SSEN launches ‘urgent review’, as Ofgem refuses £258m of funding

Scottish and Southern Electricity Networks (SSEN) says it is “urgently reviewing” Ofgem’s decision to refuse its £30 million funding request for the Pentland Firth subsea cable replacement project.

This morning (18 October) the energy regulator published its decision to refuse around £258 million in funding requested by several network operators under the RIIO-ED1 price control.

Ofgem said it considers these projects are not justified or provide poor value for money.

SSEN said it was surprised at Ofgem’s response, that it would be urgently reviewing the detail of its decision and would explore “all available regulatory mechanism” to keep the cable replacement in Orkney on track for completion in Spring next a year.

A spokesperson said: “We are extremely disappointed and surprised Ofgem has rejected our “high value project” reopener, seeking funding to replace the Pentland Firth East subsea cable, which has reached the end of its operational life.  Ofgem acknowledged in its consultation back in August it is in need of replacement.

“All other viable options assessed would cost more, delivering additional demand capacity that based on all available analysis of current and future demand on Orkney, would not be required.

“We will now urgently review the detail of Ofgem’s decision and explore all available regulatory mechanisms to enable the cable replacement to remain on track for it to be installed in spring 2020.

“We would like to reassure our customers on Orkney that we remain committed to meeting their electricity needs, in particular, maintaining security of supply and continued compliance with security of supply standards and will keep our customers, stakeholders and the Orkney community updated on developments.”

Other regulatory mechanisms available include the fact that SPEN can use other existing allowances, set by Ofgem following a review of its business plans prior to the price control period, to fund the cable.

The energy regulator also refused £67 million in street works funding requests, £70 million sought by Scottish Power Energy Networks (SPEN) for cable repairs and an additional £42 million from SPEN for work to increase network capacity in anticipation of electric vehicle uptake.

Ofgem did however approve £64 million of funding requests to invest in physical site security, street works and rail electrification projects.

Requests approved include:

• £45 million to fund street works activities by five network companies – Electricity North West, Northern Powergrid, SPEN, UK Power Networks and Western Power Distribution
• £16 million in funding to SSEN for diversions required to facilitate the electrification of the Great Western Railway line
• £3 million to Northern Powergrid to invest in sites that require physical site security upgrades