REG - OFGEM - £158 million redress for delay to ‘Western Link’

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30/11/2021 10:30

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RNS Number : 9295T  OFGEM  30 November 2021

 

£158 million redress for two-year delay to major 'Western Link' subsea
cable

 

•     £158 million redress agreed by National Grid Electricity
Transmission plc and Scottish Power Transmission plc for delays to major power
cable.

 

•     The two-year delay made it difficult at times for renewable energy
generators in Scotland to export clean electricity to England and Wales.

 

•     The consumer redress package holds both National Grid Electricity
plc and Scottish Power Transmission plc responsible for the late delivery of
this important transmission link.

 

 

National Grid Electricity Transmission plc (NGET) and Scottish Power
Transmission plc (SPT) have agreed to pay a redress package of £158 million
for delays to the Western Link Project, following an investigation by Ofgem,
the energy regulator.

 

£15 million of the redress package will be paid into Ofgem's Redress Fund.
This is operated on its behalf by the Energy Saving Trust and allows companies
to pay a sum of money to appropriate charities, trusts, organisations or
consumers as a result of breaches of licence conditions. The remainder of the
redress package will be returned via reduced system charges. (1) These charges
are ultimately paid for by consumers as part of their overall electricity
bills, so consumers will benefit from this redress package through lower
bills.

 

Ofgem recognises that consumers have benefited by a further £100 million
because of the companies' financial management of the project and their
contract management strategy. Ofgem's network price control ensures this is
returned to customers through lower system charges.

 

Western Link is a transmission project worth around £1.2 billion, providing a
major subsea electricity link between Scotland and Wales. The link was
designed to transport electricity, often from green sources like offshore
wind, between Scotland and Wales. It provides an additional 2,250MW of
capacity, equivalent to powering over two million homes, and is crucial to
helping Britain reach its targets of net zero greenhouse gas emissions (2).

 

The two-year delay restricted renewable generators in Scotland exporting
electricity to England and Wales, because at times there was not enough
capacity to do so.

 

Because renewable generators in Scotland were unable to transport the energy
they were generating, National Grid ESO would have sometimes had to reduce the
output from windfarm generators to protect the electricity system. This
ultimately led to higher costs for consumers.

 

NGET and SPT own the licence for the project and contracted with a contractor
to deliver it. The link fell two years behind its expected delivery date of
March 2017 to June 2019.

 

Ofgem's investigation found that the root causes of the delay were problems
with land acquisition, manufacturing processes, installing the cables and
commissioning tests. It acknowledged that NGET and SP did not cause or
exacerbate the delay.

 

Ofgem holds NGET and SPT ultimately responsible, as licence holders, for the
delay caused by their supply chain.

 

Cathryn Scott, Ofgem's Director of Enforcement and Emerging Issues, said:

 

"To deliver the UK's climate change ambitions, more of our electricity will
come from renewable generation. This is already happening, with offshore wind
and other projects in development. 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."

 

 

 

 

Notes

 

(1)   In addition to the £15m payment to the Redress Fund, Ofgem is
utilising mechanisms under its network price control to reset NGET's and SPT's
allowances received for WHVDC to equal actual expenditure. This will return to
consumers the overall underspend on the WHVDC project, any cashflow benefit of
receiving allowances ahead of the delayed expenditure, and the Liquidated
Damages payments received from the supply chain. This represents a
proportionate overall financial package for energy consumers.

 

(2)   Links such as this are essential for Britain to reach its net zero
emissions targets. The link is 422 km (262 miles) long, of which 385 km (239
miles) is under water.

 

 
For media, contact

 

Joss Wellings: 020 7901 1865

Media out of hours mobile: 0792 882 9894 (media calls only)

 
General enquiries (non-media)

 

If you are an energy customer looking for help and advice, including
complaints about energy firms, please see our Household gas and electricity
guide (https://www.ofgem.gov.uk/consumers/energy-guides) . Citizens Advice
also provide a free, impartial helpline service across a range of issues on
0808 223 1133.

We also regularly share news and post general advice to help consumers get the
most out of their energy services via our @Ofgem twitter
(https://twitter.com/ofgem/) and Facebook pages
(https://www.facebook.com/ofgem) . If you have an enquiry or complaint
relating to Ofgem's policies or functions, contact us at
consumeraffairs@ofgem.gov.uk (mailto:consumeraffairs@ofgem.gov.uk) or on 020
7901 7295.

For all other non-media related enquiries, please visit our Contact us page
(https://www.ofgem.gov.uk/contact-us) .

 
About Ofgem

 

Ofgem is Britain's independent energy regulator. Our role is to protect
consumers now and in the future by working to deliver a greener, fairer energy
system. We do this by:

 

·      Working with Government, industry and consumer groups to deliver
a net zero economy at the lowest cost to consumers.

·      Stamping out sharp and bad practice, ensuring fair treatment for
all consumers, especially the vulnerable.

·      Enabling competition and innovation, which drives down prices and
results in new products and services for consumers.

For facts, figures and information about Ofgem's work, see Energy facts and
figures (https://www.ofgem.gov.uk/news-media/energy-market-facts-figures) or
visit the Ofgem Data Portal (https://www.ofgem.gov.uk/data-portal/overview) .

 

For energy insights and updates straight to your inbox from Ofgem, please
subscribe (https://www.ofgem.gov.uk/subscribe-our-news-and-communications) .

Follow us on Twitter @ofgem (https://twitter.com/ofgem) , LinkedIn
(https://www.linkedin.com/company/ofgem) and Facebook
(https://www.facebook.com/ofgem) .

 

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