2026-021 Econometrics and Economic Analysis

Ofgem is seeking a consultancy or consortium to act as a strategic analytical partner to provide specialist economic, econometric and cost modelling advice to support the development and delivery of the ED3 electricity distribution price control, with additional call-off support for RIIO3 and preparatory work for the future RIIO4 framework where required.

Under this contract, the supplier will provide specialist economic and econometric support to enable the development and delivery of ED3. This includes advising on the framework, reviewing methodological choices, and supporting Ofgem's cost assessment and detailed scrutiny of network company business plans. The supplier will evaluate the efficiency and justification of proposed expenditure and outputs, assess how companies address uncertainty and scenario driven cost variations, and test the coherence and deliverability of business plans. They may also support the design and calibration of outputs, incentives and uncertainty mechanisms, as well as provide analytical or advisory input in the event of any appeals following Final Determinations.

In addition to ED3, the supplier may be commissioned to provide wider economic advice across RIIO 3 and preparatory work for RIIO 4. This may include:

• support with RIIO 3 outputs, incentives and re-openers
• analytical work underpinning the transition to more digital, structured and AI enabled approaches to cost assessment and price control design; and
• strategic adv...nal or ad hoc RIIO/ED3 related work will be commissioned under the contract rate card.
• Meetings, Clarifications and Publication Requirements

The supplier will be required to

• maintain a clear, detailed and transparent audit trail for all analysis, raw data, assumptions and models;
• provide all models and analytical outputs to Ofgem at relevant milestones;
• where required, attend meetings with Ofgem teams, the Ofgem Board (GEMA) and, network companies;
• Attend stakeholder working groups, create and present materials; and
• provide advice and explanation of recommendations, and support Ofgem throughout internal challenge processes.

All outputs produced under this contract - including models, reports, advice and other materials should be suitable for external use and publication, including on the Ofgem website and within documents used in any Competition Markets Authority (CMA) appeal, judicial review or other challenge. Unless made clear by Ofgem as part of the associated work order.

• Support During Appeals or Challenges

In the event of any appeal following ED3 Final Determinations, the supplier may be required to:

• assist Ofgem in reviewing and responding to appellant arguments;
• replicate or stress test modelling submitted by network companies;
• prepare technical evidence for Ofgem's legal teams and Counsel;
• contribute to analytical content required for the CMA process;
• be a part of the appeal hearing to defend relevant technical work.