The UK’s gas and electricity networks have been given £2.5bn less than they requested to meet the country’s energy needs.
According to Ofgem £4.5bn over the next five years is an adequate sum for meeting the country’s energy needs.
It unveiled the amount during talks regarding the next transmission control price period, which begins in Spring 2007. The energy regulator has allowed the amount of capital investment to rise to £260m, which is 76% higher than the limit set in the previous price control regime.
According to Ofgem although the proposals will lead to a 6% rise in transmission charges, it will have little impact on consumers as transmission makes up only 3% of household bills.
However many transmission companies fear the investment limit will not be enough to fix new wind farms to the national grid and to upgrade the interconnectors needed to bring gas in from overseas.
“There is some money for renewable projects but this has currently been removed from the specified amount. There will be an automatic adjustment when renewable generation comes online,” commented David Gray, managing director for networks at Ofgem.
Energy networks get less than expected
