Ofgem seeks to cut costs of Hinkley Point nuclear reactor link

UK energy regulator Ofgem said it had cut National Grid’s funding request to build a transmission link for the new Hinkley Point C nuclear reactor by £80m.

In a statement released on Tuesday, Ofgem said it planned to grant National Grid Electricity Transmission (NGET) £637m to build the link, down from the initial request of £717m.

The regulator rejected a demand for £40m in “risk funding” from NGET in the upfront cost after EDF Energy said last month that the nuclear plant could cost up to £2.9bn more than its last estimate, and face further delays.

NGET may be in a position to seek additional funding for some risks, such as extreme weather or widespread flooding, if they are efficiently managed and take place during construction, the regulator added.

The regulator plans to use its network price control framework to allow NGET to fund the investment and recoup the cost from consumers’ energy bills over 45 years.

Ofgem had planned to use the new ‘Competition Proxy’ funding model to fund the link, but updated analysis shows this may no longer deliver the best savings for consumers.

“While we welcome Ofgem’s minded-to position not to proceed with the Competition Proxy Model (CPM) for this project, we continue to question the value of the CPM,” National Grid said in a separate statement.