Ofgem set to cut National Grid’s Hinkley funding by £80 million
National Grid has been told it will have to slash the costs or stump up extra cash for a project to connect Britain’s first new nuclear plant in decades to the country’s energy network.
The regulator said it was planning to reduce by £80 million what the country’s grid operator is allowed to charge households to connect Hinkley Point C.
National Grid had asked Ofgem to allow it to recoup £717 million from consumers, but was told some of the costs were not justified.
It includes some costs for a type of pylon which takes up less space and has a smaller visual impact than its traditional counterpart.
Ofgem said it “does not intended to allow all the additional costs” associated with the so-called T-pylons.
As a monopoly, National Grid is able to charge consumers for upgrades to Britain’s electricity network though their energy bills.
Each household pays around 10p per day for the grid, or £36.50 every year. The new charge for the Hinkley project will be added to bills over 45 years, with National Grid shouldering the burden up front.
National Grid said that the decision on Hinkley will “not affect the delivery of the project, which is progressing well”.
It added: “We will … be looking to provide further evidence to Ofgem to support our view of the capital costs for this project.”
It is not the first time the two have come to blows over the funding model how to connect Hinkley to the power grid.
In July last year, Ofgem said it was planning to introduce a new model which the grid said would not benefit consumers.
Then on Tuesday, the regulator seemed to reverse that decision, reverting to a model which had been agreed in 2013.
National Grid said it welcomed the regulator’s decision not to proceed with the so-called Competition Proxy Model (CPM) for the project.
“We continue to question the value of the CPM,” it said.