Na­tional Grid chief warns of black­outs in dis­pute over prof­its curb

The Daily Telegraph - Business - - Business - By Ed Clowes

THE BOSS of Na­tional Grid has at­tacked the en­ergy watch­dog over its plans to curb how much the net­work is al­lowed to make in prof­its and to in­vest, warning that the UK could ex­pe­ri­ence black­outs as a re­sult.

John Pet­ti­grew, chief ex­ec­u­tive of Na­tional Grid, said Ofgem’s draft de­ter­mi­na­tions were “un­ac­cept­able”. A bat­tle is brew­ing be­tween the reg­u­la­tor and en­ergy com­pa­nies af­ter Ofgem said it would halve the prof­its they are per­mit­ted to make in or­der to save money for con­sumers, shav­ing £20 a year off the av­er­age house­hold bill.

The pro­pos­als – part of Ofgem’s lat­est five-year plan for the in­dus­try – have sparked claims that com­pa­nies will be so squeezed there will be no money left for in­vest­ment in in­fra­struc­ture. “They will in­crease the risk pro­file of our net­works, they will jeop­ar­dise the UK’s tran­si­tion to net zero, and with the low re­turns on of­fer, they will dampen in­cen­tives and innovation, and limit our abil­ity to help the green re­cov­ery,” Mr Pet­ti­grew said.

Un­der Ofgem’s pro­pos­als, it would take more than 100 years to re­place im­por­tant elec­tric­ity net­work as­sets, Na­tional Grid ex­ec­u­tives said yes­ter­day, while the risk of power out­ages on the elec­tric­ity net­work will rise by 24pc. Be­cause Ofgem has cut com­pa­nies’ per­mit­ted prof­its, it has also had to re­duce the amount of this money which must be spent on in­vest­ment.

Firms have been told to plough £25bn in up­grad­ing power net­works, and £10bn into mea­sures to cut carbon emis­sions – much less than the in­dus­try ex­pected. Na­tional Grid had said in its busi­ness plan that it would in­vest al­most £10bn over the five-year pe­riod.

But in­stead, Ofgem re­fused to al­low more than 50pc of the com­pany’s pro­posed elec­tric­ity net­work in­vest­ment and around 40pc of its pro­posed gas net­work in­vest­ment. The amount that the Grid can in­vest in elec­tric­ity net­work re­li­a­bil­ity has been cut by an “un­prece­dented” 80pc, lead­ing to fears that rolling power cuts could plague Bri­tain. How­ever, Ofgem said: “Strong ev­i­dence from wa­ter reg­u­la­tion and Ofgem’s off­shore trans­mis­sion regime shows that in­vestors will ac­cept lower re­turns and con­tinue to in­vest.”

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