KPI Significance
The four key reliability KPIs, SAIDI, SAIFI, CAIDI, and MAIF, are not simply internal benchmarks. In most regulated markets, they are tied directly to financial incentive mechanisms that reward outperformance and penalise underperformance.
Private LTE/5G is not simply a faster radio network. When deployed as the primary communications layer for a utility’s operational technology, it fundamentally changes what is possible in fault detection, asset monitoring, field operations and restoration coordination.
The result is a measurable improvement across all four headline reliability KPIs. This is especially important when utilities commit to annual KPI targets, like Ofgem’s Interruption Incentive Scheme (IIS) in Great Britian.
Great Britain: Ofgem’s Interruption Incentive Scheme (IIS)
In Great Britain, electricity distribution network operators (DNOs) are regulated under Ofgem’s RIIO framework. The current price control, RIIO-ED2, runs from April 2023 to March 2028. The primary mechanism for reliability is the Interruption Incentive Scheme (IIS), which tracks Customer Interruptions (CI) and Customer Minutes Lost (CML) — the GB equivalents of SAIFI and SAIDI respectively.
Under the IIS, each DNO is set annual targets for CI and CML. Performance above or below those targets triggers financial rewards or penalties, with separate incentive rates set per unit of CI and CML for each network. In the RIIO-ED1 period, incentive rates ranged from approximately £0.12m to £0.55m per CI and £0.28m to £1.34m per CML (in 2012-13 prices), varying by DNO. The magnitude of the IIS makes it the single largest financial Output Delivery Incentive (ODI) in the RIIO-ED2 framework.
The total range of ODI rewards and penalties across all incentives in RIIO-ED2 is +2.65% to -4.0% of return on regulated equity (RoRE). The IIS accounts for a substantial share of that exposure. In practice, a DNO that persistently misses its CI and CML targets could see its allowed return reduced by several percentage points — a material impact on shareholder returns.
Real-world penalties under RIIO-ED2 confirm the scale of exposure. In 2023-24, the first year of the new price control, all four DNO groups underperformed against their CML target. The highest individual penalty was £10.91m (incurred by SSEN), while better-performing DNOs received rewards — SPEN earned £2.76m and ENWL £0.87m. Targets are deliberately challenging and become progressively tighter year-on-year across the five-year control period.
| Mechanism | How it works |
| IIS financial penalty (GB / Ofgem) | DNOs pay per unit of CI and CML above their annual target. Penalty rates vary by network. The IIS is the largest single ODI-F in RIIO-ED2, with total ODI exposure of up to -4% of regulated equity. |
| RoRE reduction | Poor reliability KPI performance reduces the allowed return on regulated equity. In RIIO-ED2, the total ODI range is +2.65% to -4.0% RoRE across all incentives, with the IIS representing the largest share. |
| Reputational incentives (ODI-R) | Ofgem publishes annual performance reports benchmarking all DNOs. Poor CI/CML performance is publicly visible, creating reputational pressure alongside financial consequences. |
| Guaranteed Standards payments | Separate from the IIS, DNOs must make direct payments to customers who suffer prolonged interruptions (e.g. supply not restored within 12 hours under normal weather). These are statutory obligations under the Electricity (Standards of Performance) Regulations. |
| Licence obligations | Persistent failure to meet reliability standards can result in Ofgem taking enforcement action under licence conditions, up to and including licence modification or special administration. |
The Investment Case
These penalty mechanisms turn KPI improvement from an operational goal into a financial one. A DNO that can demonstrably reduce its CI and CML through better connectivity — faster fault detection, smarter automation, improved crew coordination — directly reduces its IIS penalty exposure and may move from penalty to reward territory.
For a mid-sized DNO, the difference between penalty and reward on the IIS alone can exceed £10m per year. The capital cost of a private LTE/5G deployment, amortised over the price control period, needs to be weighed against that ongoing financial exposure. In most cases, the regulatory arithmetic strongly supports the investment.
Conclusion
SAIDI and SAIFI fall because faults are found faster and prevented more effectively. CAIDI improves because restoration is better coordinated and less reliant on manual processes. And MAIFI can decrease as protection schemes become more precise and better synchronised.
Crucially, these are not just operational improvements — they translate directly into reduced regulatory penalty exposure. Under frameworks such as Ofgem’s IIS, the difference between hitting and missing a CI or CML target can be worth tens of millions of pounds per year. The case for private LTE/5G is therefore both operational and financial: utility-controlled, wide-area, low-latency connectivity that is purpose-built for operational technology, and that pays for itself through the regulatory incentives it protects.
To find out more about what Private 5G can offer Utilities and Energy providers, see here.