The UK’s energy watchdog has received criticism from the National Grid over plans to connect the Hinkley point C power station the UK’s electricity network.
The Hinkley Seabank plan requires new infrastructure which will aim to send power from the Hinkley point power station out to the rest of the UK.
The plans involve sending power to the grid via the Seabank substation near Bristol, and the total cost of the required infrastructure is set to reach £800m.
The decision detrimentally affected National Grid’s stock values by 2% and was described as “very disappointing”. They have hit out at Ofgem and said that they did not appreciate the costs involved as well saying that Ofgem had overestimated the proposed £100m of consumer savings.
“We have prepared for a number of financial scenarios however we do not believe that the proposed ranges for cost of debt and cost of equity included in the consultation reflect either the actual cost of financing this project or the risk being taken for construction of this complex project,” National Grid said.
“We also believe that Ofgem has significantly overestimated the potential consumer savings in their consultation,” they added.
Ofgem has said that they are planning to enforce a mechanism on the National Grid which simulates what would happen if the project was put out to tender. Ofgem has opted for a model known as “competition proxy” and intends to achieve the savings that the energy watchdog has achieved so far in the offshore wind sector in which grid connections are put out to tender.
The dispute between the two companies could result in a Competition and Markets Authority (CMA) battle if Ofgem does not back down from. National Grid has said that they continue talks with the energy regulator but “will also consider all other options available” if the two companies find themselves unable to agree.
Ofgem will be deciding whether or not they impose the “competition proxy” in the Spring.
