Ofgem Confirms Price Controls; Approves National Grid's Nuclear-Plant Upgrade
July 30 2018 - 3:06AM
Dow Jones News
By Adam Clark
The U.K.'s energy regulator Ofgem said Monday that it has
confirmed its proposed price controls for energy networks from 2021
onward, and that it has approved National Grid PLC's (NG.LN)
upgrade plans for the Hinkley Point C nuclear power station.
Ofgem said there is no change to the proposed 3% to 5% cost of
equity range, which represents the amount companies can pay their
shareholders. The cost of equity is currently set at 6% to 7%.
However, Ofgem said the default length of the price controls from
2021 will be five years, compared with eight years currently. Ofgem
estimates the price controls will save customers over 5.0 billion
pounds ($6.56 billion).
The regulator said it will extend the scope for opening up
network upgrades to competition in the next price-control period,
and will subject network companies' spending plans to open
hearings.
Ofgem said it has confirmed that National Grid can build the
grid upgrade to connect the new Hinkley Point C nuclear power
station in Somerset, England. However, Ofgem said it will set the
revenue which National Grid can earn from the upgrade, based in
part on its experience of competition for offshore wind-farm
tenders.
National Grid said in response that the decision doesn't affect
its plans for the upgrade. National Grid said the project is
expected to cost a total of GBP650 million, with the majority of
the spending incurred in the price-control period from April 2021
onward.
Write to Adam Clark at adam.clark@dowjones.com;
@AdamDowJones
(END) Dow Jones Newswires
July 30, 2018 02:51 ET (06:51 GMT)
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