Ofgem rejects £80m in funding requests for Hinkley Point C grid connection
16th October 2019 | Commercial Energy
Ofgem has lowered the amount of money it will pay the National Grid to connect Hinkley Point C to the power network by £80m. National Grid Electricity Transmission (NGET) had originally requested £717m to connect the UK’s first nuclear power station in over 30 years, but has been granted just £637m.
Half of the reduction came from rejecting £40m in “risk funding” NGET had sought to be included in the upfront cost of the link. Ofgem said additional funding could be sought for some risks, such as extreme weather or widespread flooding, if they are efficiently managed and take place during construction. It also disallowed the additional costs associated with the new “T-Pylons” used on the route as it said NGET had not “sufficiently justified all these costs or demonstrated that they represent value for money for consumers.”
Additional savings came from disallowing around £10m of costs relating to project management and support and excluding around £3m of costs associated with works that will be undertaken by the local Distribution Network Operator. Although the savings may come as some good news for taxpayers, they are dwarfed by last month’s announcement that the cost of building Hinkley Point C would rise by nearly £3bn to between £21.5bn to £22.5bn.
As a monopoly, National Grid is able to charge consumers for upgrades to Britain’s electricity network though their energy bills. Each household pays around 10p per day for the grid, or £36.50 every year. The new charge for the Hinkley project will be added to bills over 45 years, with National Grid shouldering the burden up front.
National Grid said that the decision on Hinkley will “not affect the delivery of the project, which is progressing well.” It added, “We will be looking to provide further evidence to Ofgem to support our view of the capital costs for this project.”
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