Completion of the £1bn Western HVDC link, a subsea electricity cable linking Hunterston in Scotland with Deeside in North Wales, has been delayed until 2017-18 due to cable manufacturing problems.
As a result of the delay, Ofgem has postponed the allowances that National Grid and Scottish Power will receive for building the cable. The decision came as part of Ofgem’s mid period review of the 2013-2021 gas distribution, gas transmission and electricity transmission price controls.
The regulator said National Grid Electricity Transmission (NGET) and SP Transmission reported they will deliver the link late due to technical problems with the manufacture of the cable. Ofgem said: “The companies will likely receive a financial benefit by paying suppliers later despite the delay likely increasing costs to consumers. We have decided to delay allowances to protect consumers.”
As part of it’s mid period review, Ofgem has also accepted Cadent’s offer to waive £54 million of allowances for work to medium pressure iron mains replacement work in its Central London gas network, which will no longer take place during the current price control.This is in addition to the £185m reduction in National Grid’s allowances which has already been announced under this mid-period review. Cadent, formerly National Grid Gas Distribution, owns the gas distribution networks in North London, Central England, the East of England and North West England.
The regulator decided not to make adjustment for the other issues considered during the mid period review, specifically:
- Not to accept SP Transmissions’ request to amend its connections volume driver, which it forecasts would increase allowances by £81 million.
- Make no change to the National Transmission System (NTS) Exit Capacity incentive.
- Make no change to three gas distribution outputs, other than to update reliability (loss of supply) targets.
- Make no change to SP Transmission’s trigger mechanism.
- Take no action in relation to other electricity transmission outputs.
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