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RNS Number : 4784H

OFGEM

18 August 2016

18 August 2016

Ofgem proposes reductions in National Grid's spending allowances for its energy transmission price controls

Ofgem set the price controls for energy transmission and gas distribution from 2013 to 2021. As part of this provision was made for a mid-period review of the outputs companies have to deliver for customers if there were material changes in Government policy, or changes in the needs of consumers and network users.

In May Ofgem opened a mid-period review into the energy transmission price controls. Ofgem is proposing to reduce National Grid's spending allowances for its electricity and gas transmission businesses.

-- In gas transmission Ofgem proposes to reduce National Grid's allowances by GBP168.8m as the Avonmouth gas pipelines it planned to build are no longer needed.

-- In electricity transmission Ofgem proposes to reduce National Grid's allowances by GBP38.1m. This is because less fault protection works are needed due to fewer generators connecting to the high voltage grid. This has not affected the reliability of the high voltage network.

-- National Grid is also the system operator for the GB high voltage grid. The system is going through major changes as we move to a low carbon economy. National Grid now has a bigger role to play, for example in planning the future of the grid and managing additional supply and demand balancing services. In recognition of this Ofgem is allowing an additional GBP21.5m.

Taking into account the additional allowance for National Grid's system operator role the total reduction in allowances is GBP185.4m.

Ofgem is consulting on its proposals and will make a final decision this autumn. Changes to National Grid's revenue would take effect from April 2018.

-ends-

Notes to editors:

1. Ofgem's proposals are available here https://www.ofgem.gov.uk/publications-and-updates/consultation-mid-period-review-riio-t1

The review has not re-opened the price control (for example changing key financial aspects such as the allowed cost of capital).

2. About Ofgem

Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.

For facts, figures and information about Ofgem's work, see Energy market facts and figures. Follow us on Twitter @ofgem

For further press information contact:

Ofgem press office

07766 511470

0207 901 7225

This information is provided by RNS

The company news service from the London Stock Exchange

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