Ofgem has announced a review into the £268.3 million allowance for National Grid’s gas transmission subsidiary.
The allowance, which runs from 2013 to 2021, is for providing capacity at the Fleetwood entry point to the national high pressure gas pipeline in Lancashire.
National Grid Gas Transmission (NGGT) is required by its licence to offer 650GWh/day of entry capacity at Fleetwood.
Its obligation to provide the capacity was originally triggered by bids in an auction by a gas shipper. However the shipper has defaulted on payments and no longer has a right to the capacity, according to Ofgem.
The grid operator has since offered it at auctions to other parties and a gas shipper has successfully bid for 350GWh/day of entry capacity for one quarter in 2025.
The regulator said the review could reduce NGGT’s price control allowances and its capacity obligation.
Ofgem added: “We will take account of stakeholder views on whether this entry capacity is still needed. Ofgem is planning to publish a consultation on its proposed approach in March 2017 and a final decision will be made early summer 2017.”
Stakeholders and anyone wishing to engage on the issue can contact [email protected]
Earlier this year Ofgem proposed a reduction of £185.4 million on National Grid’s allowances for gas and electricity transmission projects.