National Grid Electricity Transmission (NGET) and Scottish Power Transmission (SPT) will pay a £158m penalty after two-year delays to a major power cable, following an investigation from Ofgem
Ofgem’s Redress Fund will benefit from a £15m boost while the rest of the money will be returned via reduced system charges – meaning customers will receive reduced costs to their energy bills.
The agreed sum is a record total, dwarfing the £44m gas supplier Cadent paid Ofgem in 2019 for leaving thousands of customers without gas.
Western Link Project is a£1.2bn subsea electricity link designed to transport power from predominantly green sources like offshore wind between Scotland and Wales.
The 262-mile link will power over two million homes, providing 2,250 MW of capacity – helping the UK reach its target of net zero greenhouse gas emissions by 2050
NGET and SPT own the licence for the project, which fell two years behind its expected delivery date of March 2017 to June 2019.
The market regulator found the delay was caused by manufacturing issues, alongside problems installing cables and commissioning tests.
Ofgem held NGET and SPT ultimately responsible, as licence holders, even if it acknowledged neither group did not cause or exacerbate the delay.
The two-year delay restricted renewable generators in Scotland from exporting electricity to England and Wales, due to insufficient capacity.
As renewable generators in Scotland were unable to transport the energy they were generating, National Grid ESO sometimes had to reduce the output from windfarm generators to protect the electricity system.
National Grid said the joint venture had worked hard to protect consumers against delay and deliver the most efficient and economic approach.
It pointed out that the new technology utilised fewer cables, consequently minimising costs and disruption to local communities.
The company said: “Despite these efforts, which have been recognised by Ofgem in their investigation – and the fact that the Link was in operation and providing benefit for significant parts of the period identified – the joint venture recognises it is ultimately accountable for the delay and has therefore agreed to the redress package.”
Cathryn Scott, Ofgem’s director of enforcement and emerging issues, said: Innovative projects such as the Western Link are vital in moving clean energy from where it’s produced to where it’s needed. However, they must be delivered on time and to the standards agreed. Where they are not, as the energy regulator, we will hold the licensees accountable.”
The fine comes amid a turbulent time in the energy industry, with over 20 UK energy suppliers ceasing trading amid soaring wholesale costs.