National Grid today launched a withering attack on Ofgem, the energy regulator, over its plans for financing transmission lines from the new Hinkley nuclear power station to the grid.
The energy regulator believes that by lowering the cost of capital that National Grid is allowed on the project, it can save consumers £100 million off the £800 million cost of the new connector. However, this would result in lower returns for the UK’s biggest energy infrastructure company. But National Grid has said that Ofgem’s financing plans do not offer high enough returns to “allow sustainable investment in the UK energy sector”.
National Grid said that Ofgem had “significantly overestimated the potential consumer savings in its consultation”.
The infrastructure company also said it was wrong to base its decisions on the costs required to connect offshore wind turbines, as the Hinkley Seabed project, which will be passed on through energy bills over 25 years, was very different.
The row over how to finance the connector could take months to resolve. National Grid said it would work with Ofgem to find a solution, but warned that it “will also consider all other options available to us if we are not able to progress this satisfactorily”.
Shares in National Grid slipped almost 2% to 811p.