Ofgem proposes further £277.5m budget cut for National Grid

Ofgem is proposing reducing National Grid’s allowance for its gas transmission price control by £277.5 million. It covers the 2013-2021 period and relates to the national high-pressure gas pipeline at […]

Register now!

By Priyanka Shrestha

Ofgem is proposing reducing National Grid’s allowance for its gas transmission price control by £277.5 million.

It covers the 2013-2021 period and relates to the national high-pressure gas pipeline at the Fleetwood entry point in Lancashire.

National Grid Gas Transmission (NGGT) was required to offer 650GWh/day of entry capacity at Fleetwood, initially triggered by a gas shipper which bid for the capacity in an auction. However, Ofgem says the shipper has since defaulted on payments and no longer has the right to the capacity.

The regulator is therefore proposing to reduce the allowance “otherwise customers will be charged for investment that has not been delivered”.

It has launched a consultation on the proposal as well as on removing National Grid’s obligation to provide capacity at Fleetwood.

That means any gas shipper that wants to buy capacity there in the future would have to purchase a minimum amount in one of the regular auctions run by the grid operator.

Ofgem is inviting views until 26th May 2017.

Last month the regulator confirmed it will reduce National Grid’s spending allowance for running the electricity grid and gas main by £185 million.