Company Registration No. 02366949

ELECTRICITY NORTH WEST LIMITED

Annual Report and Consolidated Financial Statements

for the year ended 31 March 2023

Introduction

West of England. We are responsible for maintaining and upgrading the network of poles, wires,

transformers and cables which carry electricity from both the national grid and locally connected

generation to homes and business across the North West. Our job is to keep electricity flowing safely

and reliably to our customers’ homes and businesses, keeping the power on 24 hours a day, seven

days a week. We are proud of who we are, the essential role we play for our customers, our support

of the move to net zero carbon, and the investment we make locally.

We recognise the role that electricity, and the electricity distribution networks such as ourselves, play

in leading and facilitating the net zero transition, managing power flows from a range of sources as

under the Companies Act 2006.

Notice regarding limitations on directors’ liability under English Law

The information supplied in the Strategic Report and Directors’ Report has been drawn up and presented in accordance with English Law.

The liabilities of the directors in connection with these reports shall be subject to the limitations and restrictions provided by such law.

Strategic Report

In preparing the Strategic Report, the directors have complied with s414 of the Companies Act 2006. The Strategic Report has been prepared

looking statements that are subject to factors associated with, amongst other matters, the economic and business circumstances occurring

within the region and country in which the Group operates. It is believed that the expectations reflected in these statements are reasonable

but they may be affected by a wide range of variables which could cause actual results to differ materially from those anticipated at the date

of the Annual Report. The Group does not undertake any obligation to update or revise these forward-looking statements, except as may

be required by law or regulation.

Regulatory reporting and regulatory audits for the year ended 31 March 2023

Certain regulatory performance data contained in this Annual Report remain subject to regulatory audit by the Office of Gas and Electricity

Markets (‘’Ofgem’’). The final regulatory reporting pack for the year ended 31 March 2023 is not due for submission to Ofgem until July

2023, and will be reviewed by Ofgem after their submission.

Website and investor relations

Contents

Chairman’s Statement ............................................................................................................................. 1

Chief Executive Officer’s Statement ........................................................................................................ 3

Strategic Report....................................................................................................................................... 6

- Company Background ....................................................................................................................... 6

- Corporate Social Responsibility ...................................................................................................... 14

- Non-financial Information Statement ............................................................................................. 20

- Key Performance Indicators ............................................................................................................ 23

- Financial Performance .................................................................................................................... 27

- Risk Management ........................................................................................................................... 34

Corporate Governance Report .............................................................................................................. 41

Directors’ Report ................................................................................................................................... 56

Directors’ Responsibilities Statement .................................................................................................... 59

Independent Auditors’ Report to the Members of Electricity North West Limited............................... 60

Financial Statements ............................................................................................................................. 70

- Consolidated and Company Statements of Profit or Loss and Other Comprehensive Income ....... 70

- Consolidated and Company Statements of Financial Position ........................................................ 71

- Consolidated Statement of Changes in Equity ................................................................................ 72

- Company Statement of Changes in Equity ...................................................................................... 73

- Consolidated and Company Statements of Cash Flows .................................................................. 74

Notes to the Financial Statements ........................................................................................................ 75

1

Chairman’s Statement

I am pleased to introduce the Annual Report

and Consolidated Financial Statements for

Electricity North West Limited (ENWL) for the

year ended 31 March 2023.

understandably been highly focused on the

2023-28 price control agreement with our

regulator, Ofgem (this control is called “RIIO-

ED2”). We entered negotiations with Ofgem in

a positive frame of mind, being the only DNO

complacent in this demanding process; for

example, we needed to show that we were

learning lessons from events such as Storm

Arwen in November 2021.

The Board took a lot of advice – especially from

our own designated customer group. In

decarbonisation and net zero remains a top

priority for the members of Youth Focus North

West.

The ED2 final determination by Ofgem in

December 2022 was carefully considered by

the Board. We concluded that, whilst very

challenging for the business, it represented a

fair balance of interests. The Board was

particularly pleased that Ofgem recognised

that ENWL has effectively become the

the next price control – with a particular regard

to digitalisation.

The combination of a well-run network

company, that is also innovative and

imaginative, will position us well both through

ED2 and, in the future, going into the 2028

price control, as well as supporting the desire

amongst our local politicians to push to net

zero well before 2050.

Major personnel changes achieved

Emery who stepped down this year after six

years of outstanding contribution in the role.

Ian made an immediate impact on our RIIO-

ED2 submission and he ensured that Ofgem

really understood the nature and

achievements of ENWL’s business. The final

determination in December 2022 represented

a significant improvement for our stakeholders

over the original draft determination of June

2022.

2

Chairman’s Statement (continued)

Ofgem and Government have recognised in

recent months that it is the local distribution

network companies, such as ENWL, that will

‘lead the charge’ for changes to meet the

3

Chief Executive Officer’s Statement

I am pleased to present the Annual Report and

Consolidated Financial Statements for the year

ended 31 March 2023, my first such report as

Chief Executive Officer at Electricity North

West.

business, working closely with the senior

management team, we have now embarked

safe operation is fundamental to the business’s

particularly those in vulnerable circumstances.

Everyone has been affected to differing

extents by rising energy costs in the last 12

months. In the context of these cost of living

concerns, we have continued to keep our bills

among the lowest in the UK with ENWL’s

typical domestic customer paying £123 a year,

compared to the GB average of £138. For 34

pence per day per customer we manage

30,000 switchgear assets, 57,000 kilometres of

important lessons in the aftermath of one of

the worst storms in a generation, Storm

Arwen, in November 2021. Customers in

affected areas told us that they needed more

help to be better prepared for similar future

events. Alongside the £0.5m community

resilience fund that we established in the

months after the storm, we have completed

significant investment in the network,

including deploying more sensors on the

improve our operational response. We have

also put in place arrangements to rapidly

mobilise the whole workforce to support our

customers in vulnerable circumstances, when

emergency power cuts, we enhanced our

normal winter campaign tailoring the

information we provided to help our

customers in these circumstances. This

circumstances, medically dependant with no

access to mobile or internet communications,

over the course of just one week. This involved

more than 300 volunteers from across the

company supporting our customer contact

centre. We are the only critical national

Delivering performance improvements for

customers

of customer interruptions) showing a 19%

improvement over that period and customer

satisfaction improving from 80% to 89.4%. We

have delivered this while being absolutely

focussed on cost efficiency, delivering the

highest cost efficiency of any distribution

network operator, both enabling additional

investment in the network and saving our

4

Chief Executive Officer’s Statement

an efficient cost. This year we were proud that

one of our innovations, CLASS, received special

recognition from Ofgem. CLASS reduces, when

needed, the amount of power used by

everything from streetlights to everyday

household devices. Whilst these reductions

are not noticeable to consumers, when these

individually small reductions are aggregated

across a wide area, they amount to an

important saving in electricity use at times

CLASS was the only project in the UK to receive

an award in Ofgem’s latest assessments of

network company innovations with the judging

panel calling it ‘exceptional’. We are very

proud of the development and commercial

deployment of CLASS.

I was also pleased to see our innovative Smart

Street project secure funding for the next 5

years in the ED2 determination. Smart Street

will save 250,000 properties in our region

digitally advanced network in Europe, giving us

unprecedented visibility and control of our

assets.

Looking ahead to the next regulatory period

We have now entered a new five-year

regulatory period, RIIO-ED2. This will be a

period of significant change for the industry as

we continue the journey to net zero. RIIO-ED2

brings a unique challenge for the energy

industry with the demand for power expected

distribution operators invest for a net zero

future during a cost of living crisis.

control, setting out the funding arrangements

support our communities and their net zero

ambitions. As well as investing in the network,

significant sums will go towards strengthening

customer service and supporting those

customers in vulnerable circumstances who

delivering further improvements in customer

satisfaction, targeting a minimum customer

No one will be left behind and all will benefit

through our work to enable a net zero future.

Financial performance in the year

The financial performance for the Company

continues to be strong, supported by the cost

efficiencies and incentive revenue earnings

that we have delivered over the ED1 regulatory

period.

The remaining increase in our revenues

reflects the positive impact of incentive

revenues earned by exceeding standards of

performance for customers as set by Ofgem,

the effect of rising inflation and in part reflects

the collection of some income in the year that

was not collected at the start of the Covid-19

pandemic where we saw our revenues fall.

5

Chief Executive Officer’s Statement

investment, improving network resilience and

capacity. Total capital expenditure during the

year was £263.4m, £50.4m higher than the

prior year.

Our income statement continues to show the

impacts of the macro economic environment

increase (2022: decrease) in profit before tax.

This non-cash item continues to reflect

volatility in the markets and in particular in

inflation forecasts.

A responsible employer proud to serve our

communities

Delivering a culture of high engagement is

critical for us to meet the challenges that the

industry is facing. We measure colleague

engagement with an annual independent

experience of working at ENWL.

Diversity and Inclusion. Female representation

in our leadership teams has increased year on

year and is currently at 34%. Our gender pay

gap continues to reduce and is one of the

smallest gaps in the sector and more than 4%

better than the latest average UK gender pay

We have engaged with the 10,000 Black Intern

programme and look forward to welcoming

our new interns later in the year.

shareholders, my executive colleagues and all

retirement plans. We will miss them.

However, in Chris Johns as Chief Financial

Officer and Ben Grunfeld as Asset and

Technology director, we have two new

challenges of ED2. I look forward to driving the

accelerated trajectory of good-to-great

performance. This will ensure strong outcomes

for consumers, employees and shareholders as

we enter a period of significant change for the

industry and meet the net zero challenge

6

Strategic Report

Electricity North West Limited is a private

company limited by shares and incorporated

and domiciled in England, the United Kingdom,

under the Companies Act 2006. It is ultimately

owned by investors composed of funds advised

by Equitix, a consortium led by KDM Power

Limited and Swingford Holdings Corporation

West of England. We are one of 14 distribution

network operators in the UK regulated

by Office of Gas and Electricity Markets

(Ofgem).

cables which carry electricity from both the

national grid and locally connected generation

to homes and businesses across the North

West, together with the telecommunications

linear network operating model:

Strategic Report (continued)

People

region. We are committed to building careers

for our people providing secure, long-term

climate surveys are undertaken to measure

engagement and levels of agreement with the

Company’s identified climate priorities.

2023 survey are the highest ever recorded by

the organisation, with a survey response rate

competencies. We were proud to receive the

Investors in People Certification in April 2022.

Equal and fair consideration is given to all

employees and applicants regardless of their

diverse background. If necessary, the business

modifies equipment and practices to

colleagues. This year we rolled out company-