Ofgem proposes record budget cuts for National Grid

 
Oliver Gill
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Much of National Grid's funding has to be approved by government regulators (Source: Getty)

Ofgem proposed record spending reductions on the budgets of National Grid as part of its mid-year consultation.

The energy regulator has proposed a total of £185m of cuts.

The amount of money allocated to National Grid as part of their maintenance of electricity and gas networks in Britain must be agreed by Ofgem.

In May Ofgem launched an spending review of some of National Grid's projects.

The largest single funding cut proposed relates to the Avonmouth gas pipelines, which are "no longer needed" – this amounts to a cut of £168.8m.

A decision was taken in February 2015 to cease operations at the Avonmouth liquefied natural gas (LNG) facility – the last remaining LNG site run by National Grid in Britain. Operations were scheduled to be wound down from April 2016.

A further £38.1m of cuts have been tabled against the electricity network though Ofgem said that this would not adversely impact the reliability of the provision of power to the country.

Read more: Government lays out plan to avoid power supply crunch over winter

Ofgem recognised that National Grid was now playing a larger role in the push towards lower carbon emissions and proposed increasing its budget by £21.5m in reflection of this.

National Grid said it "welcomes Ofgem's continued commitment to the clarity and certainty... which has started to deliver important benefits for customers".

A final decision on the proposals will be taken by Ofgem in Autumn this year and any cuts would take effect from April 2018.

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