Ofgem claws back £185m from National Grid
Published 24 February 2017
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The regulator has stuck by its proposed reductions in National Grid’s spending allowance for RIIO-T1
Ofgem has confirmed a £185m spending allowance cut for National Grid in its mid-period review of electricity and gas transmission.
The cut comprises a £168.8m claw-back on the construction of a new high pressure gas pipeline in Avonmouth, which Ofgem says is no longer needed, and a £38.1m reduction in funds for fault protection works to accommodate the connection of generators to the high voltage grid.
Ofgem said that less reinforcement is now needed because fewer generators are demanding to connect to the transmission system.
The regulator’s final decision on the T1 midpoint review also confirms a boost to the spending allowance for system operation. An additional £21.5m will be made available for National Grid to provide additional supply and demand balancing services.
Overall, these adjustments mean a reduction a £185m reduction in National Grid’s spending budget out to 2021.
The changes to National Grid’s spending were expected. The regulator set out its intention to implement them in August last year and its “minded-to” decision has not varied. The alterations will take effect in April 2018.
The mid-point review process was introduced for the first cycle of the RIIO regulatory framework, which began in 2013. It was designed to allow for adjustments within the new eight-year price control period – the future of which is in doubt after comments made by Ofgem chief executive Dermot Nolan, earlier this month.
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