UK energy regulator Ofgem said Thursday it is proposing that the National Grid's spending allowances for its energy transmission price controls be cut due to a number of material changes in the company's plans.
Ofgem set the price controls for energy transmission and gas distribution from 2013 to 2021, but provision was made for a mid-period review of the outputs companies have to deliver for customers if there were material changes in government policy, or changes in the needs of consumers and network users.
In May, Ofgem opened a mid-period review into the energy transmission price controls and following the review is now proposing to reduce National Grid's spending allowances for its electricity and gas transmission businesses.
"Ofgem is consulting on its proposals and will make a final decision this autumn," it said.
Changes to the National Grid's revenue would take effect from April 2018 and result in a total cut of GBP185.4 million (Eur214 million).
In gas transmission, Ofgem proposes to reduce National Grid's allowances by GBP168.8 million.
This is because the Avonmouth gas pipelines it planned to build are no longer needed, Ofgem said.
In electricity transmission, Ofgem proposes to reduce National Grid's allowances by GBP38.1 million.
"This is because less fault protection works are needed due to fewer generators connecting to the high voltage grid," it said.
This has not affected the reliability of the high voltage network, it added.
While cutting some spending allowances, Ofgem said it was also proposing an additional GBP21.5 million for National Grid to spend on planning the future of the power grid and managing additional supply and demand balancing services.
This is as a result of the fact the high-voltage power system is going through major changes "as we move to a low carbon economy," Ofgem said.
National Grid said the scope of the proposed changes was "narrow with no change to key financial parameters" within the framework of the eight-year period.
"National Grid welcomes Ofgem's continued commitment to the clarity and certainty offered by the eight-year framework, which has started to deliver important benefits for customers," it said.
