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National Grid argues OFGEM wasting resources with proposed investment plan

National Grid

In this week’s Gossage, we explore the fractious relationship between OFGEM and the National Grid, with the Grid unhappy with OFGEM’s latest proposals.

Does the electricity regulator OFGEM live in a different world to the rest of us? That seems to be the conclusion reached at the National Grid. The Grid, consistently one of the most impressively run parts of the electricity network, has told the regulator straight out that a significant part of its ‘draft determination’, regarding the company’s proposed investment expenditure over the next five years, is simply ‘unacceptable’. 

The Grid has a business plan committed to almost £10 billion of investment over the next five-year RIIO-2 period, but this has to be approved by OFGEM. 

More than 50% of the proposed electricity network investment and around 40% of the proposed gas network investment has been disallowed in OFGEM’s ‘draft determination’. If such a complete watering-down of ambition is enforced, the regulator’s caution will seriously delay key investment needed for the government’s net zero transition, and will seriously impact upon the long-term resilience of the energy networks.  

According to the energy system operator, OFGEM instead proposes to subject a large part of the company to wasteful, additional, time-consuming future approvals processes. National Grid calculates the amount it can invest in electricity network reliability will have to be cut by 80%. It reckons the energy regulator’s proposals will increase the risk to network reliability and resilience by 24%, and estimates that the current approach would take around 100 years to replace important electricity network assets. 

All this would increase the risk both of scuppering the path to net zero carbon emissions, and of substantial outages particularly during severe weather events, according to the National Grid. And who will get the blame for these shortfalls? Sadly, not that dreary grey man running OFGEM, little Jonny Brearley.

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