Ofgem proposes £185.4m cuts to National Grid allowances

Energy regulator Ofgem on Thursday put forward proposals to reduce National Grid’s allowances by £185.4m.

The regulator, which sets the amount of cash granted to National Grid to maintain and improve electricity and gas distribution networks, opened a mid-period review into the energy transmission price controls in May.

In gas transmission, it proposed to reduce National Grid’s allowances by £168.8m as the Avonmouth gas pipelines it planned to build are no longer needed.

Meanwhile, in electricity transmission, the regulator proposed to cut the company’s allowances by £38.1m, saying less fault protection works are needed due to fewer generators connecting to the high voltage grid. Ofgem pointed out that this has not affected the reliability of the high voltage network.

However, Ofgem said it would allow a further £21.5m to enable the group to manage additional supply and demand balancing services on Britain's high voltage grid network as the country moves to a low carbon economy.

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.