The energy watchdog has ruled that National Grid will have to pay almost £18m towards a contract with power firm Drax.
National Grid had sought recovery of up to £113m in costs relating to contracts it signed with Drax and Fiddler's Ferry in April. The agreements would see the power stations help re-energise the grid following a loss of power on the network – also known as a 'Black Start'.
Ofgem sets National Grid cost targets for its role in balancing the network and managing provision of Black Start services. These costs are paid for by generators and suppliers via balancing charges.
The decision announced by Ofgem today will see National Grid recover £95m in costs – it will recover the full costs of the Fiddler's Ferry contract, and 70 per cent of the Drax contract.
National Grid said it is "disappointed with Ofgem's decision regarding the Drax contract as it believes the costs could not have been reasonably foreseen".
Last week, Ofgem proposed a series of cuts to National Grid's budget, totalling £185m.