Network Rail deal to avert £150m rise in electricity bill
NETWORK Rail has struck a deal with the energy regulator to save on electricity costs after warning it faced a bill increase of around £150m from a shakeup of network charges.
The rail network lobbied the energy watchdog to secure an overhaul of its plan to hike energy charges for the organisation from April 2023.
Network Rail warned Ofgem its overhaul of network charges would push up the electricity costs of its railways from £36.5m to £190m.
The rail operator warned the energy regulator that its new charging plans “would cause a major increase to rail travel costs”.
Network Rail faced higher costs from Ofgem’s plan to remove incentives for using the electricity grid at off-peak times. It was also concerned about changes to Ofgem’s charging bands.
Steelmakers and other high-energy users have also complained about the changes. They were benefiting from incentives designed to force them to use the network during periods of lower demand from domestic users.
Network Rail said: “We lobbied Ofgem, which resulted in the charging method being changed, enabling us to be pretty much cost-neutral.
“During the [Ofgem] consultation it was apparent [that] there were some organisations who could stop using the grid at the relevant times. The rail network operates 24/7 and it was only right that we were able to challenge the proposed changes to electricity charges.”
Network Rail’s campaign has also delivered savings for hundreds of other electricity users that connect directly to National Grid rather than through a regional network.
The Daily Telegraph reported last week that ministers were considering subsidies for steelmakers impacted by Ofgem’s so-called targeted charging review. Industry body UK Steel has warned heavy industry users face charge increases of up to 85pc.
The Business Department is now considering plans to subsidise network charges for some energy users by up to 90pc. The cost for the charges would then be spread among other users on the network.
The German government currently provides a 90pc exemption to all elements of network charging.
Ofgem has overhauled network charges to strip out incentives to even out the charges it levies on industrial and domestic users.
The regulator pushed ahead with the first charging changes in April this year and the rest will apply from April 2023.
A spokesman for Ofgem said: “Our targeting charging review is focused on ensuring that the costs of the network are picked up fairly by all energy users.”