Exclude weak firms from opened-up network, warns National Grid

National Grid has urged the government to ensure that opening up electricity networks to competition doesn’t result in a repeat of recently exposed failings in the retail market.

In a briefing for MPs scrutinising the Energy Bill, the company welcomes moves in the legislation to open up network development to competition.

It agrees that the introduction of competition for strategic higher value projects, worth more than £100 million, could help to drive innovation and cut costs.

However, National Grid – which currently has a monopoly over the transmission network across England and Wales – warns that replacement of existing network assets should be excluded from competition because of the risk that it poses to the system’s safety and reliability.

The briefing also warns against being too lax in policing potential entrants to the networks.

“Where competition is introduced, we must learn from failings in the energy supplier market and ensure the network sector remains resilient to external changes,” National Grid submission states.

“Any new licensees, or contracted parties, must be held to a consistent set of standards of financial and operational resilience, with proper oversight from Ofgem. This will protect our critical infrastructure and ensure that the costs of poor performance or failure are not socialised amongst taxpayers or consumers.”

The briefing also calls for early clarity on projects or programmes going out to competition in order to ensure timely delivery by bringing forward opportunities for the supply chain to engage in the process.