EVALUATION

AN INDEPENDENT EVALUATION OF THE LCNF
Finally, a respondent stated their disagreement with the argument that “innovation
incentives have done their job” – meaning that innovation should be part of business as
usual with no specific treatment as this would be ignoring the differences between
innovation projects and traditional investments.
B.1.8.4 LCNF Suggested Changes in Retrospect
One respondent suggested the change request process needs changed, as for any simple
changes it should be almost self-certifying. They suggest for large budget changes a two
stage award could be considered so design could be finished before proceeding, believing
this could also help in cases where budgeting is wrong – from being underestimated or
otherwise – so funding could be stopped before too much funding has been released.
One respondent commented on how the Tier 2 projects seemed to get pushed into the
limelight somewhat leaving the Tier 1 projects behind even during the LCNF conferences.
They continued on to say this was a mistake as it stalled innovation somewhat as the
focus was put onto “flagship” projects. They believe that as RIIO-ED1 progresses the
Network Innovation Allowance will become increasingly important as some DNOs
currently are in no position to deliver a sustainable innovation programme presently, they
think the DNOs were not sufficiently encouraged by Ofgem to get these aspects in order.
Another point in this response was that the dogmatic governance in Tier 2 Projects led to
DNOs and those in the supply chain disengaging somewhat and project partner
opportunities becoming fewer.
One of the respondents made a point regarding the partner collaboration, saying that
there have been a number of unusual attitudes and behaviours towards many aspects
from the selection process to partner rights/responsibilities. They think that establishing
good practice with relation to partners, and distinguishing partners from procured
suppliers would be worthwhile. There was a similar point made regarding partners and
suppliers in the previous question. This response also noted that clarification around IP
would be beneficial as several issues have occurred during LCNF projects as a result of
IP topics, listing; background IP vs. foreground, contributions to invention and IP (to reflect
UK patent law), rights to use/exploit beyond the project, costs for protection of IP
generated in LCNF projects (registered IP vs. unregistered IP), differentiation between IP
created through the UK customer account and the supplier’s shareholder account, IP
publication rights, shared IP, DNO exploitation of IP created/retained through LCNF
projects (as per the default IP terms in LCNF) in which part of the project. They believe an
open discussion on innovation programme IP would be beneficial so all parties are
informed.
7.3.1.1 Project Selection Process
One respondent believes that the need for projects to show guaranteed benefits,
quantifiable at the proposal stage, hinders the ambition of the projects as this produces an
increased requirement to be risk-free. This point has been made previously by
respondents in responses to other questions.
Another response suggested that Ofgem could have provided direction in the final years
of the LCNF to encourage projects in specific areas, rather that leaving it open to the
DNOs, as this could have brought in quality targeted proposals and encouraged
competition. They feel the diverse nature of the project proposals must have made it more
difficult for the Expert Panel to make a comparative assessment.
A further point from the same respondent was on the Initial Screening process – they say
that this should be changed so that the success criteria is more robust with an honest
PÖYRY MANAGEMENT CONSULTING
October 2016
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