Ofgem's decision on networks funding adjustment requests
Ofgem has published its decision on requests by several energy network companies for adjustments to their funding under the regulator’s price controls.
Network companies can apply for additional allowances to cover extra costs in their price controls, which had not been forecast when they were agreed.
The decision follows Ofgem’s consultation on the requests in August.
Ofgem has also rejected the majority of National Grid’s request to recover £123 million on maintaining gas compressors. As set out in the consultation, National Grid can only recover £500,000 spending on the compressors from customers.
The consultation proposed to refuse National Grid’s request to recover around £140 million from consumers for replacing a gas pipeline across the Humber Estuary, challenging the company to provide better evidence of why this would be in consumers’ interests.
The company has since submitted new information, including evidence suggesting that the resilience of the energy system could be impacted if the pipeline isn’t replaced. Ofgem has now decided to allow National Grid to recover the efficient costs of replacing the pipeline. The company will only be allowed to recover £111 million from consumers as Ofgem considers that the project can be delivered more efficiently.
Ofgem has confirmed that National Grid, Wales and West Utilities and Cadent can recover an additional £96 million for improving resilience to physical and cyber security threats, managing street works, and compensating landowners for disruption caused by gas pipelines.
Notes to editors
- See copies of Ofgem’s final decisions.
- Ofgem sets four price controls (for gas transmission, electricity transmission, gas distribution and electricity distribution). Both the transmission and gas distribution price controls run from 2013 to 2021. The electricity distribution price control runs from 2015 to 2023. More information about the price controls and energy networks.
- National Grid Gas Transmission owns the high-pressure gas mains in Great Britain. National Grid Electricity Transmission owns the high voltage electricity grid in England and Wales. Cadent, and Wales and West Utilities are owners of some of Britain’s eight gas distribution networks.
- The pipeline National Grid Gas Transmission wants to replace runs across the Humber Estuary, taking gas from the Easington gas terminal into the national high-pressure gas system.
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