9th Dec 2019 10:09
(Alliance News) - National Grid PLC on Monday said it has submitted its final business plans to UK regulator Ofgem for the 2021 to 2026 RIIO-2 price control period.
The business plans cover FTSE 100 utility National Grid's UK electricity and gas transmission businesses, as well as its electricity system operator.
In May, Ofgem announced its RIIO-2 price controls and set the allowed baseline return on equity at 4.3% in a cost of equity range of between 4.0% and 5.6%. This is close to 50% lower than the previous RIIO-1 price control and is intended to cut the costs passed on to UK energy consumers by GBP6 billion over the five-year price control period.
National Grid said the plans include a financial framework needed to incentivise investment and it has provided further evidence for why it thinks a real, consumer price index-stripped, allowed cost of equity of 6.5% is the "right level" for RIIO-2.
The baselines spend is likely to result in a slight reduction in consumer bills for electricity and gas transmission in real terms.
The company's electricity transmission plan has a GBP7.1 billion baseline total expenditure over the five-year period of RIIO-2 and assumes the connection of 15.3 gigawatts of customer capacity.
The gas transmission plan, meanwhile, has a GBP2.8 billion baseline total expenditure over the five years and assumes the firm will undertake a work programme to test and prove hydrogen conversion options.
"With a growing societal focus on the speed of decarbonisation and the challenges in meeting the UK's 2050 net zero emissions target, the plans provide options for additional anticipatory investment to facilitate additional wind generation and develop a national [electric vehicle] rapid charging network," said National Grid.
"We look forward to engaging further with all our stakeholders as we explain and debate our plans, including through the open forums in March and April 2020, ahead of initial determinations from Ofgem in summer 2020, and final determinations in late 2020," the company added.
By Anna Farley; [email protected]
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