Annex 4A.20: Network Operating Costs Strategy

Annex 4A.20:

Network Operating Costs Strategy

RIIO-ED2 Business Plan December 2021

RIIO-ED2 Business Plan

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Contents

1. AN INTRODUCTION TO THIS ANNEX ....................................................................................... 3

2. EXPENDITURE SUMMARY ........................................................................................................ 7

RIIO-ED1 to RIIO-ED2 Performance ........................................................................................ 8 Company Specific Factors – SP Manweb ................................................................................. 8

3. CV26 AND CV28 – FAULTS AND OCCURRENCES NON-INCENTIVISED (ONIS) ................. 9

Introduction ................................................................................................................................ 9 Updates from Draft Submission ................................................................................................ 9 Technology Development ....................................................................................................... 10 CV26 Faults............................................................................................................................. 12 CV28 Occurrences Non-Incentivised (ONIs) .......................................................................... 19

4. CV27 SEVERE WEATHER 1 IN 20 STORMS .......................................................................... 21

Overview ................................................................................................................................. 21 Updates from Draft Submission .............................................................................................. 21 Cost and Volume Summary .................................................................................................... 22 DPCR5 and ED1 Performance ............................................................................................... 22 Key Changes for RIIO-ED2 ..................................................................................................... 24 Impact of Climate Change ....................................................................................................... 25 RIIO-ED2 CV27 Strategy ........................................................................................................ 25 ED2 Ex-Ante Allowance .......................................................................................................... 25

5. CV29 TREE CUTTING ............................................................................................................... 26

Overview and Expenditure Summary ..................................................................................... 26 Climate Resilience Strategy .................................................................................................... 27 ETR 132 Storm Resilience Strategy ....................................................................................... 28 Tree Cutting Impact on the Environment ................................................................................ 31

6. CV30 – INSPECTIONS .............................................................................................................. 33

Overview and Strategy ............................................................................................................ 33 Overhead Line Inspection – LV / HV / EHV networks ............................................................. 33 Overhead Lines/Steel Towers Inspections - 132kV ................................................................ 34 Cable Route Inspections ......................................................................................................... 34 Cable Tunnel and Bridge Inspections ..................................................................................... 34 Substation Inspections ............................................................................................................ 34 LV UGB (Link Boxes) Inspections ........................................................................................... 35 LV Pillar Inspections ................................................................................................................ 35 Service Termination Cut Outs Inspections .............................................................................. 35

Cost and Volumes Summary .................................................................................................. 36

7. CV31 – REPAIR AND MAINTENANCE .................................................................................... 37

Overview ................................................................................................................................. 37 Key Maintenance Policy Changes .......................................................................................... 37 Defect Repair .......................................................................................................................... 38 Cost and Volumes Summary .................................................................................................. 41

8. CV32 – DISMANTLEMENT ....................................................................................................... 43

Overview ................................................................................................................................. 43 Cost and Volume Summary .................................................................................................... 43

9. CV33 – SUBSTATION ELECTRICITY ...................................................................................... 43

Overview ................................................................................................................................. 43 Strategy to reduce substation electricity consumption ............................................................ 43 Cost and Volumes Summary .................................................................................................. 43


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10. CV34 – SMART METER INTERVENTIONS .............................................................................. 44

Overview ................................................................................................................................. 44 ED2 Smart Meter Intervention Programme ............................................................................. 44 Programme Cost and Volumes Summary .............................................................................. 45

11. CONCLUSION ........................................................................................................................... 46


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1. An introduction to this annex

Scope

This annex details the strategy for Network Operating Costs (NOCs) for SPD & SPM Licence areas for Faults, Repair and Maintenance, Inspections and DNO Smart Meter Interventions plan.

The scope of this annex relates to the NOCs activity (captured within the CV26, 27, 28, 29, 30, 31, 32, 33 & 34 Business Plan Data Tables) forecast to be undertaken during the RIIO-ED2 period in SPD and SPM.

These areas, summarised on the next page, generally fall under the definition of operating expenditure as few capital investments are made as part of this activity. These are the essential day-to-day network operations that we undertake to ensure the ongoing safety, resilience, and reliability of the network. Through managing and repairing faults, maintaining our equipment in a serviceable condition; extending life and deferring modernisation, managing vegetation growth in proximity to our lines, gathering essential condition and safety information on our network, and managing the routine costs of substation domestic electricity and equipment dismantlement.

Our NOCs strategy is designed to ensure a continued focus on protecting and maintaining our underlying asset infrastructure. This is critical for our customers to ensure they receive high levels of supply reliability and that interruptions are resolved safely and quickly. We aim to achieve this by continuing to improve our excellent existing operational practices, through greater use of digital technologies, and through innovation for longer term network safety and resilience. We have also reviewed the impacts of our first Climate Resilience Strategy (Annex 4A.7) with consideration of additional risks this has identified, which may impact our network operation.

This strategy incorporates the management of these requirements through application of our asset management policies, business strategy, assessment processes and techniques as well as considerations of sustainability and deliverability.

This strategy includes details of the inspection, repair, and maintenance we will undertake on LV, HV, EHV and 132kV (SPM Only) assets including transformers, switchgear, overhead lines, underground cables, protection systems, civil assets, and domestic cut-outs. Alongside our safety critical tree-cutting and Smart Meter programmes, and other routine network costs.

Key highlights Network Operating Costs (NOCs) refers to a range of necessary activities undertaken as part of the day-to-day safe operation and maintenance of the distribution network. This ensures the network continues to operate in a reliable, effective, and safe manner in compliance with our legal and regulatory requirements.

Our responsibilities begin with safeguarding our employees and the public from harm from our assets and extend to ensuring we provide an industry leading quality and continuity of supply through excellent asset stewardship.

SPEN is legally obligated to ensure the safety and reliability of the assets that make up our electricity distribution network. These legal obligations are defined within:

Electricity Safety, Quality and Continuity Regulations (ESQCR) 2002;

Electricity at Work Regulations 1989; and

Health and Safety at Work Act 1974.

Our policies, strategies, procedures, and practices have been developed to ensure not only do we comply with these legislative requirements, but additionally we are able to demonstrate an asset management strategy that meets the standards required by ISO 55000.

Our SPEN RIIO-ED2 Network Operating Costs (NOCs) plan is aligned with this strategy to allow us to deliver a plan which maximises performance, provides excellent customer service, value for money, operational efficiency, technical innovation and network resilience for customers, communities and stakeholders.

The activities and scale of outputs for each licence throughout ED2 which constitute Network Operating Costs are illustrated in figure 1 below.


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Figure 1: SPEN NOCs Activities and Outputs RIIO-ED2

CV26, CV27 & CV28 Faults:

In RIIO-ED2, we will invest £306.6m to continue to provide a 24/7 365 days a year efficient fault location and repair service, as we have done in RIIO-ED1. Advancements in technology and continued improvements in working practices will drive efficiencies across all faults as we equip our staff and contractors with the skills to maximise the technological benefits to deliver value to our customers. We will also continue to utilise generators to provide temporary restoration of supply wherever practical and efficient (particularly for our vulnerable customers) and embrace new zero-emissions developments such as battery or hybrid units.

CV29 Tree Cutting:

In RIIO-ED2, we will invest £82.0m to continue our vegetation management programmes. This is broadly in line with RIIO-ED1 but represents a small increase to ensure we meet our obligations in providing a safe and reliable network by routinely managing vegetation growth on over 9,500 kms of network. Through LiDAR technology and the introduction of a new Vegetation Management System (VMS) we are improving efficiency and working closely with our service partners.

We are conscious of the challenges presented by climate change, particularly vegetation growth rates and the advocacy of new vegetation disease and assessed these risks as part of our Climate Resilience Strategy (Annex 4A.7). The slight increase in our tree-cutting activity is partly affected by climate change, but we are keeping this under review, including understanding the impact of vegetation disease such as Ash Die-back.

CV30 Asset Inspections:

In RIIO-ED2, we will invest £21.3m to inspect more than 900,000 assets throughout RIIO-ED2 in line with our inspection policies. Where appropriate we have amended existing regimes based on a risk-based approach and by making use of developing technologies.

Additionally, we have introduced a programme of LV service cut out inspections which will provide us valuable information on the asset population in over 145,000 properties. The introduction of new innovative technologies such as the Thor hammer, drones, and thermal visual equipment, has provided an opportunity to improve the quality and depth of the information we gather on our asset’s health and condition.

A robust, well managed inspection regime is key in providing the information and data necessary for our asset management systems which ultimately drive our repair, maintenance, and modernisation strategies. We are also investing in new IT systems to facilitate continued improvement in this area.


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CV31 Repair and Maintenance:

In RIIO-ED2, we will invest £93.1m to operate a frequency-based maintenance programme for our assets throughout the period. We will continue to review our strategies and policies considering latest information regarding our asset condition, which will drive the frequency and interventions needed, e.g. for oil filled equipment.

We will improve our understanding of our fleet of transformers thorough the increased industry-approved oil testing across all voltages. Our repair strategy will focus on the plant types most prone to defects, such as LV link boxes, LV Pillars and transformers and we aim to reduce outstanding defects on these asset types by 30% the end of RIIO-ED2.

CV32 Dismantlement:

In RIIO-ED2, we forecast to spend £1.2m to remove redundant assets which have been identified as no longer required in a timely, efficient, and sustainable manner. As well as reducing the presence of our network where it is not required, this will improve our overall safety and sustainability by removing asset risks.

C33 Substation Electricity:

In RIIO-ED2, we forecast to spend £21.4m on energy bills for our population of over 34,000 substations. We foresee that modernisation of the internal electrical system will enable us to identify and realise efficiencies through the deployment of low energy lighting and heating by the end of RIIO-ED2

CV34 Smart Meter Interventions:

In RIIO-ED2, we forecast to spend £21.2m in line with the UKs governments target to have Smart Meters installed in every home by the end of 2025, SPEN will continue to provide support for the approved meter installers to ensure each service position is in a condition suitable to receive a Smart Meter.

Benefits

The RIIO-ED2 period aligns with wider societal change. During this time distribution networks will be a key enabler of Net Zero and will stimulate the national Green Recovery.

Network utilisation is forecast to be stressed beyond the original design capacity of the network. Complexity of network operation is increasing significantly as we rely on flexibility, DSO constraint management and innovation for real-time advanced network management. The criticality of our assets is rising as customers transition to Net Zero and connect greater numbers of electric vehicles and heat pumps in response to the climate change drivers. All of this is set against the unavoidable and continuous deterioration of our asset base.

Our RIIO-ED2 asset management plans will ensure the safety, reliability, and resilience of the network is maintained by investing in the underlying integrity and health of our existing asset infrastructure. This ensures the network can support the forecast growth in demand, generation, complexity of operation and new DSO functionality required to allow our customers to decarbonise, and the UK to transition to Net Zero.

Why Asset Management is important in RIIO-ED2

our customers are increasingly

dependent on a reliable

electricity supply as they

increasingly use electricity for

transport and heating.

Our customers depend

on us…

our plans will manage the

deterioration of our assets in

RIIO-ED2 by targeting

modernisation on our poorest

condition assets, promoting life

extension where possible, and

prioritising assets with the

greatest consequence of failure.

We are managing an

ageing and deteriorating

asset base…

the electrification of heat and

transport will increase network

power flows. Network assets

will be operating at a higher level

of utilisation, increasing the

deterioration (‘wear and tear’ rate) of assets.

We are pushing the

network harder…


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Our customers have four areas which are regarded as a priority above all others in relation to their electricity supply: reliability, safety, cost-efficiency, and the freedom to consume when they want (domestic customers especially do not want to be constrained).

The challenge for us in RIIO-ED2 is to continue delivering these priorities against a radically changing energy landscape. In RIIO-ED2 we have a critical role to ensure the underlying network infrastructure is reliable, resilient, and safe so that the customers’ needs can be met, and we can deliver a just transition to Net Zero.

Customer and stakeholder input We have undertaken significant stakeholder engagement as part of our plan development and have sought feedback from a range of stakeholders. See Annex 3.1 – Co-Creating our RIIO-ED2 Business Plan with our Stakeholders for more information on this process. Following this engagement, we have developed the below commitments for RIIO-ED2 which are relevant to this Annex:

1. As a steward of critical national infrastructure, we will maintain our ISO55001 accreditation and ensure all our asset managers are certified with the Institute of Asset Management. We will continue our strategic partnership with the IET and our leading contribution to the IEEE, CIGRE and CIRED.

o Stakeholder feedback phase 3, S3.2 Stewardship of Critical National Infrastructure: - 60% of stakeholders strongly agreed and 33% agreed that this commitment is ambitious enough. Further 7% of stakeholders felt neutral and none disagreed.

o Customer acceptability phase 3, C3.2 Stewardship of Critical National Infrastructure: There was 97.03% acceptability for this commitment.

2. Building on our extensive RIIO-ED1 work, we will take a proactive approach to overhead line issues by adopting a risk based, digitalised inspection regime with the use of LiDAR (flying one third of our network per annum). In addition to this we will rectify all reported and confirmed overhead line clearance issues within 12 months of discovery.

o Stakeholder feedback phase 3, S3.7 Innovative approach to improving OHL safety: Stakeholders suggested that SPEN should continue to offer regular awareness training and where happy to accept increase in innovation costs to ensure keeping the network safe

o Customer acceptability phase 3, C3.7 Innovative approach to improving OHL safety: There was 97.02% acceptability for this commitment.

Delivering our Plan

Our RIIO-ED2 plans have been developed such that expenditure and delivery profiles are consistent with RIIO-ED1. This ensures deliverability throughout the price control period.

The key differences between RIIO-ED1 and RIIO-ED2 for the strategy covered by this annex are:

Advancements in technology and continued improvements in working practices will drive efficiencies across the faults arena as we train our staff and contractors with the skills to maximise the technological benefits in delivering value to our customers

investing in new IT applications to facilitate continued improvement of inspections, repair, and maintenance

Refer to the EJPs and other Annexes detailed throughout this annex for further details on deliverability and our RIIO-ED1 track record.

Wherever possible we will schedule our activities to align with other works and capital investments, for example aligning tree cutting with overhead modernisation, and aligning modernisation with maintenance programmes.

Signpost for Ofgem’s business plan requirements

Ofgem BP Guidance No Annex Page Number 5.22 Full Annex


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2. Expenditure Summary

The proposed RIIO-ED2 expenditure relating to the activities within this annex total £546m over 5 years.

Overall SPEN’s planned expenditure on Network Operating Costs within RIIO-ED2 price control period has increased by 9.6% per annum in comparison with expenditure in the first 6 years of RIIO-ED1.

Table 1 : SPEN RIIO-ED2 NOCs Expenditure Summary

The table and charts below summarise these costs amongst the various activities and how RIIO-ED2 planned expenditure in each of the NOCs activities has changed relative to expenditure within RIIO-ED1.

Table 2: SPEN RIIO-ED2 NOCs Activity Expenditure Summary

Figure 2 : SPEN RIIO-ED2 NOCs Expenditure by Activity


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RIIO-ED1 to RIIO-ED2 Performance

Figure 3 and Figure 4 show the RIIO-ED1 actuals (2016 - 2021), RIIO-ED1 forecast (2022 & 2023) and RIIO-ED2 forecast (2024 – 2028) for SPD and SPM respectively.

Figure 3: SPD RIIO-ED1 to RIIO-ED2 Performance

Figure 4: SPM RIIO-ED1 to RIIO-ED2 Performance

Company Specific Factors – SP Manweb

The SP Manweb (SPM) network is unique due to its interconnected design, which followed a different design philosophy in the post-war period. Over half of the SPM 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. 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.

Network Operating Costs (NOCs) are impacted by this network design in SPM. The full increase is £15.20m across CV26 Faults, CV30 Inspections and CV31 Repair and Maintenance. This is broken down as follows:

CV26 Faults, £7.62m: 33kV Cable Repairs and LV Underground Network Activities

CV30 Inspections, £0.06m: Thermovision Inspections

CV31 Repair and Maintenance, £7.53m: Multiple Asset Types including 33kV Primary Transformers and 11kV X-Type RMUs


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3. CV26 and CV28 – Faults and Occurrences Non-Incentivised (ONIs) Introduction

Whilst our investment programmes and routine inspections, repairs and maintenance interventions aim to minimise their likelihood, there will inevitably be network faults on our distribution network.

When faults happen, our priority is to minimise the impact of supply interruptions by responding effectively to restore supplies safely and quickly. In both our licence areas, SPEN uses remote telecontrol and network automation, as well as protection equipment to reduce the number of customers affected by a fault and the time that those customers who are affected are without power.

The proactive use of remote telecontrol and utilisation of network monitoring devices means that our network management control centres can quickly reconfigure the network during fault switching to reduce the impact to customers and to isolate sections of the network when there is a potential safety issue reported. See our Network Performance Annex 4A.5 for more details on how we will manage unplanned interruptions for our customers.

Some faults are intermittent in their nature; we proactively investigate and monitor these events to minimise inconvenience to customers and to deploy fault and network monitoring technology to allow the problem to be located and rectified. Where permanent faults are found our focus is on restoration of supply and to repair the fault to return the network to its normal running arrangements, and whenever possible to undertake the repair or replacement works with minimum disruption to customers and public.

In addition to the use of new fault location technology, consideration of safety, cost and customer service, generators and other temporary arrangements will continue to be utilised to restore supplies where repairs are expected to take longer.

The use of generators to restore supplies has increased during RIIO-ED1 and we recognise they are important to improve customer’s experience. Our strategy is to continue to use generators when appropriate and to seek to introduce generator units that are hybrid or battery powered to support the transition to Net Zero.

Having locally based teams across our geographical areas, working to provide operational standby 24/7 with expert knowledge and experience, allows us to restore customers as quickly as possible. The availability of local staff and contract partners who provide specialist support with tree clearance and generator provision, means when we are impacted by poor weather, we are able to mobilise and respond as quickly as possible when we have increased levels of fault activity.

We use local stocks so that when fault repairs are required, they can be fixed quickly and without excessive transport or logistics times. Our most frequently used stock items are held locally with less-frequently required materials and equipment held at our regional stores, this can affect some restorations but is deemed to provide efficient operation.

In the SP Manweb licence region, some parts of the urban network benefit from its unique legacy interconnected design. For faults on its interconnected 11kV and 33kV underground network, customers experience a supply interruption on average once in 45 years. The benefits and other features of SP Manweb unique network are discussed further in Annex 4A.25 under Company Specific Factors (CSF).

Updates from Draft Submission

We have presented continuity in our strategy, volumes, and costs throughout our business plan for final submission, but for CV26 Faults and CV28 ONI, there have been some updates.

The updates for the final RIIO-ED2 BPDT for CV26 Faults are:

LV Underground (Non-Consac) Faults: Increase in volume as an increasing trend was observed from the 6-year actuals (2016-2021), finalised between draft and final submission.

RIIO-ED2 Commitment #16

We will improve the reliability of our supply to customers, ensuring that on average customers will be 19% less likely to experience an unplanned interruption, and average duration will reduce by 19%. We will do this over the duration of RIIO-ED2 by investing in new and proven technologies and by embedding innovation.


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EHV Underground Faults: Increase in volume as an increasing trend was observed from the 6-year actuals (2016-2021), finalised between draft and final submission. The increase in RIIO-ED1 is more extreme seasonal peaks.

Unit Cost Updates: A new framework for underground excavation was agreed with costs reflected in the final plan BPDTs. This framework is aligned with increasing costs for materials and labour in the UK.

These updates were minimised to reduce the impact on the final plan but were important updates to ensure our costs are accurate and robust.

The updates for the final RIIO-ED2 BPDT for CV28 ONIs are:

Cut Out Volumes: Increase in volume as an increasing trend was observed from the 6-year actuals (2016-2021) that became available between draft and final submission.

Unit Cost Updates: A new framework for underground excavation was agreed with the costs reflected in the final plan BPDTs. This framework is in line with the increasing costs for materials and labour in the UK.

The change from draft to final plan is minimal for CV28 ONIs, with only minor unit cost updates applied to ensure an accurate reflection of costs during the RIIO-ED2 price review.

Technology Development

During RIIO-ED1 we have developed and deployed new technologies in fault location and network monitoring to improve how we manage the network and respond to intermittent and permanent faults that occur with a view to reducing the inconvenience to customers and aid the approach to how we undertake fault repairs.

Similarly, we have used this technology to support our asset management approach and to prioritise the investment decisions we make. Figure 5 shows an extract from our LV underground faults mapping application. This allows us to map fault history and location against our Geographical Information Systems (GIS) for the LV cable network. See Annex 4A.11 Cable Modernisation Strategy for examples.

These developments include our LV network mapping and modelling systems and use of LV Monitors, smart LV link box sensors, Bidoyngs and Rezap devices. These allow us to respond better and, in some situations, allow intervention before a permanent fault occurs. See Annex 4A.21 Network Visibility Strategy for more details on how we intend to roll-out LV Monitoring in RIIO-ED2.

Figure 8 shows an example of a ‘VisNet Hub1’ which has been successfully used to identify pre-fault conditions on underground LV cable in combination with LV fault impedance mapping (Figure 6). Subsequent on-site checks using ‘fault sniffer’ technology (Figure 7) provide the fault location allowing planned repairs prior to a permanent fault occurring on the network and minimising the inconvenience to customers.

1 Product name of an LV Monitoring device being deployed in SPD and SPM.

Figure 5: - LV UG Faults Mapping Dashboard


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We will continue to use drones on our overhead network where it is appropriate and effective to check overhead lines and pole top equipment for signs of damage to allow us to locate and repair faults quicker.

Similarly, on our HV network the development of our innovative ‘SINE Post’ system (NIA_SPEN0012) allows field data from Power Quality Monitors (PQMs) to be analysed automatically to provide alarms directly into our network management system PowerON detailing potential fault locations on the circuit. This can help reduce fault restoration time by getting teams to right location more quickly.

Figure 10: Picture of Defect from Drone Survey

Figure 9: Drone Used for OHL Surveying

Figure 11: SINE Post System Displayed on PowerOn

Figure 8: VisNet Hub Figure 7: Cable Sniffer Figure 6: LV Fault Impedance Mapping


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Figure 11 shows this technology in use, illustrating the potential search area for an overhead line fault identified through the impedance modelling algorithms used by SINE Post.

In accordance with regulatory requirements we report all our fault activities against two main regulatory categories which are covered by the Interruption Incentive Scheme (IIS) against CV26 and the Occurrences Non-Incentivised (ONIs) which are reported against CV28. These activities are outlined in more detail below.

CV26 Faults

Nearly all unplanned incidents that 1. affect the supplies to customers (except for faults beyond the cut out) or 2. affect a network components ability to carry load current for more than 3 minutes, are reported under CV26.

Whilst there are annual variations, due to changes in weather-related conditions, third-party damages, overall asset condition and other factors that affect the wide and diverse geography of our networks, on average we experience around 20,000 incidents each year that are incentivised under IIS.

The costs incurred during RIIO-ED1 and forecast for the remainder of RIIO-ED1 and RIIO-ED2, are shown below. This includes fault location, repair, and our wider response (including exceptional events).

The forecast profile over the 5-year RIIO-ED2 period in both licence areas remains largely stable and consistent with RIIO-ED1. There is a small increase of around a 1% in overall total volumes in RIIO-ED2 because of increasing fault trends over DPCR5 and RIIO-ED1. Across individual categories, the RIIO-ED2 forecast trend and run rates are generally consistent with reported volumes in RIIO-ED1, as shown in aggregate in Figure 12, Figure 13, and Figure 14.

This is with the exception of LV and EHV underground cable faults which continue to show an increasing trend, and LV, HV and EHV overhead line faults which have a slightly reducing long-term trend.

We are completing LV and 33kV cable modernisation overlays to combat the increasing trend in underground cable faults, as well as the targeted removal of a known defective joint on 33kV cable circuits. Further information on these plans are included within the following EJP papers: ED2-NLR(A)-SPEN-001-UG-EJP EHV Underground Cables and ED2-NLR(A)-SPEN-003-UG-EJP LV Underground Cables.

Figure 12: SPM CV26 Volume by Voltage (LV & HV)

Figure 13: SPM CV26 Volume by Voltage (EHV & 132kV)

6,942 6,900 6,899 6,7457,501 7,422 7,125 7,125 7,250 7,250 7,225 7,241 7,251

2,200 2,089 2,286 2,540 2,345 2,344 2,250 2,250 2,228 2,244 2,264 2,276 2,296

0

2,000

4,000

6,000

8,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

RIIO ED1 RIIO ED2

SPM CV26 Fault Volumes - ED1 & ED2 Forecast

LV

HV

270

338 357421

319 313 300 300328

361314 330

294

47 63 56 55 33 45 43 43 50 48 48 46 47

0

100

200

300

400

500

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

RIIO ED1 RIIO ED2

SPM CV26 Fault Volumes - ED1 & ED2 Forecast

EHV

132kV


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Figure 14: SPD CV26 Volume by Voltage

The above forecasts have been developed through extensive analytical review of fault volumes reported across the RIIO-ED1 period to date. We have also completed an assessment of the impacts of all planned interventions. For instance, the significant LV cable modernisation programme, and secondary reinforcement LV cable overlay programme, has reduced the increase in forecast LV underground cable faults.

This comparison with planned interventions is particularly important where forecast planned interventions are significantly above RIIO-ED1 rates. This is because the ongoing increasing trend in faults (particularly on the underground network) is being observed contemporaneously with the RIIO-ED1 planned programme.

Our review analysed each individual fault category in detail. The overall approach was to derive the RIIO-ED1 average fault volumes over the 3 most recent years of reported fault information. This gives confidence in a baselined fault volume forecast to be produced for RIIO-ED2, extrapolated over the 5-year period. Known adjustments are then applied to the baseline forecast based on engineering assessment e.g. the impacts of planned LV cable modernisation.

Forecast fault volumes were then benchmarked across industry fault rates from regulatory reporting data-share over the first 6-years of RIIO-ED1. This ensures forecasts for SPD and SPM are consistent with the range of industry historical fault rates, barring consideration of any known adjustments e.g. 33kV underground cable faults arising from known defective joints.

Once volumes were confirmed a faults unit costs exercise was completed to reflect a review of RIIO-ED1 actual performance and tested for efficiency against benchmark comparison with the median of GB DNO unit cost for each fault category reported in RIIO-ED1 (from 2015/16 to 2020/21). These unit costs were tested against a bottom-up fault repair costing activity for typical underground and overhead fault repairs. This combined approach gives high confidence that the costs applied for forecast fault volumes are efficient and reliable.

Costs associated with SPMs LV underground network and EHV cable network are subject to Company Specific Factors, detailed in Annex 4A.25 SP Manweb Company Specific Factors.

3.4.1 Cost and Volume Summary

The following charts and tables illustrate how the expenditure is distributed between the various system voltages and asset type for each licence. A comparison with SPEN’s actual expenditure for the first 6 years of RIIO-ED1 on an annual basis is included.

Table 3 : SPEN CV26 Expenditure Summary

8,5087,694 7,632 7,994 7,638 7,313 7,357 7,357

7,979 7,930 7,902 7,882 7,852

2,718 2,439 2,3893,120

2,641 2,531 2,570 2,570 2,771 2,788 2,811 2,825 2,845

318 312 272 389 258 283 289 289 310 319 301 292 272

0

2,000

4,000

6,000

8,000

10,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

RIIO ED1 RIIO ED2

SPD CV26 Fault Volumes - ED1 & ED2 Forecast

LV

HV

EHV


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Table 4: SPEN CV26 Expenditure by Voltage and Licence

Table 5: SPEN CV26 Expenditure by Asset Category and Licence

Figure 15: SPM CV26 Expenditure and Volume by Voltage/Asset Type and Licence


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Table 6: SPM CV26 Expenditure and Volume by Voltage/Asset Type and Licence


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Figure 16: SPD CV26 Expenditure and Volume by Voltage/Asset Type and Licence

Table 7: SPD CV26 Expenditure and Volume by Voltage/Asset Type and Licence


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The expenditure for CV26 reportable incidents includes assets replaced following a fault or interference with our network, in accordance with Ofgem regulatory instructions and guidance (RIGs) under Appendix 8 of Annex B - Costs and Volumes.

Whilst the overall RIIO-ED2 volumes are mainly consistent with reported volumes in RIIO-ED1, there are regional variations in the volume of fault incidents reported under the different fault categories shown in CV26.

These reflect the different physical topology and geography of the networks in SP Manweb and SP Distribution. Our RIIO-ED2 forecast takes the impact of different network investment requirements to improve reliability and performance into account. Some useful examples of this are detailed in the following Engineering Justification Papers (EJPs) referenced below.

• ED2-NLR(A)-SPEN-001-QOS-EJP Network Performance (QoS) – Annex 4A.5

• ED2-NLR(A)-SPEN-001-UG-EJP EHV Underground Cables – Annex 4A.11

• ED2-NLR(A)-SPEN-002-UG-EJP HV Underground Cables – Annex 4A.11

• ED2-NLR(A)-SPEN-003-UG-EJP LV Underground Cables – Annex 4A.11

• ED2-NLR(A)-SPEN-001-OHL-EJP - EHV Overhead Line Modernisation

• ED2-NLR(A)-SPEN-002-OHL-EJP - LV & HV OHL Modernisation

• ED2-NLR(A)-SPEN-004-RES-EJP - OHL Clearances

3.4.2 Overhead and Underground Network Comparison

At the start of RIIO-ED2, we will have 68,513km of UG Network and 38,442km of OHL network in SPEN.

This asset base is set to increase over RIIO-ED2, and optimised and pro-active asset replacement programmes will seek to remove deteriorated, end of life assets from the network.

A breakdown of our network split by overhead (OHL) and underground (UG) is shown below in more in Table 8.

Voltage

SPD SPM SPEN

UG Main (km) OHL Main (km) UG Main (km) OHL Main (km) UG Main (km) OHL Main (km)

LV 24,332 2,245 17,697 4,454 42,029 6,699

HV 13,566 13,636 7,680 12,230 21,246 25,866

EHV 2,949 2,651 2,027 1,877 4,976 4,528

132kV 262 1,349 262 1,349

TOTAL 40,847 18,532 27,666 19,910 68,513 38,442

Table 8: SPEN OHL/UG Network Length by Voltage and Licence2

It is important to understand the difference between the OHL and UG networks, not just by voltage.

SPEN are forecasting an increase in faults for our UG networks, but a reduction in OHL faults. This is illustrated and supported by the trends displayed in the graphs below (Figure 17, Figure 18, Figure 19, Figure 20).

2 RIIO-ED2 V1 Total Asset Register


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Figure 17 : SPD CV26 Fault Volumes - ED1 & ED2 Forecast (OHL, Network Type and Voltage)

Figure 18: SPD CV26 Fault Volumes - ED1 & ED2 Forecast (UG, Network Type and Voltage)

Figure 19: SPM CV26 Fault Volumes - ED1 & ED2 Forecast (OHL, Network Type and Voltage)

Figure 20: SPM CV26 Fault Volumes - ED1 & ED2 Forecast (UG, Network Type and Voltage)

1040421

724 688

1130

8831070 1066

50 36 38 37

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10001200

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2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

RIIO ED1 RIIO ED2

SPD CV26 Fault Volumes - ED1 & ED2 Forecast

LV OHL

HV OHL

EHV OHL

3560 3774 3793 3751

530 581 566 588

155 136 154 1150

1000

2000

3000

4000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

RIIO ED1 RIIO ED2

SPD CV26 Fault Volumes - ED1 & ED2 ForecastUG, Network Type, Voltage

LV UG

HV UG

EHV UG

1685 1575 1462 1472

912 856 803 834

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1000

1500

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HV OHL

EHV OHL

132kV OHL

3061 3868 37753771

313 328 341 327

0

1000

2000

3000

4000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

RIIO ED1 RIIO ED2

SPM CV26 Fault Volumes - ED1 & ED2 ForecastUG, Network Type & Voltage

LV UG

HV UG

EHV UG

132kV UG


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CV28 Occurrences Non-Incentivised (ONIs)

Occurrences not incentivised (ONIs) are incidents we attend in response to calls made into our Distribution Call Centre (DCC) by customers or emergency services. These types of incidents are reported under CV28 – ONIs.

They include incidents where customers are not off supply but have a problem with the supply (such as reports of low or flickering lights), or there are signs of damage or a problem with the service cut out components that require our attendance.

Other situations may be associated with alleged interference with our equipment or reports from the public of a potential break-in to our substations, as well as situations where equipment may pose a hazard to the public, e.g. low conductors, which in some instances upon investigation may be found to be other utility apparatus.

On average, each year there are around 42,500 ONIs where a site visit is required to investigate and resolve a reported incident. The costs of this response and the associated repairs to the network are shown below.

The profile of the forecast in both licence areas of SPEN remains largely consistent over the 6-year period with a small increase overall in total volumes of circa +/- 1% reflected in the total SPEN RIIO-ED2 forecast. The trend and run rates are generally consistent with average reported volumes across the period.

Overall, the average annual expenditure is consistent with ED1.

Figure 21: SPM CV28 Volume by ONI Type

Figure 22: SPD CV28 Volume by ONI Type

3.5.1 COST AND VOLUMES SUMMARY

Table 9 : SPEN CV28 Expenditure and Volume Distribution by Licence


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Figure 23: SPEN CV28 Total Expenditure and Volume Expenditure by Voltage, Activity and Licence

Table 10 : SPEN CV28 Expenditure and Volume by Voltage , Activity and Licence


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4. CV27 Severe Weather 1 in 20 Storms Overview

A Severe Weather 1-in-20 Event is a period of 24-hours where the number of HV faults exceed a regulatory threshold set for each licence DNO. This threshold is currently 42x or more of the HV unplanned faults than the licence daily average (400 in SPD, 359 in SPM; V6 RIGs). The costs of more frequent, smaller storms are included in our normal fault costs under CV26.

SPEN’s overhead line network is built to latest technical specification and designed in line with industry standards to cope with varying weather conditions. Our investment programmes are aimed at improving the resilience of our overhead network and increased network automation (see our Network Performance Annex 4A.5) will improve the performance of our OHL network further.

SP Manweb (SPM) and SP Distribution (SPD) are regularly impacted by prevailing south-westerly winds, particularly around North Wales and Dumfries. Each year there are typically poor periods of weather with high winds that affect parts of our network resulting in fault activity levels several times the normal daily average volumes that we routinely manage and respond to. Whilst the scale of our organisation allows us re-direct resources internally during storms, we may also rely, on or be called to provide under, the North East South West Area Consortium (NEWSAC). This is for the provision of operational support between all DNOs. The compounded effect of managing high fault volumes during storms, can have the effect of driving much higher costs for repairs. This is reflected in our Severe Weather 1-in-20 Event strategy.

Climate change will continue to cause weather conditions to be more extreme through the RIIO-ED2 period. This, coupled with the increased reliance on the distribution network for Net Zero, will require our network and operating practices to be more robust than ever. This means having access to immediate funding to enact repairs when such an event transpires is more critical than ever. More details on the impact of climate change on our forecasts can be found in Section 4.6, and Annex 4A.7 – Climate Resilience Strategy.

The following sections will explain the background of our strategy including the likely impact on our network, fault management performance and Severe Weather Event trends. Section 4.7 and 4.8 will explain how costs for Severe Weather 1-in-20 have been derived for RIIO-ED2.

Updates from Draft Submission

We have presented continuity in our strategy, volumes, and costs throughout our business plan for final submission, but for CV27 Severe Weather 1-in-20 Events, there have been some updates.

For draft submission, we anticipated that the cost of a Severe Weather 1-in-20 event would be similar for SPD and SPM. However, further analysis showed that impact of Severe Weather 1-in-20 Events is greater in SPM, therefore the costs are greater in SPM, though there is also sufficient allowance for SPD.

We also believe that an uncertainty mechanism is required for CV27 Severe Weather 1-in-20, in particular to protect customers from baseline allowances being set too high, whilst still providing allowance for immediate event response, and to protect DNOs against actual costs being incurred far greater than baseline allowances.

In our final plan, we have submitted an increased ex-ante allowance for RIIO-ED2. This is essential for managing the immediate impact of a Severe Weather 1-in-20 Event, should they occur. However, an uncertainty mechanism is also required to return unspent allowances to customers or increase allowances in line with efficient expenditure if the impact is greater than planned. It is important to note that the likelihood, impact/scale, and number of events is unpredictable, and entirely outside of DNO control.

For the above reasons, it is difficult to predict the timing of this activity. As such we have reflected all costs in the final year of the price review in recognition that costs are likely to be captured within a single year of the price review, not linearly spread across the period.

Figure 24: February 2014 Storm (DPCR5 1 in 20 event)


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Cost and Volume Summary

Table 11 : SPEN CV27 Expenditure Summary

DPCR5 and ED1 Performance

SPEN have only experienced one Severe Weather 1-in-20 Event since DPCR5 in February 2014 in SPM.

The following analysis of fault performance across SPEN is for the overhead line network only. As it is most likely that a Severe Weather 1-in-20 event would be a storm predominantly affecting overhead lines.

4.4.1 SPM CV27 Performance

SPM have had one Severe Weather 1-in-20 event in DPCR5 (none in RIIO-ED1 to date). It occurred on Friday 14th February 2014 and cost £8.4m (some of this expenditure was reported in RIIO-ED1). Fault volumes passed the 359 threshold for SPM (LV - 790, HV - 763, EHV - 69 and 132kV – 6). The event was caused by extreme winds resulting in overhead lines, pole mounted transformers and overhead line poles being damaged.

4.4.2 SPM CV26 Performance

As an indicator of network reliability, figure 19 below shows all faults related to OHL reported from DPCR5 and ED1 (2016-2021) in CV26 – Faults.

Figure 25: SPM CV26 Volumes DPCR5 & ED1 Actuals

SPM saw its highest OHL faults volume of the RIIO-ED1 period in 2021 at 1,352 faults. As shown in Figure 25 above, this is mainly due to the rise of LV faults which has been on an upward trend during RIIO-ED1, despite a reducing trend during DPCR5. HV OHL faults have remained mainly stable with EHV faults reducing slightly. Through continued investment, we are mitigating OHL faults (section 4.5.1), but this is becoming increasingly difficult as anticipated extreme weather conditions become more frequent with climate change.

891

615

777

911

523 545

435

543587 603 658

789

693

778

986

694736

586634

688 666 672

44 40 29 37 33 25 29 18 36 25 22

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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

SPM CV26 Fault Volumes - OHL Assets

LV OHL CV26 Volumes HV OHL CV26 Volumes EHV OHL CV26 Volumes


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4.4.3 SPD CV27 Performance

SPD have had no Severe Weather 1-in-20 events in DPCR5 or ED1 to date.

4.4.4 SPD CV26 Performance

As an indicator of network reliability, figure 20 below shows all faults related to OHL reported from DPCR5 and ED1 (to date) in CV26 – Faults.

Figure 26: SPD CV26 Volumes DPCR5 & ED1 Actuals SPD saw its highest total volume of OHL faults during the RIIO-ED1 period in 2019 at 1,569 faults.

As shown in Figure 26 above, this is mainly due to a peak of 1,115 HV faults which was 35% higher than the following year and is a one-off peak during the RIIO-ED1 period. LV faults have been declining during RIIO-ED1 and EHV faults have also fallen slightly. Through continued investment, we are mitigating a lot of potential OHL faults, as shown in section 4.5.2, but this is becoming increasingly difficult as anticipated extreme weather conditions become more frequent with climate change.

4.4.5 Severe Weather Events in ED1 Across the UK

Severe Weather events happen in the UK every year, with DNOs affected differently depending on their network demographics. In Figure 27 below, the severe weather events for all DNOs and SPEN are displayed for ED1 showing the dramatically varying trend in severe weather events through the last six years.

Figure 27: ED1 Severe Weather Events - All Industry

377

856

585

810

535 496

374 342415

267186

773

1581

993

1609

1135

951

701765

1115

724 710

53 87 45 85 44 50 38 30 39 36 36

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SPD CV26 Fault Volumes - OHL Assets

LV OHL CV26 Volumes HV OHL CV26 Volumes EHV OHL CV26 Volumes

21

13

22

15

22

12

1 1 3 4

1 1

-

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2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

All ED1 Severe Weather Events (2016 - 2021)

All DNOs

SPEN


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Key Changes for RIIO-ED2

Comparing the network from the last Severe Weather 1-in-20 event in DPCR5 has seen three notable changes:

1. Significant network investment means the network is more robust

2. Investment into automation, particularly on overhead lines, will assist in restricting the impact of a Severe Weather 1-in-20 Event

3. Removing open wire LV OHL from the network will improve the LV network performance during storm conditions

4.5.1 SPM Asset Changes

Asset

DPCR5

(2011)

ED1

(2016)

Forecast Start of ED2

(2024)

LV HV EHV LV HV EHV LV HV EHV

OHL (km) ETR 132

Compliant 11 0 440 0 1,416 242

OHL Poles 125,536 166,517 21,221 127,120 165,021 20,640 126,672 165.331 20,622

OHL Poles (HI 1) 78,973 94,608 11,815 84,552 106,282 13,289 77,771 90,628 10,656

OHL Poles (HI 5) 12,235 12,048 1,597 11,333 9,689 1,341 8,512 11,646 1,178

Circuit Breaker (PM) 666 666 815

Table 12 : SPM Installated OHL Assets

Through the RIIO-ED1 period, SPM has focused on replacing HI5 assets, which has led to a more reliable network. Table 12Table 11 above shows example changes from RIIO-ED1 to the start of RIIO-ED2:

11.6% of our HV network will be ETR 132 compliant, compared to 3.5% in RIIO-ED1

7% of SPM’s poles were HI5 in RIIO-ED1, with that reducing to 6% in RIIO-ED2

22% increase in HV Pole Mounted CBs in ED2 from ED1 allowing for greater use of automation

4.5.2 SPD Asset Changes

Asset DPCR5 ED1

Forecast Start of ED2

(2024)

LV HV EHV LV HV EHV LV HV EHV

OHL (km) ETR 132

Compliant 38 0 652 70 5,539 874

OHL Poles 63,268 185,932 35,613 60,552 189,099 38,121 59,214 189,094 38,495

OHL Poles (HI 1) 30,142 105,946 20,182 33,610 119,215 22,567 37,883 105,775 18,617

OHL Poles (HI 5) 5,253 18,499 2,398 4,810 16,002 2,096 2,498 12,746 2,228

Circuit Breaker (PM) 915 845 946

Table 13: SPD Installed OHL Assets

Through the ED1 period, SPD has focused on replacing HI5 overhead assets, which has led to a more reliable and better condition network. Table 13 above shows that 41% of our HV network will be ETR 132 compliant in ED2, compared to 0.3% in ED1 therefore providing increase resilience in storm conditions.

SPD has less total OHL than SPM meaning that a Severe Weather 1-in-20 Event would be less likely for SPD than SPM.

4.5.3 Overhead Line Build Standards

SP Energy Networks always seeks to build reliable and robust overhead lines at all voltages that have the capability to withstand all anticipated environmental impacts from severe weather events. It is believed that the


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line specification should be to a suitable standard and the risk from contact with vegetation should be minimised where possible. The lines shall be deemed ‘fit for purpose’ with considerations given to the prevailing weather and topography.

In 2018, following the changes to ENA TS 43 – 40, SP Energy Networks updated its policies to build in added resilience. These changes have improved our overhead line performance as shown in sections 4.4.2 and 4.4.4 with fault rates reducing. The continued investment in our overhead line network through the remainder of ED1 and ED2 utilising these construction policies should ensure the continued improved of our network.

While the construction standard implemented on rebuilds on the overhead line network are improving network performance, it is impossible to rule out the potential impact of a Severe Weather 1-in-20 Event.

Impact of Climate Change

There is a significant reliance on the distribution network to enable NET Zero by 2050. Climate projections indicate that the weather will become more extreme with higher temperatures and lower rainfall in the summer, and lower temperatures and higher rainfall in the winter when comparing to previous years. This will put further strain on the distribution network, in particular the overhead line network. This was highlighted in the key network risks within Annex 4A.7 – Climate Resilience Strategy, with two relevant keys risks shown below for CV27:

AR14 Increased Lightning Activity: Overhead lines affected by increased lightning activity. This has been described as a medium-risk factor.

AR15 Hurricanes & High Winds: Overhead line structures affected by wind speeds not accommodated for in design. This has been described as a high-risk factor.

Precipitation will get more extreme, with higher rainfall projected in the winter months ranging between 10.5% - 15.7% increase over the next 60 years. In comparison, lower summer rainfall is due to increase the risk of drought and earth moments.

Near-surface wind speeds are due to increase over the same period. While UK specific data is limited for climate extremes such as lightning and storms, the Intergovernmental Panel on Climate Change (IPCC) suggests that in a warmer climate there could be a poleward shift of storm tracks, increasing storm activity in higher latitudes (e.g. the UK), typically also associated with increased ocean temperatures.

Further details in section 4, 5 and 6 of Annex 4A.7 – Climate Resilience Strategy.

RIIO-ED2 CV27 Strategy

The CV27 Severe Weather 1-in-20 costs have been derived through the following process:

1. CV26 OHL Fault Cost: Separately for each licence, the average unit cost for OHL faults during RIIO-ED1 (2016-2021) was then split by licence and used as the cost basis for CV27.

2. 24 Hour Period Fault Limit for Severe Weather Events: The RIGs stipulate that each licence has a different threshold to meet the Severe Weather 1-in-20 Event definition. For SPD this factor is 400x the average daily HV (and above) fault count, SPM is 359x.

3. Severe Weather 1-in-20 Uplift Factor: Due to the inherent nature of a 1-in-20 Storm Event, a factor of 200% (doubled) has been applied to the costs derived from the previous steps.

4. Baseline of DPCR5 Event: To ensure the accuracy of the result of the previous steps, the costs were baselined against the 2014 event. SPM costs for RIIO-ED2 are in line with 2014 event and are determined to be reasonable.

This process has allowed us to have confidence in our baseline costs in an activity that is otherwise very uncertain. However, we also believe that an uncertainty mechanism has an important role to play for these costs in the event that far greater, or lower costs, are incurred.

ED2 Ex-Ante Allowance

Severe Weather 1-in-20 Events are unpredictable and hard to quantify due to their inherent nature. The severity and quantity of storms caused by global warming could lead to an increase in Severe Weather 1-in-20 Events in terms of volume and severity. Although SPEN’s network is now considerably more resilient than the previous event in 2014. This knowledge, alongside the lack of certainty means that forecasting costs and volumes for CV27 is challenging, and it is difficult to provide an accurate forecast.


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To ensure that sufficient allowance is included within the RIIO-ED2 plan, our proposal is for £14.4m (£5.6m for SPD and £8.8m for SPM). This allowance will enable the business to adequately provide an immediate response to Severe Weather 1-in-20 Events, though provision of uncertainty mechanism is also required.

5. CV29 Tree Cutting Overview and Expenditure Summary

SPEN’s tree-cutting strategy is a key activity in managing risk associated with our overhead assets and we adopt industry best practice to maintain public safety in addition to ensuring a resilient and reliable network. As part of our climate change adaptation we expect to experience an increase in vegetation growth rates in future and are reviewing these impacts, as per our Climate Resilience Strategy Annex 4A.7.

Managing vegetation growth in and around our assets is an important aspect of maintaining the safe and reliable operation of our system. The key activities undertaken within our vegetation management programme are broadly covered by two industry technical standards and recommendations.

ENA TS 43-8 - This Specification is intended to ensure that ENA Member Companies (ENAMC) meet their statutory obligations under the Electricity Safety, Quality and Continuity Regulations 2002 (ESQCR) with respect to minimum clearances from overhead lines, wires and cables including minimum ground clearance requirements. This specification provides the clearance parameters relative to vegetation.

ETR 132: This ETR provides guidance for Network Operators on how to improve network performance under abnormal weather conditions by adopting a risk-based methodology to identify the most effective locations to carry out resilience related vegetation management, and/or other solutions. Abnormal weather conditions include high winds, ice, snow, prolonged high temperatures and heavy rainfall.

The forecast expenditure for RIIO-ED2 is £82.02m which represents an increase of 10.18% across both licences. This increase is predominantly due to the inclusion of LiDAR Inspections which has not previously been reported against this activity.

Excluding LiDAR cost the net increase compared to the first reported 6 years of RIIO-ED1 amounts to 4%. This increase is primarily due to an increase in contract prices to manage ENATS 43-8, in line with increasing vegetation growth rates (in part attributed to the impact of climate change).

Table 14: SPEN CV29 RIIO-ED2 Cost Summary

5.1.1 ENATS 43-8

Within RIIO-ED2 our approach to tree cutting in order to maintain safety clearance will broadly remain unchanged and will ensure we continue to maintain the cyclic tree cutting programme currently underway within RIIO-ED1 to ensure public safety and supply reliability.

SPENs strategy for delivering vegetation management is based on external service providers supported by an internal dedicated central vegetation management team.

We have developed detailed databases of trees growing in proximity to our overhead lines and use this data to estimate the volume of work that is required and the most appropriate inspection and cutting cycle. Through experience, we have found that the optimum frequency for undertaking cuts varies by voltage and licence. Even though our programme cycle has not changed across both licences since 2013 we will continue to review and apply the strategy considering the changing environmental, practical, safety and financial factors.


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The following is the list of activities we undertake to comply with ENA TS 43-8:

• Surveying the overhead electricity network to assess the requirement for tree cutting and management

works.

• Working closely with our appointed contractors to enable them to deliver programmes of overhead lines

works on time and to budget.

• Liaising with customers and landowners to gain consent and permission prior to the delivery of tree

management works.

• Undertaking all tree cutting and management works to BS 3998, promoting the future health of all

affected trees and the reliability and integrity of the overhead electricity network.

• A proactive management approach to ensure safety clearances specified in ENA TS 43-8 are

maintained.

• Identifying opportunities for efficient and effective working practices through alignment with other

overhead line activities to realise improvements in customer experience and operating costs.

• New to RIIO-ED2 is the inclusion of Lidar Inspection costs within the ENA TS activity of the regulatory

reporting table. This has now become a business as usual activity within SPEN, and will now be

reported as an activity under CV29

SPEN encourages feedback from our stakeholders on whether we should go beyond the legislative requirements, however, Forestry England is the Executive Agency of the Forestry Commission have advised that this could impact the forest environments. In turn, this could affect the UK woodland crop values significantly. Stakeholders are generally comfortable with the current practices that SPEN adhere to with regards to ENA TS 43-8.

Figure 28: ENA TS 43-8 RIIO-ED2 Total Span Cut Volume by Licence and Voltage

Climate Resilience Strategy

Overhead lines form a significant part of our distribution network in rural areas which will see a high uptake in LCTs as shown in our DFES forecasts3. Therefore, to maintain a high level of supply to our customers, we must maintain the high standards set in RIIO-ED1 for our tree cutting programme.

Climate projections indicate that the weather will become more extreme with higher temperatures and lower rainfall in the summer, and lower temperatures and higher rainfall in the winter when comparing to previous years. This will put further strain on the overhead line network. This was highlighted in the key network risks within Annex 4A.7 – Climate Resilience Strategy, with eleven relevant keys risks shown below for CV29:

3 Section 7.2 of the SPEN DFES Scenarios for SPD & SPM https://www.spenergynetworks.co.uk/userfiles/file/SPD_DFES_-_Main_report_-_May21.pdf https://www.spenergynetworks.co.uk/userfiles/file/SPM_DFES_-_Main_report_-_May21.pdf

https://www.spenergynetworks.co.uk/userfiles/file/SPD_DFES_-_Main_report_-_May21.pdf

https://www.spenergynetworks.co.uk/userfiles/file/SPM_DFES_-_Main_report_-_May21.pdf


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VM1 Fluvial and Pluvial Flooding: Flooding events undermine tree roots, leading to additional faults due to falling trees. This has been described as a high-risk factor.

VM2 Coastal Flooding: Flooding events undermine tree roots, leading to additional faults due to falling trees. This has been described as a medium-risk factor.

VM3 Drought: Events affect tree structure and stability. This has been described as a low-risk factor.

VM4 Ice and Snow: Accumulation occurs on trees leading to additional faults due to falling debris. This has been described as a medium-risk factor.

VM5 Hurricane and High Winds: Increased frequency of events may weaken trees leading to additional wind damage causing faults. This has been described as a medium-risk factor.

VM6 Prolonged Growing Season: Increase in precipitation lead to an extended growing season and hence additional encroachment of vegetation. This has been described as a medium-risk factor.

VM7 Prolonged Growing Season: High raised temperatures leading to increased growth rates and the need for enhanced vegetation clearance and tree cutting schedules. This has been described as a medium-risk factor.

VM8 Lightening: Increased lightning storms leading to increased number tree lightning strikes. This has been described as a medium-risk factor.

VM9 Brought: Change in water content of soil leads to changes in natural habitats of different species. This has been described as a low-risk factor.

VM10 Pests, Pathogens and Invasive Species: Changes in weather conditions can allow pests, pathogens and invasive species to appear in the UK, damaging trees leading to additional faults due to falling trees, for example, Ash dieback (see Section 6.4.3 of this Annex). This has been described as a medium-risk factor.

VM11 Wildfire: Higher temperatures during summertime can create the conditions for wildfires that can affect trees and electrical infrastructure near them. This has been described as a high to medium risk factor.

It is anticipated that precipitation and wind speeds are set to increase through RIIO-ED2 with clime extremes such as lightening becoming more frequent and severe. Further details in section 4, 5 and 6 of Annex 4A.7 – Climate Resilience Strategy.

ETR 132 Storm Resilience Strategy

In the past, storm events have resulted in significant damage to the overhead line network and in some instances have prolonged outages for some customers. This is due to a combination of legacy issues including old specifications that are not suitable for anticipated increases in the severity of weather conditions, ‘end of life’ assets (such as deteriorated wood poles), that affect the integrity of the overhead line and the impact from vegetation in proximity to the line.

In our OHL and ESQCR Strategy (Annex 4A.13), we state our long-term objective is to ensure that by 2034 over 40% of all interconnected 11kV and 33kV overhead line networks will be rebuilt to a storm resilient standard, such that a severe weather event should not affect any connected customer for more than 36 hours.

Our experience has shown that where possible, the most efficient mechanism to deliver this severe weather resilience is by undertaking the tree clearance work in combination with our line rebuilding and refurbishment programmes. This has been our approach in RIIO-ED1 and will continue in RIIO-ED2. This also gives us the ability to achieve compliance in some instances by relocating sections of the line to avoid the need to cut down trees.

We will continue to progress towards the achievement of this long-term target. In addition to achieving compliance alongside our rebuild and refurbishment programmes, we are also planning to undertake some stand-alone targeted ETR 132 works, particularly on spur lines with high customer numbers.

The specific activity targeted for ETR 132 work in RIIO-ED2 is currently being developed in line with our modernisation and refurbishment plans, our forecast view of the ETR 132 programme is shown below.


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Figure 29: RIIO-ED2 Total ETR 132 km by Licence and Voltage

In 2018, we undertook an audit of the benefits of Vegetation Management (VM). As a result of this, we identified the need to develop a ‘Tree Management Database’ to allow on-site inspection information to be captured and analysed to drive overall improvements in our tree management approach. During 2020, a project defined changes within the existing system and implemented several enhancements for the system to be fully utilised by SPEN and approved Tree Contractors.

The AMT-Sybex Geofield Vegetation Management System (VMS) delivers an integrated solution for SPEN and our approved Contractors to manage the OHL cyclic vegetation Surveys, Consents and Cuts to ensure that our network safety and resilience is maintained

Figure 30: SPEN Vegetation Management System (system) The key benefits of the Geofield VMS are summarised below.

• Improved anomaly management via Corporate systems

• Automated Regulatory Reporting functionality

• Data improvements made by the Asset Data Team, including Free Standing Poles and SAP Static

Span ID’s

• ESRI mapping records to SAP Anomaly Clearance – Tree Hazard Observations Management

• Improved user experience owing to enhancements in the functionality of mobile devices which provide

more agile, efficient operations.

• Improved internal and external management of Payment Applications


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• No Data loss experienced by our contractors

• Supplying contractors with an improved Work Instruction

Further IT Enhancements to the Vegetation Management System will include:

• Provision of cut specification to service provider for ETR 132 activities.

• Version control management of consent forms.

• Ability to capture details of diseased trees e.g. Ash die-back

• Increased availability of information relating to site specific factors.

• Inclusion of Contractor Portal to improve the flow of information between contractor and SPEN

5.3.1 Innovation Solutions to our IT systems

We have invested £2.3m4 in 3D aerial mapping of our entire network using LiDAR technology. This has deployed fixed wing aircraft using 3D laser scanning technology to create detailed interactive models of the network, precisely highlighting the exact locations of individual trees beside its power lines.

This allows us to keep exact records of trees, plot their growth and plan maintenance. Our latest review of the use of LiDAR identified that 12 out of 13 DNO licence areas (excluding London) use LiDAR as best practice. Data analysis is available for ESQCR minimum ground clearances and vegetation clearances offering us greater information for audits, defects, desktop surveys, maintenance planning and project management.

The key benefits of LiDAR are summarised below:

Reduction in faults cause by ‘Growing of Falling Trees’ through the use of improved auditing and targeted vegetation management.

Reduction in inspection costs through the collection of automatic ground clearance information.

Audit of Vegetation Management and improved proximity information leading to improved network safety performance.

Improved network visibility leading to greater ability to plan, prioritise and audit ESQCR workload, including low ground clearance, pole lean, sag, and vegetation / structure intrusions.

Improve understanding of network location aiding network design

Improved location information leading to greater understanding of potential wayleave issues.

Improved information for ETR 132 planning, reporting, and auditing.

Further enhancements to LiDAR in association with other corporate applications will realise further benefits such as creating a database of species distribution, biodiversity, and natural capital around our assets. Information stored may include environmental impact analyses undertaken by consultants, ecology sources, satellite imagery, wildlife surveys, etc. For further information on our innovation plan in RIIO-ED2, please see Annex 2.1 – Our Innovation Strategy.

4 https://www.current-news.co.uk/news/spen-invests-2-3m-in-3d-mapping-technology-to-improve-network-

resilience

Figure 31: Vegetation Management System (pictures)

https://www.current-news.co.uk/news/spen-invests-2-3m-in-3d-mapping-technology-to-improve-network-resilience

https://www.current-news.co.uk/news/spen-invests-2-3m-in-3d-mapping-technology-to-improve-network-resilience


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Tree Cutting Impact on the Environment

5.4.1 Growth Rate

Tree growth rates are higher in SPM than SPD owing to longer growing seasons in England and Wales in addition to regional differences in temperature and rainfall factors. The current climate models have predicated a further increase in growth rate due to climate impact. An independent study researched the difference in growth rates between SPD & SPM as per Figure 32.

Figure 32: Tree Growth Rates Differences Between SPD and SPM Areas

Trees are beginning to grow faster than the rates anticipated above and Forest research.gov.uk have produced research showing rates of regrowth will increase over the next 10 years. The projected impact of climate changes means tree growth rates will have an impact upon the tree clearance cycles within DNOs. As a result, shorter cutting cycles, and an increased emphasis on tree removal rather than pruning may be required.

There is also a view that while average temperatures may rise and rainfall may increase, promoting an increase in plant biomass generally, we will also experience very high temperature ranges, new diseases, considerable soil-water deficits and increased windspeeds in some areas of the country. This view predicts that in time, these effects could restrict and even prevent the growth of trees in some landscapes, particularly in southern areas of the country. Forestry England have provided feedback that our forecast of vegetation growth rates should not materially impact on our activities.

We are continuing to keep the impact of vegetation growth under review to inform our cutting-cycle frequency.

5.4.2 Tree growth regulators

We do not use growth regulators in our network area, however, if there are material increases in tree growth rate, this may be an intervention that we will consider in the future, based on tree species and cost benefit analysis to our customers to reduce growth.

5.4.3 Tree Disease

The Woodland Trust5 have stated that Ash Dieback will kill around 80% of ash trees across the UK. Nationally, we are still learning about the potential impacts of Ash dieback, and we are aware that it will affect different parts of the country at different rates and extents.

We will implement management procedures to ensure we can manage both the risk and costs if widespread felling is required on ash trees within falling distance of our overhead assets

Although this is an increasing concern for the forest industry and other environmentalist bodies, we apply the necessary compliance procedures when dealing with diseased trees and our contractors must comply with our contractual terms and apply their professionalism to comply with legislation guidelines for felling trees etc.

We are working together with other DNOs via the ENA to ensure that there is a holistic approach to managing all types of vegetation disease affecting our network assets, or the costs of managing them safely and sustainably.

5 https://www.woodlandtrust.org.uk/trees-woods-and-wildlife/tree-pests-and-diseases/key-tree-pests-and-diseases/ash-dieback/

SPD Annual Growth Rates SPM Annual Growth Rates

https://www.woodlandtrust.org.uk/trees-woods-and-wildlife/tree-pests-and-diseases/key-tree-pests-and-diseases/ash-dieback/

https://www.woodlandtrust.org.uk/trees-woods-and-wildlife/tree-pests-and-diseases/key-tree-pests-and-diseases/ash-dieback/


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Figure 33: Symptoms of Ash Dieback Disease in Mature Ash Trees

5.4.4 Re-planting

As part of our Tree cutting policy, replanting of trees can be offered to assist with a clear fell or full specification clearance consent. The following table is an illustration of services that SPEN may provide depending on the circumstance on site.

Table 15 : SPEN Re-Planting Services

5.4.5 Wildlife

We always ensure that if a badger set, bat roost or other wildlife habitat is discovered within the vicinity of our tree cutting activity, or any other activity, that we will stop work and notify the RSPB immediately. During RIIO-ED1, demonstrating our commitment to protecting local wildlife, we were involved in the panel of the Natural Capital Pilot Project and presented on the CCL pilot project, setting out our intent to achieve the following:

Better understanding of the existing natural capital value of their landholdings.

Understanding of ways in which this value can be protected and increased.

Understanding of the ways in which SPEN depends on natural capital; and

Enhance the evidence base used when making investment decisions about restoring or improving natural capital and ecosystem service provision.


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6. CV30 – Inspections

Overview and Strategy

The routine inspection of all SP energy Networks assets are performed to ascertain the current condition and status of the plant and equipment, confirm the physical security of the item, and identify any external factors which may affect system security or may pose a safety risk to SP Energy Networks staff, contractors and the general public.

SPEN’s planned inspection frequencies vary by asset type and classification with lower risk assets generally being inspected less frequently. A full list of all our inspection regimes and frequencies is contained within the SPEN Policy document Asset Inspection and Condition Assessment Policy – ASSET-01-021 - Issue 3

Each inspection on each asset is performed using a question set which has been designed specifically with the asset in mind to ensure our asset inspectors maintain a robust and consistent approach and to ensure all the critical points are examined and captured. These question sets are regular reviewed and updated to ensure their adequacy considering emerging trends or type defects. The questions and the structure of how the data is collected has been specifically designed to align with the requirements of CNAIM and our CBRM platform. A full explanation of this is available within Annex 4.A4 Network Asset Risk – Appendix 1

In addition to the routine inspections, each asset will at some point be visited or operated as a part of other work, such as maintenance or refurbishment or modernisation activities etc. These interventions allow us to further monitor the asset and provide additional information regarding the condition of the asset and where necessary instigate remedial action.

Details of each inspection, along with information relating to the condition, environmental factors are maintained within our SAP corporate systems. In addition to highlighting any immediate safety or security issue which would need addressing this information ultimately defines our asset management strategy for modernisation, refurbishment and repair and maintenance activities.

We have reviewed our existing inspection regimes and although the majority will remain unchanged within RIIO-ED2 we have identified opportunities, based on a risk assessment, for amendments to existing regimes and additional programmes of inspection (e.g. for inspection of domestic Cut-Out assets).

Overhead Line Inspection – LV / HV / EHV networks

Overhead line inspection will be carried out by means of a foot patrol every 6 years. These programmes inspections will identify any change in land use that might demand additional constructional measures and any other hazards or defects that require remedial maintenance.

The scope of the inspection will cover the poles, associated apparatus and conductor condition and height. Each span will be measured at its centre point to establish the line height.

In preparedness for RIIO-ED2, SP Energy Networks are currently developing an enhanced inspection programme with associated IT systems for overhead lines which will allow the inspectors to perform a more detail Condition Based Assessment (CBA) whilst they are on site.

In the past, CBA’s were performed by contractors and aligned with overhead modernisation activities. Our approach to up skill our internal staff, support them with a new IT platform and combine the work in a single visit demonstrates our commitment to developing our staff and delivering an efficient, innovative plan.

It should be noted that our existing LiDAR programme also identifies low conductor height and obstructions or encroachment and is used in collaboration with our on-site derived information to manage hazards.

Where we have identified an area of continued vandalism or interference with our overhead assets, we may choose to deem the location as “High Risk” and subsequently inspect on a 3-year cycle.


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6.2.1 Technological Advancements

SP Energy Networks have undertaken extensive operational live testing of the THOR Hammer which we intend to use in RIIO-ED2. The THOR hammer utilises ultrasound technology to ascertain the residual strength of wooden poles. This technology provides extensive data to determine the suitability of the pole and identify cases of rot or decay which would undermine the integrity of the asset.

The traditional method for assessing pole soundness is through striking it with a hammer and interpreting the relative changes in the note produced. The technology also can identify pole depth and geo-stamp the recording.

Adequately identifying small defects on poles and associated pole mounted apparatus may not always be possible.

The use of Drones in SP Energy Networks to identify faulted apparatus is now commonplace and we will be exploring the use of the same technology to enhance the effectiveness of our foot patrols.

Overhead Lines/Steel Towers Inspections - 132kV

132kV Steel Towers will be inspected once every 4 years. This inspection will combine the regular foot patrol inspection we currently undertake every 2 years with a more details CBA (Condition Based Assessment). Combining the inspections, we feel makes more effective use of our line team’s skills and time.

Helicopter patrols will inspect the entire network every 2 years as is currently the case. In line with our colleagues in SPT we are actively exploring the use of drones in addition to or in conjunction with the use of helicopter patrols in ED2.

Cable Route Inspections

132kV and critical 33kV cable routes are categorised as either Category A or Category B depending on their importance. These will be inspected along the cable route.

Category A Circuits are those which meet one or more of the following criteria and will be inspected twice annually.

Fluid filled cables which pass through a Sensitive area as defined by the Environment Agency

and Electricity Companies, Operating Code.

Have a high likelihood of common mode failure, e.g. 2 cables in same track/location.

Of high importance to the operation of SP Energy Networks distribution system.

Have historically required disproportionately high levels of repair and maintenance.

All other circuits will be classed as category Band shall be inspected annually. The programmed inspections will identify any change in land use, excavations, new structures etc that may demand additional security measures.

Following any reported instance of vandalism or interference the route will be classified as high risk and inspected 4 times per year.

Cable Tunnel and Bridge Inspections

132kV and critical 33kV underground cables, which run within a cable or tunnel, or as suspended under or attached to a bridge structure will be inspected annually.

Substation Inspections

Each one of our 34,400 substations are routinely visited to perform inspection on both the civil fabric of the building and the condition of the assets within them.

Figure 34: THOR Hammer (Pole Testing

Equipment)

Figure 35: SPEN Drone


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Having reviewed the inspection regime for 132kV sites we have determined that our enhanced security measures at these sites mean we can safely reduce the inspection interval from monthly to quarterly inspection by the commencement of RIIO-ED2. Grid site inspection also include thermo-vision imagery to identify areas of high electrical resistance within components and assist in the prediction of future failure.

Our Primary substations are inspected every 6 months and our secondary substations will be inspected annually. Any high-risk sites will be subject to a quarterly inspection.

6.6.1 Thermo Vision Inspections at Substations

In addition to the inspection described above a dedicated team also undertakes thermo-vision examination of individual components at our 132kV sites and Primary substation annually.

Owing to the unique nature of the SPM network in terms of it interconnected nature a proportion of these cost is attributable to the Company Specific Factors, details of which are within Annex 4A.25 SPM Company Specific factors, Section 5.8.

LV UGB (Link Boxes) Inspections

Our RIIO-ED2 strategy for inspections of our Link Box population will be amended to combine the external inspection and internal inspection into one visit. We have also amended the interval between inspections based on the condition of the asset.

Subsequently HI1, 2 and 3 assets will be inspected every 5 years, whereas HI4 and 5 will be subject to a more frequent annual inspection. Initially this strategy does increase the overall volume of inspections, however given the level of investment in link box modernisation we believe that this strategy will provide a more efficient long-term solution and ensure we continue to manage the risk of the UGB population in an effective manner.

Our programme of deploying heat monitors and blankets will continue to manage the risk of ageing and deteriorating link box assets until they are modernised.

SPM currently utilise around 1,000 such sensors to actively monitor temperature conditions within the link boxes.

We will also regularly visit assets within high footfall areas, recognising the increased risk to public safety in these areas.

LV Pillar Inspections

LV Pillars inspection will be performed annually. If an asset has been subject to vandalism or third-party damage it will be inspected quarterly for one year.

Service Termination Cut Outs Inspections

Historically, meter operators have provided condition information reports to DNOs collected during routine meter-reads. This has continued during the Smart Meter role out programme using the MOCOPA (Meter Operation Codes of Practice Agreement). This reports the presence of defects at service positions to the DNO. See ED2-NLR(A)-SPEN-001-CUT-EJP for more details.

As the Smart Meter programme reaches completion, meter-reads will no longer take place and this information stream will be lost. It is therefore critical to for customer safety that we establish a routine inspection policy for these assets.

Within RIIO-ED2 we plan to commence a dedicated service termination position inspection programme. We will inspect 145,000 domestic service positions to undertake condition assessments. This programme will gather valuable data relating to this asset type and will make use of the iDentify (NIA_SPEN_0049) project, using Artificial Intelligence to capture key asset characteristics.

Figure 37: Use of thermal Imaging technology during link box inspection

Figure 38: Link Box Heat Monitor

Figure 40: Typical Phenolic Domestic Cut Out

Figure 36: Thermo Imaging of S/S Apparatus


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Cost and Volumes Summary

Table 16: SPEN CV30 Expenditure Summary

Table 17: SPEN CV30 Expenditure by Activity, Licence and Voltage

Figure 39 SPEN CV30 Expenditure by Licence and Voltage


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7. CV31 – Repair and Maintenance

Overview

We have reviewed our existing inspection Repair and Maintenance policies and although the majority will remain unchanged within RIIO-ED2 we have identified opportunities, based on risk assessment, for amendments to existing practices and additional programmes informed by engineering assessments. These changes are further described in the following section.

Our Repair and Maintenance requirements are set out in our comprehensive suite of asset management policies, which form part of our fully accredited ISO 55000 asset management system. We regularly review these policies to ensure we capture feedback from their implementation, incorporate new techniques and address emerging issues. This process is informed by the results of a structured asset risk assessment methodology which forms an integral part of our business management reporting system.

Our repair and maintenance strategy is to:

Comply with statutory requirements, relevant health, safety and environmental legislation and associated company documentation and procedures.

Ensure safety of staff, contractors, and members of the public

Minimise the risk of failure

Prolong asset life through timely and appropriate intervention

Ensure cost effectiveness

Our plant maintenance regimes are based on routine periodic interventions, where standard activities are undertaken on assets on a fixed frequency, to ensure all assets are routinely maintained and fit for operational service. Although this approach remains appropriate in many instances, we are increasingly looking to enhance the effectiveness and cost efficiency of our maintenance programmes by undertaking additional maintenance based on condition and performance where this is appropriate and can add value.

80% of our distribution network is now more than 30 years old. Despite the level of investment through our modernisation activities the overall risk on our network will increase, see our Network Asset Risk strategy (Annex 4A.5). Additionally, as we embrace Net Zero the demand placed upon our assets will increase. Our maintenance policies and strategies will evolve to counter this degradation however we have identified that within RIIO-ED2 we require additional funding to carry out physical repairs to defects on assets, which otherwise would not be included in any other programme of work. We believe that appropriate and focused defect repair intervention is the most efficient and responsible approach to prolong the operational life of our ageing & deteriorating assets. This is covered in a later section.

Key Maintenance Policy Changes

7.2.1 Distributed Gas Analysis Oil Sampling

Within RIIO-ED2 we plan to increase the frequency of DGA oil sampling on our Primary Transformer fleet (EHV/HV) from every two years to annually, aligned with our current policy for 132kV Transformers.

Additionally, we aim to perform DGA oil sampling on Secondary 6.6/11kV Transformers for highly loaded, deteriorated, and basement substations. These samples will be performed every 3 years compared to 12 years in RIIO-ED1. We will also complete DGA sampling for secondary transformers forecast to undergo high utilisation under our Distribution Future Energy Scenarios (DFES).

There is an increased cost in performing the additional sampling, however we consider this to be offset by the benefits that a regular annual data set will provide us in managing our transformer fleet. Our approach is in line with CIGRE TB 455 – Guide to Transformer Maintenance and complies with IEC 60422 edition 4 – Mineral insulating oils in electrical equipment, supervision, and maintenance guidance, and ensures we are applying industry best practice.

7.2.2 Oil Regeneration 33kV & 132kV Transformers

We are currently trialling an innovative oil regeneration process which if successful will be rolled out in RIIO-ED2 and allow us to potentially avoid the need for a full oil change on future maintenance activities.


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The system consists of oil regeneration canisters which are fitted to the top and bottom of a transformer to allow oil flow while trapping contaminants and insulation degradation products such as water and acids. Depending on application, this can offer benefits aligned with transformer refurbishment.

Defect Repair

7.3.1 Introduction

A defect is an asset condition that requires attention depending on its severity and risk. Defects can be associated with ground mounted and overhead line assets, causing the asset to not function correctly with potential risk to customer supply or a safety risk to employees and/or the public. Ensuring that defects are corrected in a timely manner is essential to ensure a safe and efficient network is maintained.

Defects are categorised by their severity with different standard timescales for rectification in line with internal policy. The table below shows the categories within SP Energy Networks policy.

Priority Urgency Timescale Comments

I Immediate Attention Within 24 hours May require emergency network

U Urgent Repair Within 3 months Not an “I” but requires Urgent attention.

P Condition Information / Investment Plan Part of a Planned Programme of defect remediation or equipment modernisation

Table 18 : Defect Categories

Common examples of defect are shown below in Figure 40 below:

7.3.2 Defect Strategy

Through the RIIO-ED2 price review period, we will continue our focus on understanding the health of our network assets, including the defects associated with them. Priority “I” and “U” defects will be dealt with in the safe timely manner as within RIIO-ED1. However, we intend to apply greater focus to manage “P” defects to prevent them from deteriorating to U or I defects.

Our planned asset modernisation expenditure programmes will remove a considerable number of defects on our network; however, this only affects a small proportion of our overall network assets (<2% p.a.). Owing to the scale of our networks, and the volume of defects we discover during routine inspection we must adopt a pro-active, targeted, risk-based approach in RIIO-ED2. This is particularly true for assets with high defect discovery rates, and low rates of modernisation e.g. ground mounted plant defects on switchgear and transformers.

Our RIIO-ED2 strategy will “flatten the curve” of defect volumes on our network. We forecast a 30% reduction on the volume we would otherwise have by the end of RIIO-ED2. The strategy has four key areas:

Data – Understand our network through data collection and analysis

Investment – Efficient and focussed asset intervention investment

Policy – Refresh policies to ensure efficient and timely delivery

Governance – Accurate, usable, real time and automatic reporting system

Figure 40 – Defect Examples (Left to Right: Damaged palisade fencing, broken pole stay wire, missing LV fuse-board labels, compromised Ring Main Unit (RMU) kiosk)


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Alongside a greater focus on “P” defects, a stand-alone painting programme is required. This programme will reduce overall “P” defects by 4% and will primarily tackle secondary transformers in coastal areas reducing their likelihood of corrosion, therefore prolonging asset life.

Figure 43: Effect of Intervention on Projection of Defect Volumes

Our strategy will look to identify defects at the earliest opportunity through a comprehensive inspection and reporting system and seek to align defect rectification / clearance with other programmes of work. We will adopt a “Touch It Once” approach and ensure we maximise our opportunities to clear defects whenever we are carrying out other work - either on the apparatus or on the local network where appropriate.

This structured, informed, and systematic approach to defect clearance will enable us to provide value for money whilst ensuring our assets continue to operate safely by prolonging their life.

7.3.3 Current and Projected Plant Defect Position

At the end of 2020 SPEN had 96,000 open “P” defects, following an increasing trend. This discovery rate is informed by our accurate and frequent inspection regime. Assuming a projected 8,300 increase per annum the total “P” defect volume would be 115,000 defects at the end of ED1 and 163,000 at the end of RIIO-ED2.

To arrest this increase in defects and to enable us to reverse the trend, forecasts allowance has been included in our RIIO-ED2 business plan for increased repair works. Figure 41 below illustrates the year on year rise in the volume of P defects within SPEN. This has been extrapolated from 2010 (not shown in chart).

Figure 41 : Projection of Defects by Licence


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7.3.4 Plant Defect Data Analysis

We have analysed our corporate data relating to plant defects and are able to identify 20% of asset types contribute 80% of defects. This “Pareto” approach allows us to develop strategies, solutions, and programmes of work specific to the asset types and their common defect types.

The broadly identifies 4 asset types in each licence which we will target in RIIO-ED2. Figure 42 is a summary of this analysis.

Figure 42: Pareto Analysis pf Defect by Asset Type (Plant Defects)

7.3.5 Defect Governance

In preparation for RIIO-ED2, SPEN have rolled out a new defect management platform which allows us to readily identify defects on assets or within substations. This enables us to include the clearance of defects within other scopes of work. In addition to the plant defects mentioned previously, civil type defects and overhead defects are also included, providing a single source of information across the business.

To support this tool, we plan to rollout out business processes and protocols which ensure we maximise our opportunity to remove defects in a timely and cost-efficient manner to provide value to customers and ensure safe network operation. Figure 43 shows examples of interactive pages in our defect dashboard.

Figure 43: Defect Management Application


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In relation to the costs accompanying this submission it should be noted that owing to the unique nature of the SPM network in terms of it interconnected nature a proportion of these cost is attributable to the Company Specific Factors (CSF), details of which are within Annex 4A.25 SPM Company Specific factors – section 5.8.

Table 19: SPEN CV31 Expenditure and Volumes by Voltage and Asset Type

Table 20 : SPEN CV31 Expenditure by Activity, Voltage and Licence


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Figure 44: SPEN CV31 Expenditure and Volumes by Asset Type

Figure 45: SPEN CV31 Expenditure and Volumes by Voltage


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8. CV32 – Dismantlement Overview

Occasionally SPEN are required to undertake the activity of de-energising, disconnecting, and removing (where appropriate) network assets where the cost of dismantlement is not chargeable to a third party and no new assets are to be installed.

This activity has historically attracted relatively low cost in current and previous price control periods. Given the nature of the work it is difficult to predict or anticipate the specific nature of this activity.

Historical averages have therefore been used to provide a forecast for RIIO-ED2 both in terms of cost and volumes.

Cost and Volume Summary

Table 21: SPEN CV32 Expenditure

9. CV33 – Substation Electricity

Overview

Substation electricity is the costs incurred for the consumption of substation electricity usage. SPD and SPM effectively operate our substation electricity as two single supplies and have a declared demand of 4.5MW and 3MW respectively.

To ensure best price for our customers, we are diligent in seeking the best contract offer by comparing the market rate throughout RIIO-ED2. However, following a change in the regulations in April 2021, unmetered supplies over 100kW are now required to be metered and consequently SPEN are required to enter a half hourly tariff contract with their supplier. The terms of the current contract which, in addition to the fluctuations in the price of the energy retail market have ultimately marginally increased the overall cost is this activity.

Strategy to reduce substation electricity consumption

SPEN recognise the necessity to reduce our substation electricity consumption as part of our commitment to our customers as well as climate change strategy to reduce CO2 emissions. Within our substation modernisation plans we aim to upgrade outdated and inefficient lighting and heating systems which will allow us to achieve targets.

As we are reducing the energy consumption of our existing substation fleet, we are also forecasting that the total number of sites will increase by 383 across HV, EHV and 132kV indoor and outdoor sites. For this reason, we have assumed a stable consumption rate.

Our strategy to reduce energy consumption within our substations is contained within Annex 4C.3: Environmental Action Plan.


Table 22: SPEN CV33 Expenditure and Energy Consumption Summary


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SPD has traditionally attracted a higher cost than SPM owing principally to the increased population of substations. The proportionality in each licence’s substation volumes is reflected in the distribution of the costs.

Figure 46 - SPEN CV33 Expenditure and Substation Population Summary Charts

10. CV34 – Smart Meter Interventions

Overview

Smart Meters provide live readings of the electricity use within a dwelling and automatically send the information back, over a wireless network, to the energy supplier. This facility removes the need for a meter reader to physically attend site to take a meter reading, or the customer having to send in periodic readings.

Smart Meters are also a fundamental part of the Governments plan for a “Smart Grid” which will pave the way to enable the transition to a more flexible energy market and the delivery of Net Zero CO2 emissions by 2050.

The official national Smart Meter roll-out commenced in 2016 with an original deadline in 2020. Under the current regulatory framework for Smart Meter installation Energy suppliers are obligated to take all reasonable steps to roll out Smart Meters to all their customers.

Although over 12 million Smart Meters have been installed in homes across all energy companies there is still a significant volume yet to be installed. Consequently, the original deadline of 2020 has now been extended to mid-2025.

Every Energy supplier is required to make all reasonable steps to provide a Smart Meter for their customers. In addition to issues surrounding network coverage owing to factors such as the rural location or thick internal walls the supplier will occasionally require some intervention by the DNO regarding the physical equipment associated with the service termination position to enable a successful installation.

SPEN has 3.5m customers with a service position at their premises. There are numerous types of service termination types and layouts which owing to their age, condition, specification and even location could prove problematic for the Smart Meter installer. When a meter installer encounters a service termination situation which prevents them from installing a Smart Meter, we will attend to resolve the issue, this is classed as a CV34 intervention. In most cases this will involve the replacement of the service termination to a modern type.

ED2 Smart Meter Intervention Programme

Our programme for RIIO-ED2 has been developed in line with the revised deadline of mid 2025 in mind.

Figure 47: Smart Meter


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Throughout RIIO-ED1, we have updated many service positions through several activities which supported Smart Meter installations without any further intervention. Opportunities for the replacement of service termination equipment may arise within the following activities.

Rising and Lateral Mains (RLM) Refurbishment or replacement of Mural Wiring Faults Connections LV Overhead Lines Customer Enquiries such as repositioning. LV Service Replacements and reinforcements and removal of loop services LV Cut Out Modernisation

Our RIIO-ED2 Cut Out modernisation and strategy for dealing with undersized services and looped services can be read in Annex 4A.22 LV Services and Cut Outs Strategy. This intervention means that the CV34 intervention rate, i.e. the proportion of Smart Meter installs which require reactive DNO intervention will reduce.

Our CV30 Inspections activities will also include a Cut Out Inspection regime in RIIO-ED2 which will allow us to identify potential areas for proactive intervention where a Smart Meter is yet to be installed.

We recover our costs in this area via a Smart Meter interventions volume driver which is explained in more detail in our Uncertainty Mechanisms Annex 5B.

Programme Cost and Volumes Summary

Table 23: SPEN CV34 Expenditure and Volumes Summary

Figure 48: SPEN CV34 Smart Meter Installations/Interventions/Expenditure (Charts)


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11. Conclusion

Network Operating Costs (NOCs) refers to a range of necessary activities undertaken as part of the day-to-day safe operation and maintenance of the distribution network. This ensures the network continues to operate in a reliable, effective, and safe manner in compliance with our legal and regulatory requirements.

Our NOCs strategy is designed to ensure a continued focus on protecting and maintaining our underlying asset infrastructure and to fulfill our responsibilities of safeguarding our employees and the public from our assets. We will also ensure we provide an industry leading quality and continuity of supply through excellent asset stewardship.

This is critical for our customers who expect high levels of supply reliability and that interruptions are resolved safely and quickly as they transition to Net Zero. We aim to achieve this by continuing to improve our excellent existing operational practices, through greater use of digital technologies, and through innovation for longer term network safety and resilience. We have also reviewed the impacts of our first Climate Resilience Strategy (Annex 4A.7) with consideration of additional risks this has identified, which may impact our network operation.

Under this strategy, during RIIO-ED2 we will:

• Invest £306.6m to continue to provide a 24/7 365 days a year efficient fault location and repair service, as we have done in RIIO-ED1.

• Safeguard our customers against the impact of extremely severe weather events through preparation for extreme storms and ring-fenced fault repair allowances.

• Invest £82.0m to manage vegetation and provide a safe and reliable network by routinely managing vegetation growth on over 9,500 kms of network, including the application of LiDAR technology and ongoing review of the impacts of climate change and vegetation disease.

• Invest £21.3m to inspect more than 900,000 assets in line with our inspection policies and updated operational practices, including using new technologies and inspecting domestic cut-out assets.

• Invest £93.1m to deliver our frequency-based maintenance programme to defer asset modernisation and deliver an enhanced asset repair programme to prevent defects from accelerating asset deterioration and reducing overall equipment defects by 30%.

• Spend £1.2m to remove redundant assets which have been identified as no longer required in a timely, efficient, and sustainable manner.

• Spend £21.4m on energy bills for our population of over 34,000 substations.

• Spend £21.2m in line with the UKs governments target to have Smart Meters installed in every home by the end of 2025.

Documents

Annex 4A.20: Network Operating Costs Strategy