Ofgem confirms it will cut National Grid's spending allowance

Energy regulator Ofgem confirmed on Friday that it will cut National Grid's spending allowance for running the high voltage electricity grid and high pressure gas main by £185m.

Ofgem will reduce National Grid's allowances for the high pressure gas pipeline price control by £168.8m because the Avonmouth gas pipelines it planned to build are no longer needed.

In addition, it will cut allowances for the high voltage electricity grid price control by £38.1m, as less fault protection works are needed due to fewer generators connecting to the high voltage grid.

However, the regulator will allow an additional £21.5m for system operation.

"The electricity system is going through major changes as we move to a low carbon economy. So National Grid (as system operator) has a bigger role to play. This includes providing additional supply and demand balancing services."