SSE chief executive Alistair Phillips-Davies has penned an open letter to Ofgem urging it to rethink deep cuts to transmission company returns and “put the UK back on a path to net zero”.
Ofgem is under pressure to take a hard line after the current eight year spending controls were viewed as far too generous, with consumer bodies such as Citizens Advice stating that the regulator has inadvertently allowed networks to make billions in excess profit.
Ofgem’s new draft framework from electricity transmission and gas networks roughly halves the returns network companies can make for the spending period from 2021-26. It lays down a marker for the electricity networks framework – and WPD’s owner PPL Corporation has recently put the firm up for sale.
National Grid, usually rubbishes talk of blackouts as scaremongering. This week its CEO turned the tables, stating Ofgem’s plans increase the risk of supply losses.
SSE’s chief executive repeats that warning:
“Far from putting net zero at the heart of the coronavirus recovery, the regulator’s plans could jeopardise net zero, as well as impact the reliability and security of supply of critical national infrastructure,” writes Phillips-Davies.
“Investment plans should be commensurate with net zero,” he adds. “Ofgem’s complex new investment mechanisms for new net zero investments should be fast and effective, not slow and bureaucratic. And returns must be commensurate with the risk of these huge capital intensive projects.”
However, he states, it is not too late for Ofgem to change tack:
“Overall, my message to Ofgem is simple; there’s still time for us to work together to unlock the billions of pounds of investment needed to put the country on a path to net zero. Our plans are formed by stakeholders and evidence. They are deliverable. And by unlocking this investment we can kickstart the green economic recovery – and be the backbone of ‘build back better’.”