Ofgem to review cost of plugging into National Grid

THE energy regulator, Ofgem, announced a “wide-ranging and comprehensive review” into the cost of energy supplied to the National Grid yesterday.

Ofgem said Britain faced an “unprecedented challenge” as it moved to a low-carbon energy system. Under the Energy Act 2010, Ofgem is tasked with pricing access to the grid in a way that keeps costs down. But it must also maintain security of supply and encourage a move to low-carbon power generation.

Ofgem said new kinds of generators, such as wind and wave power stations had less flexibility on where they are sited with many low-carbon generators choosing to locate in Scotland because of favourable geographic and weather conditions.

However, power companies complain they currently pay higher charges to plug into the grid from remote parts of Scotland than they do in the south of England.

In the north of Scotland, it costs power companies £24 to pump a kilowatt per hour of power into the grid.

Closer to Britain’s big cities, there is a £6 subsidy to encourage companies to site power stations near customers.

Scotland’s first minister Alex Salmond said the review of the regime for electricity transmission charges must bring about “fundamental and lasting change” in pricing.

Alistair Buchanan, Ofgem’s chief executive, said the review followed Ofgem’s finding that £200bn of investment will be required to move to low-carbon energy in Britain.