In a mid-term review of the energy transmission price controls set by Ofgem for National Grid, the energy regulator is proposing a £21.5m uptick in the allowance for spending on the high voltage grid, which would be more than offset by tighter price controls in other areas.
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Since Ofgem approved the eight-year investment plan for 2013-21, National Grid has cancelled projects that were included in the past plan, so it has taken advantage of its mid-period review to eliminate some of National Grid’s costs but without affecting existing operations.
In May, Ofgem opened a mid-period review into the energy transmission price controls and following the review is now proposing to reduce National Grid’s spending allowances for its electricity and gas transmission businesses. The consultation on the changes will continue through the summer, with a final decision expected in early autumn.
It also proposes reducing Grid’s allowance by 38.1 million pounds for electricity transmission works.
At the same time, National Grid appears to have been completely blindsided by the rapid growth in small-scale generation such as solar panels and small wind farms that connect directly into lower-voltage distribution networks. “Taking into account the additional allowance for National Grid’s system operator role the total reduction in allowances is £185.4mn”.
“As expected, the scope of this MPR is narrow with no change to key financial parameters of the framework”, National Grid said in a statement.
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National Grid (NG.L) said that it welcomeed Ofgem’s continued commitment to the clarity and certainty offered by the eight-year RIIO framework, which has started to deliver important benefits for customers.
