Two distributed network operators (DNOs) including Britain’s biggest WPD today passed to Ofgem final plans totalling more than £ 10 billion for network upgrades over the regulator’s next five year period.
Western Power Distribution has been wholly owned by National Grid since March. Its parent today announced the headline £6.7 billion which WPD wants to spend during RIIO-ED2’s five-year window beginning in 2023.
The DNO claimed today’s sum is nearly 30% up on its commitments contained in ED1 improvements, made under its previous owner, the American utility PPL.
Catering for future charging of 1.5 more million EVs, plus 600,000 new heat pumps heating WPD’s eight million homes, shape the sum, alongside maintaining reliability and resilience of the DNO’s systems.
WPD’s largest ever consultation process, involving “the unparalleled scrutiny” of 25,000 stakeholders, shaped today’s business plan, the DNO’s parent National Grid told investors.
“It is critical for all stakeholders that we have the right incentives, and an appropriate level of return, to attract the investment required to enable net zero goals”, National Grid said.
SSEN meanwhile intends investing £3.99 Bn in Scotland’s Highlands and in central southern England over the RIIO-ED2 period of 2023-2028, so as to accelerate a transition to “smart, flexible networks” en route to Net Zero.
Supporting what the network operator calls “a just and fair transition”, SSEN says it can spend the cash without recouping higher costs from customers’ bills.
The FTSE 100-listed company indicated that baseline investment – cut by £146 million since its initial proposal – could see the regulated asset value of SSEN Distribution grow to over £6.0 billion by 2028.
SSEN expects over 850 jobs to be created over the price control period.
Ofgem intends convening open forums starting in March 2022, ahead of publishing its draft determination later in the summer. Final determinations will come in late 2022.
Penalty for Western Link
Meanwhile, Ofgem has levied a £158 million penalty on the transmissions divisions of both NG and Scottish Power, for delivering their promised £ 1.2 billion subsea cable two years late.
Running from Ayrshire’s Hunterston nuclear stations to Flintshire Bridge in Wales, the 2.25 GW Western Link is designed to port renewable power from the Highlands and islands onward into England.
The 27-month delay from anticipated commissioning in March 2017 inflicted curtailment losses on Scots generators and unexpected management expenses for the NG, an investigation found. Ofgem held both transmission operators responsible.
The regulator will put 10% of the fine into its own redress fund. Run by the Energy Saving Trust, this benefits consumers in distress. The balance will go towards reducing network charges.
