,137 additional units delivered in RIIO-ED1, which we are on track to deliver.
RIIO-ED2 Business Plan
63
The programme will conclude in 2025/26, with an additional 1,978 units delivered in RIIO-ED2 at a unit cost
of £7.5k.
As the allowed re-opener adjustment in ED1 was specific to SP Manweb and the number of faults is heavily
correlated with the operating and fault conditions of the interconnected network, we believe it is appropriate
to incorporate part of the LV link box cost in this RIIO-ED2 CSF.
The adjustment is based on a comparison to the volumes in our SP Distribution area, where we plan to
deliver 95 units (at the same unit cost). This leads to a CSF adjustment of £14.06m (shown in Table 5).
We believe this is the most appropriate comparison, given that both licence areas are underpinned by the
same asset management policies. In our comparison we have conservatively not accounted for the larger
size of the SP Distribution network.
Changes from ED1
This is a new inclusion to the Company Specific Factor adjustment.
The re-opener adjustment covered the direct costs of the 4,137 additional units delivered in RIIO-ED1, which
we are on target to deliver. Link box assets in SP Manweb have been subject to intrusive inspection to
provide a health and risk index. As of 14/09/2020, 17,594 link boxes were surveyed, of which 3,279 were
replaced.
The ED1 allowance adjustment was for a total of £23.4m to cover the direct costs only (the unit costs of the
equipment, and not the additional delivery support team). Consistent with this (and in line with all other non-
load related expenditure parts of the CSF) we have included just the direct costs in our CSF adjustment
calculation.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the same methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
LV link box modernisation is covered under the asset modernisation strategy for LV switchgear outdoor
within the LV Outdoor Switchgear EJP – ED2-NLR(A)-SPEN-001-SWG-EJP. It considers different options
surrounding the volume, timing and scope of Health Index HI4 or HI5 switchgear replacement.
Cost mitigation measures
There are no identified cost saving measures applicable to link boxes in the context of our Company Specific
Factor adjustment. Therefore, the same cost mitigation measures apply here as to the rest of our Totex plan.
Relevance of approach to strategic aims
The key driver for replacement of the LV link boxes is to manage overall levels of network risk, whilst
maintaining the excellent performance and reliability for our customers. The additional costs incurred by the
SP Manweb interconnected network are necessary to ensure there is no reduction in these standards
through increased risk of failure.
As discussed in Section 4.1 on customer and stakeholder engagement, our customers consider network
reliability to be of utmost importance. A reliable network will become even more important as customers rely
on their electricity for an increasing proportion of their energy needs, such as heating and transport, as part
of the Net Zero transition.
RIIO-ED2 Business Plan
64
5.7.7 Pilot wires – 33kV and 11kV
5.7.7.1 CV7 – Asset replacement
Basis of proposed costs
The SP Manweb interconnected network requires robust communications channels for its unit protection to
operate effectively and reliably to avoid unnecessary CI/CML should a fault occur. Pilot wires are an integral
part of SP Manweb’s unit protected design for both its 11kV and 33kV interconnected network.
For a typical radial network, a direct comparison of pilot wires in the EHV network is not available. Though
much less extensively, other DNOs do utilise pilot cables in 33kV networks protection, particularly with
intertrip signalling. However, due to disparity in volumes, no direct comparison from which to calculate an
adjustment is available. Furthermore, during RIIO-ED2 the SP Distribution network does not plan any
investment in this asset base.
Therefore, we have used the 2019 V1 Asset Register from the DNO datashare to assess industry pilot wire
volumes – see Figure 33.
Figure 33: Industry volumes of pilot wire (from V1 DNO Asset Register 2019)
SP Manweb has over five times the length of pilot wires than industry average, and twice that of the next
highest DNO. In line with our headline approach – that we consider SP Distribution to have the best
comparative radial network design – we have assumed SP Manweb would have the same volume of pilot
wires if it were also of radial design. SP Manweb has approximately four times the volume of underground
pilot wires to SP Distribution, leading to 75% of underground pilot wire investment being attributed to the
special case. This is considered to be a conservative comparison due to SP Distribution being a larger
network, and is a more conservative than a comparison with the GB average. Furthermore, normalising kms
of pilot wire (either by customer, by km of network, or by GWh distributed) would result in a larger difference.
In RIIO-ED2, in the 33kV (HV) network, we have planned approximately 7.5km of targeted short section
overlays of poorly performing underground pilot cables at an average cost of £140.7k per km. We have also
planned 23.5km of pilot cable as part of our 33kV cable modernisation plan, at an average cost of £42.4k per
km as the pilot will be installed with the associated 33kV interconnector cable. This is a total spend of £2.1m.
Using the ration above, we calculate that we would need to spend £0.5m if SP Manweb were designed as a
radial network. This leads to a total adjustment of £1.5m towards the CSF.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
km
OH UG
RIIO-ED2 Business Plan
65
In the interconnected 11kV (HV) network, pilot wire is present along all interconnected cable routes, which
conservatively make up ~50% of all cable routes. This compares to virtually no pilot wire requirement in a
traditional radial network at 11kV, and so we assume pilot wire costs at 11kV are wholly attributed to the
unique interconnected and unit protected network. We have planned approximately 5km of targeted short
section overlays of poorly performing underground pilot cables in the 11kV network in RIIO-ED2, at an
average cost of £118.9k per km. We have also planned 23.3km of pilot cable as part of our 11kV cable
modernisation plan, at an average cost of £30.8k per km, as the pilot will be installed alongside
approximately 50% of 11kV. This leads to a total cost of £1.31m towards the CSF.
In summary, the above activities for underground pilot cables, for both 33kV and 11kV interconnected
circuits represent an overall £2.8m towards the CSF.
Finally, for overhead pilots, we plan to replace 47km of end of life ‘Hardex’ pilot cables on the overhead EHV network over RIIO-ED2. For overhead cable a combination of overhead and underground fibre-based
technology must be deployed since Hardex – the self-supporting pilot cable which is ‘under slung’ from 33kV overhead lines – no longer has a recognised manufacturer. As a result, a further 39 Hardex protection
schemes also need to be upgraded. This replacement programme is unique to Manweb, and is required to
maintain protection signals for the interconnected network18. The average cost of each replacement is
£18.5k per km of Hardex and £23.7k per protection scheme, leading to a total cost of £1.8m towards the
CSF (shown in Table 5).
Changes from ED1
The methodology for calculating the CSF in ED1 for overhead line pilots, e.g. ‘Hardex’ was the same as we propose for ED2 as part of plans to replace a unique and obsolete asset on SP Manweb’s 33kV overhead network. The cost of upgrading the protection schemes alongside the Hardex replacement was not
specifically called out in the ED1 Company Specific Factor, which may have been an omission in the ED1
submission.
With regard to underground pilot cables we have taken a similar approach to ED1. However, we have
differentiated between those pilot cables that, due to their performance or condition, need replacement along
a short section and those pilot cables that will be replaced in conjunction with plans to overlay a 33kV or
11kV interconnector cable. In line with wider methodology improvements, we have also compared the SP
Manweb plans to an equivalent radial network based on SP Distribution volumes (more conservative than
industry average volumes), rather than taking a direct comparison between the two ED2 plans.
Other options considered
The optioneering for the short-section pilot repairs is detailed in EJP is ED2-NLR(A)-SPEN-001-PROT-EJP –
Light Current, Protection and Pilots. The optioneering for the overlay of pilot cables in parallel to cable
modifications is detailed in D2-NLR(A)-SPEN-002-UG-EJP for 11kV and ED2-NLR(A)-SPEN-001-UG-EJP
for 33kV.
Cost mitigation measures
The monitoring and testing of pilot cables is undertaken routinely as part of our planned inspection and
maintenance activities to ensure we are able to prioritise appropriate interventions to maintain their
performance and reliability. This may require just replacement of short sections of pilot cable or where the
performance of the power cable means it is efficient to combine the pilot and power cable overlay
replacement works.
18 The entire EHV network is unit protection in order to support the unique design and operation of the SP Manweb network.
RIIO-ED2 Business Plan
66
Relevance of approach to strategic aims
The ED2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
SPM’s 33kV and 11kV network provides leading performance in terms of reliability with the lowest CI of all
UK DNOs – the proposals for pilot cable modernisation are critical to the maintaining the integrity and
reliability of the network.
5.7.8 Primary substation sites
5.7.8.1 Primary site numbers
As well as primary transformers, SP Manweb also have a greater volume of primary sites due to the meshed
network design. This drives a number of additional costs throughout our non-load related expenditure plan, as
set out in the following sections.
Figure 34: Left: Primary sites per TWh distributed, Right: Primary sites per 100,000 customers. Showing SP
Manweb compared to SP Distribution, industry average and industry median. Source: V1 asset register.
We estimate SP Manweb has 110% more primary sites than it would if it were designed as a traditional
network. To do this, we have compared SP Manweb’s number of primary substations with the number in SP Distribution (SP Manweb have 78% more of these sites than SP Distribution) and accounted for the difference
in size of network, using the number of units distributed (SP Distribution distributes 18% more units than SP
Manweb). This is more conservative than using the industry average or industry median of the comparisons
considered, shown in Figure 34.
5.7.8.2 CV10 – Civil works
Basis of proposed costs
Our proposed condition-based civil strategy is vital to ensure that all civil assets and buildings are kept in a
good condition to maintain safe and secure sites to protect members of the public, staff and network assets,
maximising the life of our electrical equipment. This may comprise of, but not limited to, maintenance, repair
or replacement of doors, fencing, walls, roofs, building services, building structures, drainage infrastructure,
paths, roadways and plant supporting structures.
In RIIO-ED2, SP Manweb plan to perform civils modernisation work at 390 indoor primary substations. If SP
Manweb were a radial network. We calculate that we would need to replace 390 × 12.1 = 186 primary
-
10
20
30
40
50
60
70
80
SPM SPMscaled
SPD Industryaverage
Industrymedian
Primary sites per TWh distributed
-
10
20
30
40
50
60
70
80
SPM SPMscaled
SPD Industryaverage
Industrymedian
Primary sites per 100,000 customers
RIIO-ED2 Business Plan
67
transformers if SP Manweb were designed as a radial network. (Secondary civil modernisation is discussed
in Section 5.7.9.1)
However, although there are more primary substations in SP Manweb, the average modernisation cost seen
over RIIO-ED1 is lower than for SP Distribution - £15k compared to £21.6k. We have therefore accounted for
this by using the SP Distribution unit cost in the comparison. This results in a CSF adjustment of £1.89m
(shown in Table 5).
Changes from ED1
In the ED1 CSF, there was an adjustment proposed for primary site civil modernisation. However, the
detailed analysis into equivalent site volumes was not conducted. The adjustment was calculated as the
difference between SP Manweb and SP Distribution. This resulted in a proposed adjustment of £6.4m (8-
year, 12/13 prices). Overall, the investment in CV10 in has gone down considerably from ED1 to ED2, and
the CSF adjustment reflects this.
In the assessment of the ED1 CSF, Ofgem’s consultants DNV GL agreed that SP Manweb will incur extra
substation civil costs due to the higher number of substations on an interconnected network. DNV GL agreed
with the assessment of the number of additional assets; however, they believed there was insufficient
evidence that the unit cost of civil works was higher in SP Manweb. DNV GL used the lower unit cost from
SP Distribution to reduce the claim by roughly 10%.
In ED1, SP Distribution civil repair work was more reactive, whereas SP Manweb had a dedicated
programme to close out all Health Index HI4 & HI5 defects, resulting in higher unit costs for SP Manweb. The
actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using the
updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
However, following this programme of modernisation work, the planned unit cost for ED2 is now in line with
DNV GL’s previous expectations, in fact the planned unit costs for SP Manweb in ED2 is now significantly
lower as shown above. We have therefore been conservative by using the SP Distribution unit cost to
calculate the ‘equivalent radial network’ for comparison. Furthermore, there are reduced volumes of primary
sites requiring civil work.
This results in a significant reduction in the proposed ED2 adjustment of £1.89m from the CSF allowance of
£4.34m in ED1 (5-year, 20/21 prices).
Other options considered
If instead of using the comparative volume of sites to scale the expenditure we had compared the planned
primary civils expenditure between SP Manweb (£5.9m) compared to SP Distribution (£7.2m), this would
have resulted in no adjustment. However, this would not account for the scale of SP Manweb and
furthermore SP Manweb had a more proactive programme in ED1 that will be completed ahead of ED2. SP
Distribution on the other hand are proposing a full proactive programme with named substation projects in
ED2. Therefore, we do not feel this is a fair or representative comparison.
The options for civils modernisation are covered in the relevant EJP: ED2-NLR(A)-SPEN-002-RES-EJP –
CV10 Condition Driven Civils. The optioneering covers various timescales for modernisation.
Cost mitigation measures
There are no feasible options to move away from an interconnected system that reduce the volumes of
primary substation buildings that need to be modernised. However, the planned civils repair and
maintenance costs associated with primary substations are also higher in SP Manweb due to the volume of
primary sites – as covered in Section 5.8.3.6. The preferred civil modernisation programme selected as the
most cost effective and correct solution to reduce future maintenance costs.
RIIO-ED2 Business Plan
68
Relevance of approach to strategic aims
The driver for civils condition improvements is to maintain the excellent performance and reliability for our
customers, whilst maintaining a safe and resilient network. The additional costs incurred by the SP Manweb
interconnected network are necessary to ensure there is no reduction in network performance, in terms of
increased customer interruptions, or in network safety. As discussed in Section 4.1 on customer and
stakeholder engagement, our customers consider network reliability to be of utmost importance. A reliable
network will become even more important as customers rely on their electricity for an increasing proportion of
their energy needs, such as heating and transport, as part of the Net Zero transition.
5.7.8.3 CV11 – Op IT and telecoms – RTU replacement
Basis of proposed costs
Constant monitoring and control of the primary networks are critical to ensure a safe, secure and reliable
supply to all customers. The Supervisory Control and Data Acquisition (SCADA) system is the means by
which each item of plant on the network is securely monitored and controlled in real time. SCADA enables
the network to be managed including remote control of plant for planned and unplanned works and recovery
of critical alarms and indications. SCADA is not only critical for network management but also safety
management, risk mitigation and resource response.
Managing the electrical network requires constant data communications between the SPEN control room
and substations. Remote Terminal Units (RTUs) take the signals from all the plant in the substation and
convert them to signals suitable to be transmitted to the SPEN control room.
The main drivers for the replacement of legacy RTUs are obsolescence and associated support issues. In
RIIO-ED2, SP Manweb plan to perform 296 remote terminal unit (RTU) replacements at primary sites, at a
total cost of £3.18m, in order to ensure continued robust operation of the telecoms systems. In line with the
approach as above, due to the high number of primary sites in SP Manweb, we calculate that this is
equivalent to a replacement programme of only 296 × 12.1 = 141 RTUs if SP Manweb were designed as a
radial network. This results in a CSF adjustment of £1.67m (shown in Table 5).
Changes from ED1
In the ED1 CSF, there was an adjustment proposed for RTU replacement, calculated as the difference
between SP Manweb and SP Distribution. This resulted in a proposed adjustment of £6.4m (8-year, 12/13
prices).
In the assessment of the ED1 CSF, Ofgem’s consultants DNV GL agreed that SP Manweb will incur extra primary RTU costs due to the interconnected network. However, DNV GL could not see why the ratio of
RTUs between SPM and SPD differed from the ratio of primary substations – which it calculated as 1.63, and
so recommended that this lower ratio be applied. The allowed adjustment was £2.59m (5-year, 20/21 prices).
We agree with the logic followed by DNV GL, and more detailed analysis to derive a radial equivalent site
volume has since been conducted for ED2. This scaling factor is the most appropriate comparison, as it
removes any influence from programme differences that are driven by historical asset strategies in SP
Manweb and SP Distribution, and is purely driven by the topology of the network. The RTU volumes
correlate with the volume of substations. However, the ratio calculated by DNV GL (1.63) appears to have
been based on the planned ED1 Black Start interventions at SP Manweb substations compared to at SP
Distribution substations. This was specific only to the Black-Start activities. The correct ratio is 2.1, as
explained at the start of this section (Section 5.7.1). In the updated approach above, we have shown that our
assessment of primary substations in SP Manweb compared to an equivalent radial network (i.e. including of
equivalent size) is conservative.
RIIO-ED2 Business Plan
69
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
The preferred solution for RTU replacement is compared against the ‘do nothing’ option in EJP ED2-NLR(O)-
SPEN-001-RTU-EJP – Primary RTU Replacement.
Cost mitigation measures
There are no feasible options to move away from an interconnected system that reduce the volumes of
primary substations and therefore reduce the volumes of communications equipment requiring
modernisation.
The EJP outlines how the move to modern SCADA protocols as part of the RTU replacement programme is
a cost-effective option. Although it is possible to carry out bespoke development works to enable legacy
protocols on modern RTUs and this would have reduced the work required on the telecoms infrastructure,
this would have added significant RTU development costs, severely limited vendors capable of providing a
solution and would have failed to deliver the required level of cyber security. Based on experience, bespoke
engineered RTUs are more expensive to purchase than industry standard equipment. Failure to move to
industry standard equipment would have resulted in extremely high RTU costs (in comparison to industry
averages) both to SPEN and third parties wishing to connect to our network.
Relevance of approach to strategic aims
The driver for RTU replacement is to maintain the excellent performance and reliability for our customers,
whilst maintaining a safe and resilient network. The additional costs incurred by the SP Manweb
interconnected network are necessary to ensure there is no reduction in network performance, in terms of
increased customer interruptions, or in network safety. As discussed in Section 4.1 on customer and
stakeholder engagement, our customers consider network reliability to be of utmost importance. A reliable
network will become even more important as customers rely on their electricity for an increasing proportion of
their energy needs, such as heating and transport, as part of the Net Zero transition.
5.7.8.4 CV11 – Op IT and telecoms – 33kV infrastructure improvements
Basis of proposed costs
In RIIO-ED2 and beyond, a significant programme of work is required to modernise and improve the 33kV
telecommunications in SP Manweb. Our strategy for RIIO-ED2 is to maintain the legacy network, replace
obsolete equipment, and add supporting Operational Data Network (ODN) across the primary network in SP
Manweb. This solution retains more of the existing infrastructure over the period of RIIO-ED2, which
represents an initial cost saving19. This amounts to a total programme spend of £20.17m.
As the increased volume of primary sites leads to proportionately higher telecoms infrastructure
requirements, we have scaled the non-DSO spend according to the number of primary sites in SP Manweb
compared to a radial equivalent radial network. We calculate an equivalent programme of work would
therefore cost £20.17m × 12.1 = £9.61m if SP Manweb were designed as a radial network. This results in a
CSF adjustment of £10.56m (shown in Table 5).
19 Replacement of end-of-life equipment will not be completed during RIIO-ED2 and significant expenditure will
be required in RIIO-ED3 to extend the programme.
RIIO-ED2 Business Plan
70
Changes from ED1
In the ED1 CSF, there was an adjustment proposed for telecoms infrastructure replacement, calculated as
the difference between SP Manweb and SP Distribution. This resulted in a proposed adjustment of £4.7m (8-
year, 12/13 prices). It is our view that, for this programme of work, a direct comparison between SP Manweb
and SP Distribution in ED1 led to an overly conservative comparison.
As above (Section 5.7.8.3), in the assessment of the ED1 CSF, Ofgem’s consultants DNV GL agreed that SP Manweb will incur extra primary telecomms infrastructure costs due to the interconnected network but
recommended that in fact a lower ratio (1.63) be applied. The resultant, allowed adjustment was £3.2m (5-
year, 20/21 prices). Also as described above (Section 5.7.8.3), whilst we agree the ratio of primary
substations is an appropriate scaling factor, the 1.63 ratio was incorrectly calculated – the correct primary
substation ratio is 2.1 as explained at the start of this section (Section 5.7.1). The corrected scaling factor
based on a radial equivalent volume of primary sites is the most appropriate adjustment method, and in the
updated approach above, we have shown that our assessment of primary substations in SP Manweb
compared to an equivalent radial network (i.e. including of equivalent size) is conservative.
Finally, it is clear that overall, the proposed adjustment in this area had increased significantly from ED1 to
ED2. This is driven by an ambitious programme of modernisation and a resultant greater level of expenditure
planned for ED2 – £20.4m compared to just £10m in ED1 (8-year, 12/13 prices).
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
The other options considered are detailed with the relevant EJP, ref. ED2-NLR (0)-SPEN-003-TEL-EJP,
which considers a do nothing approach as well as exploring alternative existing and different technologies,
as well as site requirements.
The proposal for RIIO-ED2 maintains the separation of technology and services which will sustain the cyber
security profile of the service as well as being the most efficient to meet network performance requirements.
Cost mitigation measures
There are no feasible options to move away from an interconnected system that reduce the volumes of
primary substations and therefore reduce the infrastructure investments required. However, the preferred
solution maximises use of the existing infrastructure over the period of RIIO-ED2, which represents an initial
cost saving and reduces any asset stranding risk.
Relevance of approach to strategic aims
The driver for telecommunications network is to support a range of critical services that are required to
ensure safe, reliable, and secure electrical network management system. The services provide the following
functionality: -
• Protection signalling to protect people and assets in the event of faults.
• Supervisory Control and Data Acquisition (SCADA) monitoring for the electrical network.
• Operational telephony across the control rooms and sub-stations.
• Additional capability for cyber security enhancements such as Incident Event Monitoring.
• The capability to transfer data for applications such as security management and detailed electrical
phasor point measurements.
• Support the growth of the distributed generation activities.
RIIO-ED2 Business Plan
71
5.7.8.5 CV11 – Op & IT&T – operation and maintenance (including pilot rentals)
Basis of proposed costs
As stated in Section 5.7.7 above, the SP Manweb interconnected network relies heavily on pilots wires for
effective operation of its unit protection between primary substations and remote monitoring and control of
33kV switchgear at substations. In non-urban areas, other than the Hardex referred to above, where we use
overhead line circuits rather than underground cables, we do not own our own pilot wires. In this case we
rent third party communication channels from British Telecom and other service providers. The extensive
telecoms network to support the unit protected network also requires additional, specialist external support
from telecoms companies.
For a typical radial network, a direct comparison is not available. Other DNOs do have telecoms O&M
requirements, but to a much lesser extent on average. The detailed breakdown of these costs is not
available for us to compare.
However, broadly the telecoms O&M spend is directly proportional to the number of primary sites on a
network (based on the factor of 2.1 which is the SPM:SPD ratio).
Furthermore, the interconnected network has greater telecoms routine maintenance and repair costs also all
associated with the increased number of primary sites.
In RIIO-ED2, SP Manweb will invest a combined £21.42m on non-DSO telecoms O&M activities. This
includes Network Management Services (NMS), routine maintenance, repair management, leased lines
(“pilot rentals”) and ancillary services (such as JRC, airwave, and firewalls).
Of this, ancillary services are not considered eligible for a CSF adjustment, as this cost does not vary greatly
with size and topology of network. Approximately 76% of the remaining cost is attributed to 33kV networks20.
The resultant expenditure that is eligible for the CSF adjustment is therefore £15.10m.
We therefore calculate the equivalent expenditure would cost £15.10m × 12.1 = £7.20m if SP Manweb were
designed as a radial network. This results in a CSF adjustment of £7.91m (shown in Table 5).
Changes from ED1
In ED1, the cost adjustment in this area was significantly underestimated. Only the area of leased lines (pilot
rentals) was included, whereas it should have covered the wider operations and maintenance areas of the
pilot wire network, which requires specialist external support from telecoms companies. Our CSF adjustment
has increased from £1.07m in ED1 (5-year, 20/21 prices) to £10.03m in ED2.
In the assessment of the ED1 CSF, Ofgem’s consultants DNV GL agreed that SP Manweb will incur extra pilot rental costs; however, it is unclear why this was reduced. It appears to be a recalculation using SP
Distribution costs. However, the equipment costs at a disaggregated level are not dissimilar between SP
Manweb and SP Distribution – the driver for the difference in total costs is one of scale driven by the size of
the SP Manweb primary telecoms network and the additional line leasing (see EJP paper, reference ED2-
NLR (0)-SPEN-001-TEL-EJP, for details).
The cost of 33kV telecoms O&M activities excluding ancillary services in SP Distribution is £12.91m,
compared to SP Manweb’s equivalent cost of £15.10m. Therefore, a CSF adjustment calculated from a
direct comparison between SP Manweb and SP Distribution would be £2.19m; however, this is not
accounting for the sizes of the networks or the larger planned programme of spend in SP Distribution.
20 We have assumed all DNOs have pilot costs at the 132kV level. The total is scaled on the basis that there are over 6.2 times more
primary sites than 132kV sites, but that there is twice as much expenditure on average at 132kV sites than at primary sites.
RIIO-ED2 Business Plan
72
Our review of this area of expenditure reflect the justified requirements of SPM’s unique network and is considered conservative as ancillary services have been excluded from the CSF calculation.
Other options considered
All constituent actions are compared against a ‘do nothing’ options in the EJP paper, reference ED2-NLR
(0)-SPEN-001-TEL-EJP – SPD & SPM Telecommunications Operations and Maintenance.
Cost mitigation measures
There are no feasible options to move away from an interconnected system that reduce the volumes of
primary substations and therefore reduce the infrastructure investments required. This investment is
necessary to maintain the existing assets in a fit for purpose state and therefore avoid stranding.
Relevance of approach to strategic aims
The telecommunication network is critical to the safe operation and overall performance in terms of reliability
under both normal and abnormal network conditions.
The O&M function provides a range of services, enabling electrical protection services, provision of SCADA
capability, sub-station telephony and other data related activities, which without will result in significant
issues in the telecoms network that would have a consequential impact to the integrity of the distribution
network and to supply reliability.
5.7.8.6 CV12 – Electricity System Restoration (ESR - Black start) – interventions at primary substations
Basis of proposed costs
As recommended by the Government and the UK Electricity Industry, in RIIO-ED2 we will continue to
increase the resilience of our equipment on which the recovery process following a grid blackout relies. This
is achieved by installing backup power supplied capable of energising the necessary functions at key
locations on the network – including primary substations. These functions include remote control facilities,
data (SCADA) and voice communications, and protection systems. These power supplies can be either
generators or battery systems depending upon individual site requirements.
In SP Manweb, the RIIO-ED2 plan involves 648 site interventions at an average cost of ~£3.1k. To calculate
the cost of an equivalent radial network for comparison, we have taken into account two factors. The first is
to apply the site ratio calculated above to account for the additional number of primary sites in SP Manweb
compared to a radial equivalent radial network.
We have also applied a factor to take account for the inherent resilience of the interconnected network,
following feedback from the Ofgem and DNV GL review of our RIIO-ED1 CSF methodology for black start.
We have assumed that two of three primary substations in a group21 are required for the network to be
resilient and have a sufficiently energised system for a short period of time. We believe due to the high
utilisation of our network, this is a conservative comparison.
We therefore calculate that we would need to make 648 × 12.1 × 32 = 463 site interventions if SP Manweb were
designed as a radial network. This leads to a CSF adjustment of £0.57m (shown in Table 5).
21 In the interconnected network, operational groups of primary transformers typically comprise between three
and five primary transformers. More than two transformers would be required for resiliency in a larger group.
RIIO-ED2 Business Plan
73
Changes from ED1
The method for deriving a radial equivalent network for comparison of black start costs has been updated to
include the updated site volumes and to account for feedback from the ED1 slow track determinations, as
above. Overall though, the additional adjustment has stayed the same: it is proposed at £0.57m in ED2 and
this was the allowed adjustment in ED1 (5-year, 20/21 prices).
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
Options for black start resilience are addressed in ED2-NLR(A)-SPEN-001-RES-EJP – Energy System
Restoration (ESR) (formally known as Black Start) with power supply optioneering including the installation of
generation at all core/critical substation sites, and reducing the resilience level to 3 days resilience in line
with previous policy.
Alternative approaches to calculating the CSF adjustment are not considered.
Cost mitigation measures
Alternative approaches that reduce the additional costs associated with the interconnected network are not
available.
The ESR EJP explains that there is relatively small cost increase between three- and five-day battery
systems relative to the higher costs of wholesale replacement prior to end of life, which makes the preferred
five-day solution the most economic, and provides best value to customers as a result.
Relevance of approach to strategic aims
The driver for black start is to maintain a safe and resilient network in the event of a network blackout. The
additional costs incurred by the SP Manweb interconnected network are necessary to ensure there is no
reduction in network performance, in terms of increased customer interruptions, or in network safety. Black
start resilience will become even more important as part of the Net Zero transition. Customers rely on their
electricity for an increasing proportion of their energy needs, meanwhile the chances of blackouts may
increase as increased amounts of electricity are generated by renewable technology, which is more
intermittent and has less inertia than conventional, fossil-fuel power plants.
5.7.8.7 CV14 – Site security
Basis of proposed costs
To ensure we meet minimum legislative requirements detailed in the Electricity, Safety, Quality and
Continuity Regulations (ESQCR), all substations are required to have adequate security measures in place.
We plan to progress an intervention strategy over multiple price control periods (ED2, ED3, & ED4) that
covers the programmes of works to upgrade, install or refurbish security systems including, but not limited to;
intruder detection systems, access control or locking, perimeter intruder detection, and security lighting
installed within the substations.
The greater number of primary sites leads to an additional cost associated with our site security
requirements. At our 33kV primary substations the main programme is focused on upgrading our building
alarm systems to a modern standard. This involves targeting our highest risk sites, sites where the alarm
systems are end of life and connection of existing alarm systems into our alarm receiving centre to allow a
standard monitoring of alarms across our substation fleet. Sites where security risk is higher than normal,
additional measures may be taken to including higher security fencing, perimeter detection or CCTV.
RIIO-ED2 Business Plan
74
We plan make a total of 523 interventions at 33kV primary substations at an estimated cost of £4.5k per site.
Using the same method as above, we have compared SP Manweb’s number of primary substations with a typical radial network comparator. We therefore calculate that we would need to upgrade just 523 × 12.1 =249 primary sites if SP Manweb were designed as a radial network. This results in a CSF adjustment of
£1.23m (shown in Table 5).
Changes from ED1
There was no inclusion of site security (or indeed any wider legal and safety) costs in the CSF adjustment in
ED1, which was an oversight in the ED1 submission. This cost has been emphasised by the more holistic,
top-down assessment of the consequences of the different primary-site volumes in SP Manweb compared to
an equivalent, radial network.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
Options for site security are covered in ED2-NLR(A)-SPEN-002-SAF-EJP. The optioneering covers
comparison against the “do nothing” scenario, which is rejected on the basis of ensuring regulatory and legal
requirements. The chosen option presents the “do minimum” solution.
Cost mitigation measures
Alternative approaches that reduce the additional costs associated with the interconnected network are not
available. The EJP explains that the best net present value solution has been chosen, which is also the
lowest cost option.
Relevance of approach to strategic aims
The driver for site security modernisation is to keep members of the public safe, and to protect our
equipment, which maintains the excellent performance and reliability for our customers, whilst maintaining a
safe and resilient network. The additional costs incurred by the SP Manweb interconnected network are
necessary to ensure there is no reduction in the levels of security.
As discussed in Section 4.1 on customer and stakeholder engagement, our customers consider network
reliability to be of utmost importance. A reliable network will become even more important as customers rely
on their electricity for an increasing proportion of their energy needs, such as heating and transport, as part
of the Net Zero transition.
5.7.8.8 CV14 – Asbestos management
Basis of proposed costs
The Control of Asbestos Regulations 2012 (CAR 2012), Part 2, Regulation 4, places a legal duty on SP
Distribution and SP Manweb to manage asbestos within the sites and buildings within our network. In line
with these regulations, we must carry out assessment of all premises to determine the presence of asbestos,
and manage the risk associated where asbestos is identified.
RIIO-ED2 Business Plan
75
Our forecast volumes of interventions in SP Manweb is higher than in SP Distribution due to more primary
interventions22.
In RIIO-ED2, SP Manweb will invest a total of £1.65m spent on asbestos management activities, of which
approximately £388k23 will be spent at primary sites. We calculate an equivalent programme of work would
therefore cost £0.39m × 12.1 = £0.19m if SP Manweb were designed as a radial network. This results in a CSF
adjustment of £0.20m (shown in Table 5).
Changes from ED1
As above, legal and safety costs were not included in the CSF adjustment in ED1, which was an oversight in
the ED1 submission. This included asbestos management costs. These costs have been identified through
the more holistic, top-down assessment of the consequences of the different primary-site volumes in SP
Manweb compared to an equivalent, radial network.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
Options for asbestos management are covered in ED2-NLR(A)-SPEN-001-SAF-EJP. The optioneering
covers comparison against the “do nothing” scenario, which is rejected to ensure compliance with regulatory
and legal requirements. The chosen option presents the “do minimum” solution.
Cost mitigation measures
Alternative approaches that reduce the additional costs associated with the interconnected network are not
available. The EJP explains that the best net present value solution has been chosen, which is also the
lowest cost option.
Relevance of approach to strategic aims
The driver for site asbestos management is to keep our staff and members of the public safe. The additional
costs incurred by the SP Manweb interconnected network are necessary to ensure there is no reduction in
the levels of safety.
5.7.8.9 CV14 – Fire management
Basis of proposed costs
SP Energy Networks’ (SPEN) Substation Fire Protection Policy (SUB-01-012 Issue 3, 2018) sets out the
overarching guidance that we require to follow to ensure compliance with fire safety legislation at
substations. In line with this policy, in RIIO-ED2 we will undertake an extensive programme of Fire Risk
Assessments (FRAs) at all our substation locations and a dedicated programme to close out actions raised,
as well as fire systems upgrades at grid and primary sites.
The investment at SP Manweb primary sites is as follows:
22 Volumes of secondary site interventions in SP Manweb is also higher than in SP Distribution, due to the greater number of indoor
substations – as discussed in Section 5.7.8.2. Secondary site volumes in SP Manweb are 40% higher than in SP Distribution, and this 40%
represents about 20% of all volumes in SP Manweb. This should lead to a necessary adjustment for secondary sites of similar scale to
primary sites, but it has not been included as it would have been a late addition to the plan. However, this exclusion also ensures the
adjustment for asbestos management is conservative overall – this is important as we do not have the data to account for unit cost or
average ‘per site’ differences in a radial network, which may be higher. 23 Workstream totals that are not usually disaggregated have been split across grid, primary and secondary sites activity volumes to get this
value.
RIIO-ED2 Business Plan
76
• A cost of £0.64m for the FRA programme
• A forecast 530 sites will require primary site ‘system upgrade’ actions (at ~£500 per site)
• A forecast 53 sites will require primary site ‘close out’ actions (at ~£5k per site)
Using the primary site scaling factor, if SP Manweb were designed as a radial network, we calculate an
equivalent programme of work would be as follows:
• £0.64m × 12.1 = £0.30m cost for the FRA programme
• 530 × 12.1 = 253 sites would require primary site ‘system upgrade’ actions (at ~£500 per site)
• 53 × 12.1 = 25 sites would require primary site ‘close out’ actions (at ~£5k per site)
The total spend on fire protection activities if SP Manweb were designed as a radial network would therefore
be £0.56m. This results in a CSF adjustment of £0.61m (shown in Table 5).
Changes from ED1
As above, legal and safety costs were not included in the CSF adjustment in ED1, which was an oversight in
the ED1 submission. This included fire protection costs. These costs have been identified through the more
holistic, top-down assessment of the consequences of the different primary-site volumes in SP Manweb
compared to an equivalent, radial network. Furthermore, the overall levels of investment in fire protection will
increase significantly in RIIO-ED2 compared to RIIO-ED1 – as shown in Engineering Justification Paper
ED2-NLR(A)-SPEN-003-SAF-EJP - CV14 Legal and Safety - Fire Protection.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
Options for fire protection are covered in ED2-NLR(A)-SPEN-003-SAF-EJP. The optioneering covers
comparison against the “do nothing” scenario, which is rejected to ensure compliance with regulatory and
legal requirements. The chosen option presents the “do minimum” solution.
Cost mitigation measures
Alternative approaches that reduce the additional costs associated with the interconnected network are not
available. The EJP explains that the best net present value solution has been chosen, which is also the
lowest cost option.
Relevance of approach to strategic aims
The driver for fire protection activities is to keep our staff and members of the public safe, and also to protect
our equipment, which maintains the excellent performance and reliability for our customers. The additional
costs incurred by the SP Manweb interconnected network are necessary to ensure we reduce fire risk as far
as reasonably practicable.
As discussed in Section 4.1 on customer and stakeholder engagement, our customers consider network
reliability to be of utmost importance. A reliable network will become even more important as customers rely
on their electricity for an increasing proportion of their energy needs, such as heating and transport, as part
of the Net Zero transition.
RIIO-ED2 Business Plan
77
5.7.8.10 CV16 – Flood resilience
Basis of proposed costs
Items of plant and equipment across our network can be susceptible to operational issues because of
flooding resulting in wider issues with the network and loss of supply. Our strategy for RIIO-ED2 is to ensure
all new substations are constructed and plant installed in locations, and at levels which guard against
flooding. Where existing network assets are at risk from flooding appropriate flood protection measures shall
be implemented to protect the assets from flooding.
For primary sites, all existing primary substations identified within the flood risk areas, where no adequate
defences are currently in place, shall have a detailed flood risk assessment completed by a specialist
contractor. Where the site assets are proved to be at risk of flooding, appropriate flood prevention measures
shall be implemented, where reasonably practicable to do so.
This results in a programme of work at primary sites of £2.46m. In line with the approach as above, we have
scaled this spend according to the number of primary sites in SP Manweb compared to a radial equivalent
radial network. We calculate an equivalent programme of work would therefore cost £2.46m × 12.1 = £1.17m if SP Manweb were designed as a radial network. This results in a CSF adjustment of £1.29m (shown in Table
5).
Changes from ED1
There was no inclusion of flooding resilience costs in the CSF adjustment in ED1, which was an oversight in
the ED1 submission. This cost has been emphasised by the more holistic, top-down assessment of the
consequences of the different primary-site volumes in SP Manweb compared to an equivalent, radial
network.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
The preferred option as presented in ED2-NLR(A)-SPEN-003-RES-EJP –Flood Resilience has been
presented as the only option available as failure to invest in flood mitigation will result in failure to comply
with recognised industry guidance and potential for unacceptable loss of supply during flood events.
Alternative approaches to calculating the CSF adjustment are not considered.
Cost mitigation measures
Alternative approaches that reduce the additional costs associated with the interconnected network are not
available.
As set out by the EJP, there are numerous solutions available for flood mitigation ranging in permanence
and, therefore, cost. In every instance, the correct solution is installed to ensure protection is provided to the
necessary design flood level, while also ensuring the solution is cost effective.
Relevance of approach to strategic aims
The driver for flood resilience improvement is to maintain the excellent performance and reliability for our
customers, whilst maintaining a safe and resilient network. The additional costs incurred by the SP Manweb
interconnected network are necessary to ensure there is no reduction in network performance, in terms of
increased customer interruptions, or in network safety. As discussed in Section 4.1 on customer and
stakeholder engagement, our customers consider network reliability to be of utmost importance. A reliable
network will become even more important as customers rely on their electricity for an increasing proportion of
their energy needs, such as heating and transport, as part of the Net Zero transition. Furthermore, the impact
RIIO-ED2 Business Plan
78
of climate change in the UK is likely to be increased flood levels and frequency. This places additional
importance on the need for this improvement to be made to our network.
5.7.8.11 CV22 – Transformer bunds (Oil Pollution Mitigation Scheme at Operational Sites)
Basis of proposed costs
In RIIO-ED2, SP Manweb are undertaking a programme of work to mitigate against oil pollution, which
includes the replacement and addition of bunds to primary transformers. The programme is targeting existing
primary sites where intervention will have the maximum environmental benefit.
SP Manweb plan to add/replace 38 bunds at an average unit cost of £38.6k. The unit cost is equivalent to a
radial network as, although transformer sizes at primary substations vary between SPD and SPM, as a result
of the interconnected network equipment, bund sizes are relatively comparable. The size is driven by
footprint of the transformer more often than transformer rating, due to minimum distance from oil containing
plant to bund wall.
In line with the approach as above, we have scaled this spend according to the number of primary sites in
SP Manweb compared to a radial equivalent radial network. We therefore calculate that we would need to
replace 38 × 12.1 = 18 bunds if SP Manweb were designed as a radial network. This results in a CSF
adjustment of £1.47m (shown in Table 5).
Changes from ED1
There was no inclusion of transformer bunding costs in the CSF adjustment in ED1, which was an oversight
in the ED1 submission. This cost has been emphasised by the more holistic, top-down assessment of the
consequences of the different primary-site volumes in SP Manweb compared to an equivalent, radial
network.
The actual and forecast remaining costs against the Company Specific Factor in ED1 will be calculated using
the updated methodology and reported in the BPDTs under the M25 Company Specific Factor memo table.
Other options considered
The options for primary transformer bunding are presented in ED2-NLR(A)-SPEN-002-ENV-EJP
Environment – Oil Pollution. The optioneering covers alternative options including the installation of bunds at
all non-bunded sites within ED2, and the use of different bund types.
Alternative approaches to calculating the CSF adjustment are not considered.
Cost mitigation measures
Alternative approaches that reduce the additional costs associated with the interconnected network are not
available.
As set out by the above EJP, the use of HDPE bunds over concrete bunds where appropriate can reduce
cost due to the prefabricated nature of the design, lower ground preparation requirements and significantly
reduced time on site. Subject to site requirements, we have utilised an overall average unit cost.
Relevance of approach to strategic aims
The driver for transformer bunding, and the mitigation of oil release, is to reduce our environmental footprint
and protect the natural environment. This is an important driver in itself, there are limited links to other
strategic aims.
RIIO-ED2 Business Plan
79
5.7.9 Secondary substation sites
5.7.9.1 CV10 – Civil works
Basis of proposed costs
As discussed in Section 5.7.8.2 for primary substations, our proposed condition-based civil strategy ensures
buildings are kept in a good condition to maintain safe and secure sites.
As discussed in Section 3.6.1 and supported by multiple internal and external reviews (see Section 5.3), the
unique SP Manweb interconnected unit protection requires secure well heated/ventilated buildings to remain
serviceable. As a result, SP Manweb has a larger number of brick-built secondary substations than other
DNOs with radial networks, which use more open compound and glass reinforced plastic (GRP) style
substations.
At the time of writing, a survey of the SP Manweb secondary substations is underway, which should reveal
more accurate numbers of brick-built substations, their condition, and the additional costs of repair. To
calculate the CSF adjustment in the interim, we have used the volumes of all indoor substations.
We have compared SP Manweb’s number of indoor substations with the number in SP Distribution, as a typical radial network comparator. In SP Manweb, over 90% of all GM HV substations are indoor – the
highest percentage of any DNO. SP Manweb have 61% more of these sites than SP Distribution. In ED2, SP
Manweb plan to perform civils modernisation work at 2,020 indoor secondary substations, at a unit cost of
£2.6k. We therefore calculate that we would need to replace 2020 × 11.61 = 1201 secondary substations if SP
Manweb were designed as a radial network. However, the SP Manweb average indoor site modernisation
cost seen over RIIO-ED1 is slightly lower than for SP Distribution (possibly due to economies of scale) –
£2.6k compared to £3k. We have used the SP Distribution unit cost in the equivalent network for
comparison. This results in a CSF adjustment of £1.59m (shown in Table 5).
Changes from ED1
In ED1 we compared the overall expenditure on brick-built substations between SP Manweb and SP
Distribution. Our previous estimate on brick-built substation volumes at ED1, SP Manweb has 5,197 such
substations in the ED1 plan compared to only 2,377 for SP Distribution, both at a unit cost of £4k for
maintaining brick buildings.
In the assessment of the ED1 CSF, Ofgem’s consultants DNV GL agreed that SP Manweb will incur extra
secondary site civils costs due to the interconnected network. However, they considered that the claim
should be reduced to reflect the lower number of non-brick sites that will need investment and therefore
recommended that the claim be reduced from £10.1m to £7.5m (8-year, 12/13 prices).
As our updated assessment is now based on all indoor substations, and therefore captures the lower unit
price, we believe this is now a more conservative comparison in line with the previous comments.
Overall, however, due to the much-reduced volumes of sites to be modernised in ED2 compared to ED1, the
proposed adjustment has significantly reduced – £1.57m in ED2 compared to allowed adjustment of £5.72m
in ED1 (5-year, 2021 prices).
Other options considered
Alternative approaches to calculating the CSF adjustment are not considered.
The options for civils modernisation are covered in the relevant EJP: ED2-NLR(A)-SPEN-002-RES-EJP –
CV10 Condition Driven Civils. The optioneering covers various timescales for modernisation.
RIIO-ED2 Business Plan
80
Cost mitigation measures
There is no real alternative to reducing the civils costs, e.g. by converting from X to Y-type transformers and
removing the unit protection equipment. The reduction is costs would only materialise if the substation is
demolished and replaced with a GRP or other containerised housing, with a much higher up-front cost and a
long payback period. Furthermore, the majority of these assets are in the community and this would prove in
the majority of situations to be unacceptable to our customers from an aesthetic perspective. It is possible
that the necessary planning consents may be difficult to achieve.
Relevance of approach to strategic aims
The driver for civils condition improvements is to maintain the excellent performance and reliability for our
customers, whilst maintaining a safe and resilient network. The additional costs incurred by the SP Manweb
interconnected network are necessary to ensure there is no reduction in network performance, in terms of
increased customer interruptions, or in network safety. As discussed in Section 4.1 on customer and
stakeholder engagement, our customers consider network reliability to be of utmost importance. A reliable
network will become even more important as customers rely on their electricity for an increasing proportion of
their energy needs, such as heating and transport, as part of the Net Zero transition.
5.8 Network operating costs
A breakdown of the CSF Network Operating Costs is shown in Table 6, and a detailed rationale for the
individual costs follows beneath.
Table 6: Network operating costs expenditure plan
Asset categories
SP Manweb
Interconnected
Network
Equivalent Radial
Network
Resultant
CSF
adjustment
Category
Volume Cost
(£k) Volume
Cost
(£k) (£m)
CV26 Faults
33kV Underground Cable
Repairs (Non-Pressure
Assisted) (§ 5.8.1.1)
339.5 10.33 143.00 10.33
2.03
LV Underground Network
• LV switching only
• UG Cables (Non
CONSAC) - Asset
Repair/Replacement
Required
• Plant & Equipment
LV link boxes only
1 5,590.76 - -
5.59
CV30
Inspections
Primary substations -
thermovision 1 55.77 - - 0.06
CV31 Repairs
&
Maintenance
33kV RMU (§ 5.8.3.1) 828 0.52 - - 0.43
33kV CB (Air Insulated
Busbars) ID (GM) (§ 5.8.3.1) 1,530 0.24 557.41 0.24 0.23
33kV CB (Air Insulated
Busbars) OD (GM) (§ 5.8.3.1) 720 0.06 176.33 0.06 0.03
RIIO-ED2 Business Plan
81
Asset categories
SP Manweb
Interconnected
Network
Equivalent Radial
Network
Resultant
CSF
adjustment
33kV CB (Gas Insulated
Busbars ID (GM) (§ 5.8.3.1) 2,478 0.10 850.37 0.10 0.16
33kV CB (Gas Insulated
Busbars OD (GM) (§ 5.8.3.1) 1,055 0.12 527.50 0.12 0.06
Batteries at 33kV Substations
(§ 5.8.3.1) 6,270 0.12 2,987.89 0.12 0.38
33kV Transformer (GM)
(§ 5.8.3.4) 4,010 0.31 2,506.25 0.31 0.46
ACB on LV Board (X- Type
Network) (WM) (§ 5.8.3.2) 1,000 0.10 - - 0.10
6.6/11kV X Type RMU
(§ 5.8.3.2) 2,000 0.70 2,000.00 0.51 0.38
Batteries at GM HV
Substations (X type only)
(§ 5.8.3.2)
7,500 0.10 3,073.77 0.10 0.44
Secondary HV CBs (X-type)
(§ 5.8.3.2) 1,160 0.30 - - 0.35
Pilot Wire underground
(§ 5.8.3.5) 365 1.50 - - 0.55
Protection schemes (X-type
only at HV/EHV sites)
(§ 5.8.3.3)
2,215 0.52 1,683.40 0.52 0.28
Secondary civils (§ 5.8.3.6) 61,170 0.11 37,882.30 0.11 2.45
Primary civils (§ 5.8.3.6) 4,560 0.51 2,173.01 0.51 1.22
Total 15.20
5.8.1 CV26 Faults – cable repairs
5.8.1.1 EHV underground cables (non-pressure assisted)
Basis of proposed costs
SP Manweb interconnected network operates with high utilisation factors as described in Section 9. The
high utilisation factors offer many benefits in terms of reduced investment costs in some areas, however
operating at higher utilisation factors does increase the fault level of the systems and the fault current that
flows at the time of a circuit fault.
Under fault conditions the interconnected operational arrangements lead to higher circulating fault currents,
which coupled with power flows, (e.g. VARs), higher utilisation and circuit loadings, results in SPM’s 33kV cables being stressed more by increased thermal and mechanical expansion in cable/joints. This leads to
accelerated deterioration of cable insulation papers, in the vicinity of the fault compared to a radial network
design.
RIIO-ED2 Business Plan
82
Figure 35: 33kV Cable Faults – RIIO-ED1 first five years showing the high anomalous values for both SPM
and SPD
Both SPM and SPD fault rates are affected by a known legacy trifurcating joint type issue, which is unique
to both licences, who over a 9-year period used a cold shrink type joint which was found to have an internal
defective component that resulted in an accelerated failure rate. A High Value Project (HVP) re-opener
application, referenced CRC 3F, was made in May 2019 to request increased levels of expenditure during
ED1 to target the proactive removal of known trifurcating joints was rejected. At the time, from a review
undertaken SPD had circa 1,805 (57%) defective joints and SPM circa 1,387 (43%) of the total joints
procured and installed during the period 2001/02 and 2010/11.
Considering this re-opener outcome, further analysis has been undertaken to compare SPM’s 33kV cable network performance and fault rate with all other UK DNOs taking account of the unique factors its
interconnected design has to its performance and failure rate. Several studies show that impregnated paper
insulation will deteriorate faster if heated. One of the studies is from CIRED 2011, which states that as
temperature increases, the paper desorbs water (making it dry) and the impregnant absorbs water – the
converse is true as the cable cools, but over time the paper becomes less able to reabsorb moisture leaving
it permanently dry. An engineering paper presented at the 21st International Conference on Electricity
Distribution (CIRED) referenced ‘CIRED2011 PILC Ageing’, recognised the reduction of insulation life
correlated with operating temperature. Higher power flows (VArs) on an interconnected network will give
higher cable operating temperatures and therefore lower life expectancy, which will be exacerbated in
Manweb due to its unique interconnected design.
By excluding the “legacy trifurcating joint type issue” the CSF only compares the performance of SPM’s 33kV cable fault rate with other UK DNOs, and is illustrated in Figures 35 and 36, which compares SPM’s 33kV cable network length and fault rate with UK DNOs.
Even accounting for a known joint issue, unique to SP Manweb and SP Distribution, (which account for
approximately half the faults reported) the fault rate in SP Manweb is still 2 – 3 times higher than the median
of all other DNOs.
These are significant contributing factors to SP Manweb’s higher fault rate on the 33kV cable network.
240
31
102
113
162
77
125
364
356
30
230
92
775
697
0 100 200 300 400 500 600 700 800 900
ENWLNPGNNPGYSSEHSSESLPNSPNEPN
EMIDWMIDSWEST
SWALESSPD
SPM
33kV Cable Faults - RIIO-ED1 5 Years
RIIO-ED2 Business Plan
83
Figure 36: 33kV Cable Faults – RIIO-ED1 first five years showing SPM fault volumes showing Trif Joint and
Non-Trif Joint related with the median/average of other UK DNOs excluding outlier SPD
Figure 37: 33kV Cable Faults – RIIO-ED1 first five years showing SPM fault rates per km showing Trif Joint
and Non-Trif Joint related with the median/average of other UK DNOs excluding outlier SPD
Under CV26, a total of 679 EHV UG cable faults are forecast. Using analysis above, we have assumed that
50% of these (340) will be non-Trif joint related repairs, and that the CSF adjustment is applied to this
volume only. We have compared this volume to the industry median ED1 5-year fault volumes of 143 –
taken from the analysis above.
This represents an additional 196.5 cable faults on SPM’s 33kV cable network due to its unique interconnected operational arrangements and design. Based on average repair costs of £10.2k per fault this
represents £2.0m of CV26 costs towards the CSF (see Table 6).
Changes from ED1
The methodology for calculating the CSF for 33kV cable faults has changed from the claim made in RIIO-
ED1 against this repair activity. The CSF claim in ED1 simply compared the difference in the average unit
costs between SPM and SPD given the requirement in SPM to replace a longer section of faulted cable due
to the levels of carbonisation and deterioration of insulation papers in the 33kV cable in the vicinity of the
cable fault.
Whilst Ofgem appointed consultants DNV GL acknowledged this fact, the claim was reduced as DNV GL
did not agree that the difference in unit cost was the only factor that contributed to a higher cost.
A full review of 33kV cable fault performance in 2018/19, which was initiated following an unprecedented
level of faults in 2018, found a legacy trifurcating joint used between 2001/02 and 2010/11 was the reason
351
697
119
160
0 100 200 300 400 500 600 700 800
SPM (Excl 3M Trif)
SPM
DNO Median
DNO Average
Comparison of SPM Faults with UK DNO - RIIO-ED1 5 Years
0.18
0.36
0.11
0.14
0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40
SPM (Excl 3M Trif)
SPM
DNO Median
DNO Average
33kV Cable Faults per km - RIIO-ED1 5 Years
RIIO-ED2 Business Plan
84
for an increase in fault volumes. Analysis also determined that temperature variations contribute in part to
their failure; explaining the seasonal peak.
As a consequence of our review and the experience from the information gathered to support the HVP re-
opener for EHV cable trifurcating joints, the CSF proposal for ED2 has been reflected into the adjustment
reported for ED1, which is detailed in the new CSF memo table M25.
Figure 38: 33kV Cable Faults during 2018 showing Trif Joint and other fault causes against ambient air
temperatures recorded
Notwithstanding the faults associated with the legacy trifurcating joint, which accounted for approximately
50% of the faults on SPM’s 33kV cable network, the remaining 50% of 33kV cable fault volumes in SPM are still nearly 3 times that of the median of the other UK DNOs.
Our ED2 CSF proposed adjustment of £2.03m has increased from the CSF allowance of £0.46m in ED1 (5-
year, 20/21 prices) as the ED2 CSF reflects the interconnected network fault level currents and circulating
power flows that result in higher stresses on cables and joints leading to increased failures compared to a
radial design typical of other UK DNOs.
Other options considered
There are no feasible options to move away from an interconnected system however, we are proposing a
programme of targeted investment to overlay 20km of 33kV cable and proactive joint removal against CV7
and CV8 respectively.
For 33kV cable modernisation needs in SP Manweb in ED2, the options are considered within the relevant
EJP: ED2-NLR(A)-SPEN-001-UG-EJP: SPD & SPM EHV (33kV) Underground Cable Modernisation. The
paper considers various overlay replacement options, and the optimum scheme is selected based on
deliverability and net benefit over a 45-year period.
Cost mitigation measures
As part of our 33kV cable review, Health Index categories for EHV non-pressurised cables has been
developed together with an extensive exercise to verify all known joint positions and types across the whole
underground cable network. The Health Index category is determined based on several factors, including
age, utilisation and condition inputs such as fault rate per kilometre. It represents a measure of the condition
of an asset, with HI1 being little to no degradation and HI5 being advanced stages of degradation.
RIIO-ED2 Business Plan
85
It has been determined that applying a marginal voltage reduction, may mitigate faults. Voltage reduction
have been applied seasonally to reduce electrical stresses and fault prevalence.
Innovation techniques involving the use of on-line cable partial discharge (PD) monitoring equipment has
been used which enables the early identification of faults through pre-emptive detection. This informs the
prioritised intervention and network re-configuration to secure supplies, however its application on SPM’s network is limited to 33kV feeders at grid sites due to the earthing arrangements on primary switchgear and
the physical constraints to fit PD equipment at non-grid sites.
Relevance of approach to strategic aims
The CV2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
SPM’s 33kV network provides leading performance in terms of reliability with the lowest CI of all UK DNOs
and during the first 5-year period of ED1 reported no customer supplies being lost for over 92% of the
network faults experienced on its 33kV interconnected network.
5.8.1.2 LV Network
Basis of proposed costs
Like the EHV and HV voltage levels the LV network also operates interconnected with over 70% of the LV in
Merseyside and Wirral being interconnected and circa 30% of the LV networks across its more rural areas of
North Wales, Shropshire and Cheshire also operating interconnected. Overall, around 53% of the LV
network is designed and operated interconnected.
As was explained in Section 3, SPM’s interconnected LV network provides leading performance in terms of supply reliability, as well as flexibility in how the network can be reconfigured to accommodate changing
loads. It also facilitates planned works on the HV system to be carried out without the need, in many
instances, to interrupt customer supplies (CIs), as running arrangements can be altered to maintain supply to
customers, who otherwise would be impacted. This benefit, which is embedded within the network’s legacy design, is provided extensively across our urban areas of Merseyside and Wirral as well as some parts of
Cheshire and North Wales where the LV network is interconnected between 2 or 3 secondary substations.
SPM’s unique network does mean it is more complex due to the multiple paths power can flow compared to the single path in a typical radial design network. Whilst this means additional LV network studies are
needed to design and plan any changes or additions to the LV system, it also means that operating the
interconnected LV network is more complex when the network experiences an intermittent or permanent
fault.
RIIO-ED2 Business Plan
86
Figure 39: LV network arrangements comparing typical radial configuration with SPM’s interconnected arrangements
The CSF is based on the additional direct time and activities involved with operating, testing and responding
to LV network faults, both intermittent and permanent, compared to a radial network. The schematic
diagrams shown in Figure 39 illustrate the differences between a radial arrangement and SPM’s interconnected network design for a routine fault on a single LV circuit feeder. In contrast to a single visit on
a radial network, SPM’s interconnected network requires multiple visits to all LV circuit infeeds from each of
the secondary substations together with on-site intrusive checks at LV link boxes to test individual live
phases and confirm live or not live status and voltage on all interconnected LV infeeds.
To calculate the CSF, we have also identified and recorded all permanent faults reported in the first 5 years
of ED1 by overlaying on our LV mapping system, ERSI, each fault position. Coupled with this analysis, we
have also determined the geographical areas of each fault and how many of the faults have occurred on our
interconnected underground cable network. Against this information we have estimated the additional
average man-hours required in visiting multiple secondary substations and LV link boxes to undertake the
necessary operational checks and circuit testing to restore supplies, reconfigure the network and/or locate a
permanent fault.
Whilst the forecast number of faults across the ED2 5-year period is 18,950 across activities for restoration
by LV switching, LV underground (non Consac) cables and LV link boxes faults, the CSF only applies to the
proportion of LV network incidents associated with the interconnected LV network. The number of CSF
incidents is based on the analysis completed over the 5-year ED1 period for the above fault activities, which
represents overall around 68% of incidents. This assumption is based on the analysis of cable faults on our
LV interconnected network and how the fault distribution increases against the level of interconnection, as
shown in Error! Reference source not found. below.
Figure 40: LV network faults by district area against the level of interconnection
The make-up and distribution of these faults across our interconnected network does vary between the
different geographical areas. This, together with the fact that a proportion of incidents occur outside normal
working hours, i.e. 50% are responded to by 24/7 standby teams, the proposed CSF adjustment for ED2 is
estimated to be between £5.59m and £6.78m.
To be conservative, we have taken the bottom of this range and propose a CSF adjustment of £5.59m for all
LV network faults against CV26 for restoration by LV switching, LV underground (non Consac) cables and
LV link boxes faults (see Table 6).
Dee Valley & Mid Wales
North Wales
Merseyside
Mid Cheshire
Wirral
0
100
200
300
400
500
600
700
0% 10% 20% 30% 40% 50% 60% 70% 80%
2020/2
1 L
V U
G fault v
olu
mes
% of Network Interconnected at LV
RIIO-ED2 Business Plan
87
Changes from ED1
The methodology for calculating the CSF in ED1 was simply based on the unit cost difference between SPD
and SPM and whilst the full CSF value of £1.37m (5-year, 20/21 prices) was allowed for in ED1, we believe
the difference in unit cost was not the only factor that contributed to a higher cost in CV26 for responding to
and repairing faults on the underground interconnected LV network.
The CSF claim in ED1 did not compare all the differences and additional activities associated with every
aspect of operating and switching on an interconnected network under fault conditions and nor were we able
to map reported LV faults on to the LV network to assess the volumes of faults experienced on the
interconnected LV network areas.
This we have been able to achieve in justifying our ED2 CSF to reflect fully the higher costs associated with
our LV network fault activities, which represent circa 41% (excluding service underground cable faults) of our
CV26 expenditure over the 5-year period.
As a consequence of our review and the experience from the information and analysis undertaken to support
the CSF proposal for ED2, this has been reflected into the adjustment reported for ED1, which is detailed in
the new CSF memo table M25.
Other options considered
There are no feasible options to move away from an interconnected system however, we are proposing a
programme of proactive targeted investment to overlay 104.4km of LV cable to provide the greatest benefits
to customers in terms of avoided faults, derived on a circuit level.
For LV cable modernisation needs in SP Manweb in ED2, the options are considered within the relevant
EJP: ED2-NLR(A)-SPEN-003-UG-EJP: SPD & SPM LV Underground Cable Modernisation. The paper
considers various overlay replacement options, and the optimum scheme is selected based on deliverability
and net benefit over a 45-year period.
Cost mitigation measures
Whilst an increasing trend in LV underground cable faults has been observed in the years 2019/20/21, the
proposals reflected in ED2 take account of a proactive and targeted intervention strategy to reduce fault
levels by the end of the ED2 period.
This coupled with the innovative proposals for deploying increased levels of active LV network monitoring
devices and the increased utilisation of new and emerging cable fault monitoring equipment has been
reflected in our overall expenditure for LV network faults in our ED2 CV26 proposal and hence is built into
our CSF adjustment proposed.
Relevance of approach to strategic aims
The ED2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
SPM’s LV network provides leading performance in terms of reliability with the lowest CI of all UK DNOs,
however the complexity of the interconnected LV network means we need to reflect fully the higher costs in
operating it compared to a radial system.
RIIO-ED2 Business Plan
88
5.8.2 CV30 Inspections – Thermovision at Primary Substations
5.8.2.1 Thermovision inspections at Primary Substations with outdoor switchgear and busbar arrangements
Basis of proposed costs
Inspections costs are driven by existing policies in order to comply with statutory requirements, ensure
safety, minimise risk of failure, prolong asset life, and allow cost effective interventions to ensure plant,
switchgear and protection systems perform reliably.
The inspection activities are based on the SPEN Asset Inspection and Condition Assessment Policy
document ASSET-01-021, which covers all asset types at all voltage levels.
We have determined the volumes and costs of carrying out thermovision inspections on primary switchgear
associated with SPM’s unique interconnected network, which is not required on an equivalent radial network.
To calculate the CSF, we have only identified costs associated with thermovision inspections of primary
substation (non-grid sites) 33kV plant, switchgear and associated assets, (such as reference voltage
transformers, disconnectors and earth switches, bus bar connections as appropriate) associated with SP
Manweb’s discrete interconnected 33kV unit systems.
Figure 41: Typical thermovision inspection image showing 33kV ‘hotspot’
We calculate the CSF as £0.06m for thermovision inspections associated with primary plant and switchgear
associated with non-grid sites where SPM has plant and equipment unique to its interconnected design
arrangements.
Changes from ED1
The methodology for calculating the CSF is consistent with the approach taken for ED1, which was allowed
in full following a review by Ofgem appointed consultants DNV GL.
The actual CSF adjustment for ED1 is detailed in the new CSF memo table M25 and is based on all primary
switchgear non grid sites being inspected using thermovision equipment once every 2 years, i.e. 50% in year
1 and 50% in year 2.
Other options considered
For plant and switchgear our inspections activities are determined by established policies and robust work
practices that comply with statutory requirements, ensure safety, minimise risk of failure, prolong asset life,
make cost effective interventions to ensure plant, switchgear and protection systems perform reliably. Whilst
we continue to use new or innovative approaches as well as new technologies the efficient delivery of our
inspection programme is a licence condition for which there are no other options.
Cost mitigation measures
Whilst inspection costs are driven by policies that cover the type and frequency of inspection needed, the
cost mitigation is driven by working practices and the use of innovative technologies available to support the
RIIO-ED2 Business Plan
89
testing and non-intrusive maintenance tasks required. The use of thermovision equipment for this activity is
deemed effective and efficient.
Relevance of approach to strategic aims
The ED2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
5.8.3 CV31 Repair and Maintenance (R&M)
5.8.3.1 Primary switchgear and associated unit protection equipment
Basis of proposed costs
Operational repair and maintenance costs are driven by existing policies in order to comply with statutory
requirements, ensure safety, minimise risk of failure, prolong asset life, make cost effective interventions to
ensure plant, switchgear and protection systems perform reliably. The R&M activities are based on the SP
Manweb substation maintenance policy, SUB-01-009 inclusive of post fault maintenance requirements.
Existing policies set out the repair and maintenance intervention activities, ranging from a full major
maintenance (including oil change) through to trip testing and condition monitoring. Subject to the
manufacturer type, operating voltage and intervention activity the policy determines the frequency of when
R&M is performed.
We have determined the volumes and costs of maintaining primary substation (non-grid sites) 33kV CBs and
associated equipment (such as reference voltage transformers, disconnector’s and earth switches as appropriate) and 33kV RMUs (exclusive assets used by SPM) associated with SP Manweb’s discrete interconnected 33kV unit systems.
All the unit protection schemes supporting SPM’s unique interconnected network require the use of
additional battery systems and charger units. Whilst these are relatively low-cost items, they are discrete to
the SP Manweb interconnected network and compared to typical radial design networks, SPM’s network has significantly more battery systems, particularly with its HV network as shown in Figure 19 within section
3.4.1– Volume of batteries per 1 million customers, all voltage levels, across all DNOs (from 2020 DNO asset
register).
We have scaled the R&M switchgear expenditure by the percentage of 33kV CBs that are at primary sites
(i.e. unique to the interconnected network), according to the asset register, and by CB type. For batteries, we
have scaled the R&M expenditure by the number of primary sites in SP Manweb compared to an equivalent
radial network (factor of 2.1 – see section 5.7.7).
Given SP Manweb’s unique design and requirement for (non-grid site) 33kV CBs, 33kV RMUs which are not
required in primary substations in a radial network, we calculate the CSF as £1.30m for primary plant,
switchgear, associated protection and battery systems.
Our ED2 CSF proposed adjustment of £1.30m has reduced from the CSF allowance of £1.49m in ED1 (5-
year, 20/21 prices) as the ED2 CSF reflects the changes from ED1 in the overall reduction in R&M activities
driven by our ED1 and ED2 asset modernisation delivery plan, particularly removal of oil filled switchgear.
Changes from ED1
The methodology for calculating the CSF is consistent with the approach taken for ED1, which was allowed
in full following a review by Ofgem appointed consultants DNV GL.
The actual CSF adjustment for ED1 is detailed in the new CSF memo table M25.
RIIO-ED2 Business Plan
90
Other options considered
For switchgear, protection systems including batteries the R&M activities and interventions are determined
by established policies and robust work practices that comply with statutory requirements, ensure safety,
minimise risk of failure, prolong asset life, make cost effective interventions to ensure plant, switchgear and
protection systems perform reliably. Whilst R&M activities look to use new or innovative approaches as well
as opportunities to use new technologies the efficient delivery of our R&M programmes is a licence condition
for which there are no other options.
Cost mitigation measures
Whilst R&M costs are driven by policies that cover the type and frequency of intervention needed, the cost
mitigation is driven by working practices and the use of innovative technologies available to support the
testing and non-intrusive maintenance tasks required.
As in ED1, the efficient delivery of ED2 R&M will also be through the effective co-ordination of our R&M
plans with our investment modernisation and refurbishment plans, i.e. touch once approach during the
period. This coupled with the use of available technologies, e.g. partial discharge test devices, CB trip-timing
multiple test devices are key cost mitigation approaches we will continue to use that are reflected in our
overall ED2 submission.
Relevance of approach to strategic aims
The ED2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
5.8.3.2 Secondary X-type switchgear and associated unit protection equipment
Basis of proposed costs
Operational repair and maintenance costs are driven by existing policies in order to comply with statutory
requirements, ensure safety, minimise risk of failure, prolong asset life, make cost effective interventions to
ensure plant, switchgear and protection systems perform reliably. The R&M activities are based on the SP
Manweb substation maintenance policy, SUB-01-009 inclusive of post fault maintenance requirements.
Existing policies set out the repair and maintenance intervention activities, ranging from a full major
maintenance (including oil change) through to trip testing and condition monitoring. Subject to the
manufacturer type, operating voltage and intervention activity the policy determines the frequency of when
R&M is performed.
Figure 42: X-type unit protection with HV CBs at each secondary substation
RIIO-ED2 Business Plan
91
With regard to secondary X-type switchgear in SP Manweb, testing and maintenance of the unit protection
equipment at secondary substations (protection relays and LV board ACB) including battery systems is
unique to its HV interconnected network. It is carried out as part of the routine maintenance visits to the
secondary site. The CSF adjustment is based on the R&M activities (direct labour costs) associated with the
additional HV secondary assets (additional HV CBs, unit protection relays, battery systems and LV board
ACBs) that are unique to SPM’s interconnected network. The CSF adjustment excludes the costs associated
with routine R&M of secondary RMUs and CBs, i.e. oil handling / changing and general routine R&M tasks
any DNO would normally perform.
The higher level of maintenance is related to the fact that SP Manweb’s interconnected network requires HV CBs at each secondary substation along the interconnector circuit between primary substations, for its unit
protection principle to operate safely and effectively as shown in Figure 41. In a typical radial network, a
single HV CB is required at the primary source only. For a fault on a circuit along the interconnector between
two or more primary substations, then the two CBs (typically one at each of the X-type RMU’s or on a X-type
CB panel board), at each adjacent secondary substation will operate to isolate just the faulted cable section
to ensure that no customer supplies are disconnected.
This places additional duty on the CBs, and they must be maintained for safety and operational integrity
purposes.
Regarding post fault maintenance the CSF is based on the additional cost of post fault maintenance costs
associated with X-type RMU CBs and to a lesser extent CBs at HV customer feeder sites and mid-feeder
panel board substation sites.
Based on the unique and additional HV secondary assets SPM’s interconnected network requires, we calculate the CSF adjustment for HV secondary R&M as £1.27m. Our ED2 CSF proposed adjustment of
£1.27m has reduced from the CSF allowance of £1.6m in ED1 (5-year, 20/21 prices) as the ED2 CSF
reflects the changes from ED1 in the overall reduction in R&M activities driven by our ED1 and ED2 asset
modernisation delivery plan, particularly the removal of oil filled switchgear.
Changes from ED1
The methodology for calculating the CSF is consistent with the approach taken for ED1, which was allowed
in full following a review by Ofgem appointed consultants DNV GL.
The actual CSF adjustment for ED1 is detailed in the new CSF memo table M25.
Other options considered
For switchgear, protection systems including batteries the R&M activities and interventions are determined
by established policies and robust work practices that comply with statutory requirements, ensure safety,
minimise risk of failure, prolong asset life, make cost effective interventions to ensure plant, switchgear and
protection systems perform reliably. Whilst R&M activities look to use new or innovative approaches as well
as opportunities to use new technologies the efficient delivery of our R&M programmes is a licence condition
for which there are no other options.
Cost mitigation measures
Whilst R&M costs are driven by policies that cover the type and frequency of intervention needed, the cost
mitigation is driven by working practices and the use of innovative technologies available to support the
testing and non-intrusive maintenance tasks required.
As in ED1, the efficient delivery of ED2 R&M will also be through the effective co-ordination of our R&M
plans with our investment modernisation and refurbishment plans, i.e. touch once approach during the
period. This coupled with the use of available technologies, e.g. partial discharge test devices, CB trip-timing
RIIO-ED2 Business Plan
92
multiple test devices are key cost mitigation approaches we will continue to use that are reflected in our
overall ED2 submission.
Relevance of approach to strategic aims
The ED2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
5.8.3.3 Protection – at all voltages
Basis of proposed costs
Protection systems form a critical part in providing a safe, reliable network that protect the integrity of assets
by operating correctly under fault or abnormal conditions.
Within SP Manweb, the application of unit protection schemes is unique and used widely across its 33kV and
11kV interconnected network. The application and routine maintenance requirements are defined in existing
policies, specifically PROT-01-016 Protection Inspection and Maintenance Policy and PROT-03-019 Primary
and Secondary Substation Protection and Control Equipment.
The circuits in a 33kV urban network consist mainly of standard sized underground cables that form
interconnections between BSP substations and provide connections to primary substations. The network is
generally operated in interconnected groups of two or more BSP transformers, with its exact configuration
and operating regime determined by system analysis. The primary substation connections are made so as to
form discrete sections of network that may be protected by individual zones of unit protection. The unit
protection schemes utilise pilot cables that are laid with the associated 33kV cable.
In more rural and semi-urban areas, again the use of unit protection is used where the zone of protection is
the circuit between primary substations or primary substation and BSP, however at primary substations sites
with outdoor 33kV switchgear there is also the requirement for bus bar protection schemes which also are
integral to how the unit protected zones operate.
It is desirable for transformers that are to be operated in parallel at HV, as an interconnected group, to be
connected to different 33kV interconnectors.
Figure 43 shows typical urban and rural 33kV running arrangements.
RIIO-ED2 Business Plan
93
Figure 43: Typical 33kV urban interconnected network (left) and typical 33kV rural interconnected network
arrangement (right)
The unit protection schemes have protection relays that rely on pilot cables to ensure the protection relays at
either end of the circuit communicate correctly to detect and clear faults.
One type of 33kV unit protection relays used throughout the more urban and semi urban areas in called
‘Translay’ where the pilot cables are run overhead or over non-SP Manweb owned pilots. For safety,
isolation transformers are used between the pilot wires and the substation relay panels and protection relays
and staff. Other unique unit protection schemes include the MPR relay scheme which relies on
communication across telecommunication channels, some SP Manweb owned and others that are leased
from third party service providers.
The CSF adjustment is based on the protection R&M associated with the unit protection and bus bar
protection schemes which are unique to SP Manweb’s interconnected when compared to a radial design. The CSF adjustment value is £0.28m.
Changes from ED1
The methodology for calculating the CSF is consistent with the approach taken for ED1, which was allowed
in full following a review by Ofgem appointed consultants DNV GL. However, for ED2 we have
disaggregated these unique protection costs against the appropriate line within CV31 for Protection costs,
whereas in ED1 all CSF protection costs were shown against the respective lines for 33kV CBs and
6.6/11kV CB (GM) secondary switchgear.
The actual CSF adjustment for ED1 is detailed in the new CSF memo table M25.
Other options considered
Like switchgear, protection systems including batteries the R&M activities and interventions are determined
by established policies and robust work practices that comply with statutory requirements, ensure safety,
minimise risk of failure, prolong asset life, make cost effective interventions to ensure plant, switchgear and
protection systems perform reliably. Whilst R&M activities look to use new or innovative approaches as well
as opportunities to use new technologies the efficient delivery of our R&M programmes is a licence condition
for which there are no other options.
Cost mitigation measures
As in ED1, the efficient delivery of ED2 R&M will also be through the effective co-ordination of our R&M
plans with our investment modernisation and refurbishment plans, i.e. touch once approach during the
period., which we have reflected in our overall ED2 submission.
Relevance of approach to strategic aims
The ED2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
5.8.3.4 Primary 33kV transformers
Basis of proposed costs
Operational repair and maintenance costs are driven by existing policies in order to comply with statutory
requirements, ensure safety, minimise risk of failure, prolong asset life, make cost effective interventions to
ensure plant, switchgear and protection systems perform reliably. The R&M activities are based on the SP
Manweb substation maintenance policy, SUB-01-009 inclusive of post fault maintenance requirements.
RIIO-ED2 Business Plan
94
Existing policies set out the repair and maintenance intervention activities, ranging from a full major
maintenance (including oil change) through to trip testing and condition monitoring. Subject to the
manufacturer type, operating voltage and intervention activity the policy determines the frequency of when
R&M is performed
We have calculated the costs associated with R&M Opex for 33kV primary transformer by reviewing the
volumes of assets compared to an equivalent radial network. Based on the R&M policies for interventions
required for oil plant and associated voltage control equipment the total R&M Opex across RIIO-ED2 is
£1.24m of which we calculate the R&M activities that contribute to the CSF as £0.46m.
Changes from ED1
The methodology for calculating the CSF for primary 33kV transformers was an oversight as it was not
included in the ED1 CSF submission. Like the approach and justification for primary 33kV transformer
modernisation in the ED2 CSF, we have applied the same principles to calculate the R&M CSF for the ED2
period.
The actual CSF adjustment for ED1 against this R&M activity is shown in the new CSF memo table M25.
Other options considered
Like switchgear, primary 33kV transformer R&M activities and interventions are determined by established
policies and robust work practices that comply with statutory requirements, ensure safety, minimise risk of
failure, prolong asset life, make cost effective interventions to ensure plant, switchgear and protection
systems perform reliably.
Whilst refurbishment proposals are built into our ED2 plan it does not replace the need for routine R&M
activities on primary 33kV transformers. Also, there are trials we are progressing with new innovative oil re-
generation approaches with the aim to retard insulation degradation, thus extending transformer usable life.
On this basis we do not believe it provides a viable option for R&M costs.
Cost mitigation measures
As in ED1, the efficient delivery of ED2 R&M will also be through the effective co-ordination of our R&M
plans with our investment modernisation and refurbishment plans, i.e. touch once approach during the
period, which we have reflected in our overall ED2 submission.
Relevance of approach to strategic aims
The ED2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
5.8.3.5 Underground pilot wire repairs
Basis of proposed costs
The use of underground pilot wires is an integral part of SP Manweb’s unit protected design for both its 11kV and 33kV interconnected network with circa 3,665km of underground pilot wires across its 11kV X-type and
nearly 2,000km of underground pilot associated with its 33kV underground cable network.
The underground pilot cables owned by SP Manweb ensure the safe and effective operation of its unique
unit protection schemes and when pilot cables degrade beyond an adequate condition, associated protection
schemes are likely to fail to operate correctly which may cause danger to the public and/or increased
interruptions to customer’s supplies. Tests have shown the insulation resistance has degraded on some protection pilot assets, some to levels where protection operation would be affected if called to operate.
RIIO-ED2 Business Plan
95
SP Manweb’s exceptional supply reliability in urban area, as highlighted in section 3, is dependent on the
reliability and effective operation of its underground pilot cables.
For a typical radial network, a direct comparison is not available as other DNOs do not operate an
interconnected X-type 11kV network and do not utilise pilot cables for 33kV network unit protection,
particularly for intertrip signalling. The requirement for ongoing repairs and maintenance of underground pilot
cable is essential to the performance and reliability of SP Manweb’s network. The relevant EJP is ED2-
NLR(A)-SPEN-001-PROT-EJP – Light Current, Protection and Pilots, which covers non-load proposals for
ED2.
In ED2, we have only allowed for carrying out 365 repairs on underground pilot cables associated with the
11kV interconnected X-type network which contributes £0.55m to the CSF value.
Changes from ED1
The methodology for R&M has changed from the CSF proposal for ED1 in that the ED2 CSF focuses on the
unique underground pilots, of which there is a high proportion of 3-core pilot cables, which support 11kV
protection applications in the SP Manweb X-type network. These are predominantly in urban areas across
Merseyside and Wirral.
The actual CSF adjustment for ED1 against this R&M activity is shown in the new CSF memo table M25.
Other options considered
There is a large installed asset base of protection only underground pilots in SP Manweb, which is detailed in
section 3.4.1, Figure 17. There are dedicated pilots with small numbers of cores for protection applications
which are essential to ensuring clearance of faults within design clearance times. Alternatives for providing
the same reliable form of protection tripping and inter-tripping on the 11kV interconnected network are not
available.
Cost mitigation measures
Like cable fault location, pilot cables require the effective use of similar fault location techniques to pre-locate
and pin-point cable sheath faults, or cable faults caused by earth contact or particularly the ability to measure
insulation resistance, which is critical to the performance of the pilot cable for correct protection operation.
The efficient and effective use of these types of fault location devices is essential in mitigating costs for this
repair activity for which dedicated operational engineers and technical team members are trained and
proficient in their use.
Relevance of approach to strategic aims
The ED2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
5.8.3.6 Primary and secondary substation civil repairs
Basis of proposed costs
SP Manweb plan to undertake a £6.45m programme of civils R&M to improve the condition of our secondary
substations. The costs associated with X-type, brick-built substations are unique to SP Manweb’s network. We have therefore scaled the investment by the number of indoor secondary substations in SP Manweb
compared to an equivalent radial network (factor of 1.61 – see Section 5.7.9.1), leading to a CSF adjustment
of £2.45m.
A £2.34m programme of civils R&M is planned to improve the condition of our primary substations. To
calculate the primary civils R&M cost of an equivalent radial network for comparison, we have scaled the
RIIO-ED2 Business Plan
96
investment by the number of primary sites in SP Manweb compared to an equivalent radial network (factor of
2.1 – see section 5.7.7). On this basis we have calculated a CSF adjustment of £1.22m for ED2.
Changes from ED1
The methodology for calculating the CSF for civil R&M in ED1 for both primary substations and secondary
substations was an oversight as it was not included in the ED1 CSF submission.
From the review of the CSF for ED2, the approach and justification for the CSF costs for non-load primary
33kV assets have been applied to calculate the civil costs associated with the R&M CSF, which we have
calculated a CSF value of £.1.2m over the 5-year period.
For HV secondary substations we have only considered the civil R&M costs associated with the upkeep and
maintenance of SP Manweb’s unique X-type substations. Based on this approach we have calculated a CSF
value of £2.45m over the 5-year period.
The actual CSF adjustment for ED1 against this R&M civil repairs activity is shown in the new CSF memo
table M25.
Other options considered
Operational repair and maintenance costs are driven by existing policies in order to comply with statutory
requirements, ensure safety, minimise risk of failure, prolong asset life, make cost effective interventions to
ensure plant, switchgear and protection systems perform reliably. R&M civil activities form part of this overall
asset management strategy. To ensure its effectiveness a quality management policy is in place for all Civil
and Groundwork associated with both Transmission & Distribution Substation / Sites. The procedure is
documented under QUAL -10-013 Issue 4.
Cost mitigation measures
As in ED1, the efficient delivery of ED2 R&M will also be through the effective co-ordination of our R&M
plans with our investment modernisation and refurbishment plans, i.e. touch once approach during the
period, which we have reflected in our overall ED2 submission.
Relevance of approach to strategic aims
The ED2 plan is based on the ‘Engineering Net Zero’ model, that will deliver our customers’ requirements as the UK transitions to Net Zero, whilst maintaining a safe, resilient and efficient network.
RIIO-ED2 Business Plan
97
6. Glossary
ACB Air Circuit Breaker
ATOS Average Time Off Supply
CAI Closely Associated Indirects
Capex Capital Expenditure
CB Circuit Breaker
CCTV Closed Circuit Television
CI Customer Interruption (of over 3 minutes)
CML Customer Minute Lost
CNAIM Common Network Asset Indices Methodology
CSF Company Specific Factor (Manweb’s unique interconnected network)
CV Costs and Volumes
DNO Distribution Network Operator
DSO Distribution System Operator
EHV Extra High Voltage (typically 33kV)
EJP Engineering Justification Paper
ESQCR Electricity, Safety, Quality and Continuity Regulations
EV Electric Vehicles
GM Ground Mounted
HI Health Index
HV High Voltage
ID Indoor
IT&T Information Technology and Telecommunications
kV 1,000 volts
LPN London Power Networks
LV Low Voltage
MEAV Mean Equivalent Asset Value
MM Mott MacDonald
MVA Megavolt-ampere (1 million volt-amperes, power)
OD Outdoor
Opex Operation Expenditure
PB PB Power Ltd., was Parsons Brinckerhoff, now part of WSP
R&M Repair and Maintenance
RIIO Revenue = Incentives + Innovation + Outputs
RMU Ring Main Unit
RTU Remote Terminal Unit
SCADA Supervisory Control and Data Acquisition
SPD SP Distribution
SPM SP Manweb
Totex Total Expenditure
UCM Unit Cost Manual
UG Underground
UKPN UK Power Networks
98
Recommended