OFGEM has confirmed its decision to cut the proposed cost of the Hinkley-Seabank project by £60m.
The link, which is due to be completed in 2024, will connect the new Hinkley Point C nuclear power station to the grid.
In October, Ofgem set out the areas it deemed National Grid Electricity Transmission (NGET) costs to be too high.
NGET wanted to spend £716m on the new link, but Ofgem’s decision today cuts that to £656m.
Ofgem has determined this to be the efficient cost for delivering the project following consultation and analysis.
The cost will be spread over the next 45 years.
Ofgem’s minded-to position in October proposed to cut costs to the project by £80m.
However, following consultation and analysis of new evidence, Ofgem is satisfied that some of these costs are ‘appropriate and provide value for money.’
- £11.3 million of development costs in relation to the project’s T-pylons
- £5.8 million of additional costs in relation to project contingency, and
- £1.6 million of additional costs in relation to project management. (1)
NGET’s rate of return for delivery of the project will be set in line with Ofgem’s tough next round of price controls, RIIO-2, which are expected to be finalised later this year.
The energy regulator has confirmed and published its decision to fund the project through the RIIO price control arrangements rather than through the Competition Proxy Model.
Ofgem’s analysis shows that this presents best value to bill payers.
When compared to RIIO-1, the updated RIIO-2 framework is projected to save billions of pounds for consumers over its five year period.