National Grid 2014 Annual Report Download - page 31

Strategic Report Corporate Governance Financial Statements Additional Information
Principal
operations
Overview of our UK RIIO-regulated
businesses during 2013/14
Over the past year there have been significant
regulatory changes in the UK, most notably the
introduction of RIIO and its associated incentives.
The RIIO regulatory framework, which began on
1April 2013, incentivises us to operate efficiently.
Italso provides opportunities in terms of specific
incentives to engage and serve our customers and
stakeholders well.
There have been significant Government and
regulatory policy changes affecting our business,
including the introduction of EMR and the evolution
of the system operator role in the long-term planning
of the network. Also, with a likely tightening of the
margin between electricity supply and demand in
the mid tolate part of the decade, additional tools
have beendeveloped to help us balance the
electricity transmission system.
The planning process for obtaining consent for major
infrastructure projects has also changed, requiring
significant consultation before an application to the
Planning Inspectorate. Our Kings Lynn B connection
project was the first to go through the new process
and was granted consent by the Secretary of State
in December 2013.
Progress during 2013/14
Our activities and achievements in the UK during
2013/14 have included:
• Achieving an employee injury frequency rate
of0.06, meeting our target of world-class
performance. Initiatives during 2013/14 included
avisible safety leadership programme with a
renewed focus on behavioural safety and
excellent role modelling, as well as introducing
best practice incident analysis tools and systems
from the US into our UK business so we can
improve how we learn from incidents.
• Making significant progress on the implementation
of our new UK operating model by concluding the
managerial and staff appointment process in our
Transmission business.
• Working with trade unions to agree revisions to
pay and terms and conditions for employees.
Wehave also agreed changes to our UK pension
arrangements for all employees who have defined
benefit (DB) or defined contribution (DC) schemes.
These changes aim to make sure our total reward
package remains both competitive in the market
and sustainable under RIIO.
• Working on the 2013 triennial valuations of our
two DB pension plans (for further information
seenote 29 under ‘Notes to the consolidated
financial statements’).
• Maintaining resilient networks during the wettest
winter on record. Our networks withstood the
winter storms well, when some electricity
distribution networks had significant issues.
Wehave installed extra flood protection at critical
UK sites, helping maintain reliability and reduce
costs. Following the severe wet weather over
Christmas 2013 we have been working on future
potential network resilience issues. For details
about our reliability performance see page 10.
• Renegotiating our key contracts and introduced
new contractor relationships so we can deliver our
RIIO outputs efficiently and provide clarity on the
accountability for safety between ourselves and
our contractors.
• Continuing to focus on delivering excellent levels
of service. 2013/14 has been the first year in
whichwe have had incentives for customer
andstakeholder satisfaction for our regulated
businesses. Ofgem set a baseline target of 6.9
forcustomer and stakeholder satisfaction for our
regulated transmission businesses with scoring
ranging from 1 – very dissatisfied to 10 – very
satisfied. We have performed well in our customer
surveys, scoring 7.2 for our Gas Transmission
business and 7.4 for our Electricity Transmission
business. The stakeholder surveys are newly
introduced but early indications are that both
transmission businesses are in line to achieve
good results for stakeholder satisfaction.
• Under RIIO our gas distribution customer
satisfaction results are now reported on an annual
basis, rather than quarterly, which was how we
reported them under our previous price control.
We will publish the results on our website in the
summer as part of our commitment to our
stakeholders, and in our Annual Report and
Accounts for 2014/15.
• Extensive involvement in the development of new
network codes to underpin the European internal
energy market.
• Focusing on changing our ways of working –
supporting the development of our global
performance excellence framework with targeted
roll-out in the UK. Our approach has been to build
up the capability requirements through early
adopters before starting the full-scale roll-out over
the coming months.
Principal risks
Our regional risk profile describes the main risks our
UK business faces. Below, we provide an overview
of some of the risk themes we are managing:
• the risk of changes to the complex political and
regulatory agenda for UK and European energy
policy development and their potential
implications for our business;
• challenges associated with making sure the data
required to deliver business processes and
regulatory requirements is complete, accurate
andconsistent;
• the impact of changes in our business structure
and processes on our ability to continue to
perform under RIIO; and
• continued management of safety, security and
network resilience.
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