National Grid to bear £17.7 million of extra Black Start contract costs, £54 million can be recouped from customers

Regulator Ofgem has said National Grid must bear £17.7 million of a £113 million bill it incurred procuring so-called ‘Black Start’ services. Within that bill customers will pay an additional £54 million, above budgetted costs, because Ofgem said National Grid could not have predicted some events adding to the cost.

The System Operator decided it had to add extra black start capability earlier this year after SSE announced proposals to close Fiddler’s Ferry, Engie said it proposed closing Rugeley, and Drax proposed mothballing its coal units.

The SO procured black start from Drax and Fiddler’s Ferry at a total cost of £113 million.

The regulator decided that Drax’s announcement was not ‘unforseen’. It had Capacity Market contracts in future years and its existing black start contract, due to end in 2016, would have to be renegotiated in any case. It said National Grid should bear £17.7 million of the £67 million contract costs.

However it said the Fiddler’s Ferry announcement was unexpected, because although the plant was operating at as low as 11% load factors it had Black Start contracts lasting until 2020 and other contracts that would incur penalties if it closed. Ofgem allowed National grid to recover the full £54 million cost of that Black Start contract.