Ofgem Trims National Grid's Spending

British energy regulator Ofgem has cut the amount of money that the gas and power grids operator National Grid may spend on the network.

Since Ofgem approved the eight-year investment plan for 2013-21, National Grid has cancelled projects that were included in the past plan, so it has taken advantage of its mid-period review to eliminate some of National Grid's costs but without affecting existing operations.

Ofgem is proposing to reduce its allowances by £168.8mn ($221.8mn) in gas as the Avonmouth gas pipelines it planned to build are no longer needed. Avonmouth, the plant that liquefied gas in summer for peak shaving in winter, was used for balancing the system but it was closed down this summer owing to lack of demand for its services. It was to have run until 2018.

Avonmouth LNG near Bristol shut down this summer, two years ahead of schedule (Credit: National Grid)

Ofgem is also proposing to reduce National Grid’s allowances by £38.1mn in the power grid as there are fewer generators connecting to the high voltage grid. This has not affected the reliability of the high voltage network, said Ofgem.

Oftem said that the system is going through major changes in order to adopt to a lower carbon power system and that 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 £21.5mn. Taking into account the additional allowance for National Grid’s system operator role the total reduction in allowances is £185.4mn."

National Grid said it welcomed "Ofgem's continued commitment to the clarity and certainty offered by the eight-year [price control] framework, which has started to deliver important benefits for customers.

William Powell