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<p>Distribution Network Operators (DNOs) and Transmission Owners have an overarching
obligation to develop and maintain efficient, co-ordinated and economical systems.
Ofgem has also placed specific licence obligations on them to ensure that losses are
as low as reasonably practicable. Whilst Government and Ofgem are aware of potential
approaches to minimising losses, including through the use of low resistance cables,
network companies are not instructed exactly how to go about this. Instead, Ofgem
sets incentives for network companies, including broader environmental incentives
on losses and business carbon footprint. These incentives have encouraged the network
companies to proactively manage losses on their networks to the extent to which this
is possible. For example, it is now widespread practice across GB to replace ‘high-loss’
cables with newer ‘low-loss’ substitutes, where this is efficient. The DNOs are also
undertaking a programme of replacing pre-1960s transformers with newer more efficient
types.</p><p> </p><p>Neither Government nor Ofgem specifically records the effect
of losses on Scottish consumers and businesses. However, as part of developing their
business plans for future capital expenditure, Ofgem will require network companies
(including the Scottish network companies) to take into account the lifetime costs
including losses, when deciding between different equipment.</p>
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