National Grid to be stripped of £277.5m by Ofgem

Mid-point review could also see gas transmission operator lose licence obligation for capacity provision

Ofgem plans to claw back £277.5 million from National Grid Gas Transmission’s (NGGT’s) RIIO-GT1 allowance. The proposal comes as part of mid-point review within NGGT’s eight-year price control.

In a statement released today, Ofgem said the reduction should be made because NGGT no longer needs to provide capacity for importing gas into the national high-pressure gas pipeline at the Fleetwood entry point in Lancashire.

The regulator explained: “National Grid Gas Transmission’s (NGGT) obligation to provide this capacity was originally triggered by a gas shipper which bid for the capacity in an auction. However, the shipper has since defaulted on payments and no longer has a right to the capacity.”

Ofgem said NGGT’s allowance should therefore be reduced, “otherwise customers will be charged for investment that has not been delivered”.  

Ofgem also said that it wants to remove NGGT’s obligation to provide capacity at Fleetwood altogether.

The regulator said such a change would mean “consumers would be better protected against the risk of paying for expensive network investment which is not needed.

Ofgem has launched a consultation on this proposal – and the suggested reduction in NGGT’s allowance – which interested parties must respond to by 26 May.