UK energy distributor warns of blackouts after Ofgem regulation modifications

The CEO of UK energy distribution firm Nationwide Grid has warned that new Ofgem rules may discourage infrastructure funding, risking blackouts.

John Pettigrew criticised the UK energy regulator Ofgem and its modifications to infrastructure funding forward of the tip of consultations on Friday. Chatting with The Occasions, he spoke of fears that energy strains would ‘decay’ and that new funding programs wouldn’t forestall this.

Ofgem launched worth caps on British electrical energy payments in 2013. These are set to run out in 2021, and Ofgem’s proposed alternative rules would change infrastructure funding mechanisms. This has proven unpopular with energy distributors.

To offer financial savings to shoppers, Ofgem needs to cut back the returns networks could make from tasks. On the identical time, it could present greater than $33.3bn (£25bn) of funding for infrastructure tasks upfront. Chief govt Jonathan Brearley stated on the time that this may make “a fair deal for consumers, cutting returns to the network companies to an unprecedented low level while making room for investment to drive a clean, green and resilient recovery.”

In his interview, Pettigrew stated: “It is deeply concerning for us because ultimately you’re increasing the risk on the network. The risk of a loss of supply increases as a result of not spending as much on asset health, because the assets are deteriorating as they age.”

Ofgem tells Nationwide Grid: “We will not spend millions on bad proposals”

Pettigrew stated he was involved concerning the consistency of energy provide for some main cities. Particularly, he highlighted a proposed undertaking for Sheffield in North East England, the place greater than 500,00zero persons are served by two energy strains.

Nationwide Grid deliberate to exchange one in all these in works costing $53.4 (£40m). Ofgem rejected this proposal, saying Nationwide Grid had not demonstrated the necessity for the works.

An Ofgem spokesperson stated: “Nationwide Grid has did not show the necessity to substitute this cable, citing, for instance, a single survey from 2015 as proof to justify spending a proposed £40 million of shoppers’ cash on this restore. So we have now left the door open for them to return again to us with higher proof and, if they supply it, we, in fact, stand able to fund this restore.

“Sustaining a robust and dependable community for shoppers is our high precedence, and wherever community firms have demonstrated they want very important funding to do that we have now given them the go-ahead.

“We won’t green-light spending billions of shoppers’ cash on poor or poorly evidenced proposals. Nevertheless, we have now left the door open for firms to return again to us with extra proof on the work they want funding for.

“We now expect them to come forward with better-evidenced plans, and stand ready to deliver funding when they do so.”

Nationwide Grid says it has proposed infrastructure works with a worth of greater than $4bn (£3bn), however that Ofgem rejected greater than 80% of those.

Business consultations on the brand new RIIO-2 worth management construction finish this week, and utility firms Scottish Energy and SSE have additionally objected to the plans

In August, Ofgem ordered an investigation into Nationwide Grid’s energy balancing programs, after a interval of unusually excessive balancing prices. When the UK enforced a nationwide lockdown to restrict the unfold of Covid-19, electrical energy use patterns shifted considerably, and Nationwide Grid’s price of levelling rose to 39% larger than predicted.

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