OFGEM CONSULTS ON £205 MILLION INVESTMENT PROPOSAL

OFGEM CONSULTS ON £205 MILLION INVESTMENT PROPOSAL FOR ARGYLL ELECTRICITY NETWORK UPGRADE

Ofgem has today launched a consultation on a proposal for £205 million of funding to reinforce the transmission infrastructure between the Kintyre peninsula and Hunterston.

If approved, the funding would provide for SHE Transmission (the transmission arm of SSE) to deliver two subsea cables that will reinforce the link between the Kintyre peninsula and the rest of the transmission system in Scotland. They will also upgrade existing overhead lines between Crossaig and Carradale and build a new substation at Crossaig. These reinforcements to the high voltage electricity system are required to both accommodate the growth of renewable generation in Kintyre and ensure the robustness of the transmission system in this area. SHE Transmission would be required to complete the upgrades in 2016.

Today's consultation on funding is the first to be issued under Ofgem's Strategic Wider Works (SWW) programme. SWW was introduced as part of the RIIO-T1 price control to consider funding for specific major transmission projects on a case by case basis. This is to ensure that projects are delivered in a timely manner.

There are a number projects due to be considered by Ofgem under SWW between 2013 and 2021. The costs of these projects were part of the £30 billion package announced under Ofgem's new RIIO price control package for transmission companies.

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Notes to Editors:

1. Full details of the project and funding details can be found on our website. The final funding decision on the Kintyre-Hunterston project is expected to be published in autumn 2013.

2. Strategic Wider Works is the term used to describe the flexible funding arrangements given to specific major transmission projects (i.e. those which deliver a significant increase in transmission capacity). Transmission Operators - National Grid Electricity Transmission Plc, SP Transmission Ltd and SHE Transmission - submitted their business plans for the price control running from 2013-2021. At the time of setting these plans there was not sufficient information available to determine the need for all major projects. Therefore the SWW arrangements were put in place to provide flexibility to ensure that expenditure for these projects is only approved by Ofgem when a project's consumer benefits are clear.

3. Ofgem is the Office of the Gas and Electricity Markets, which supports the Gas and Electricity Markets Authority, the regulator of the gas and electricity industries in Great Britain. The Authority's functions are set out mainly in the Gas Act 1986, the Electricity Act 1989, the Competition Act 1998 and the Utilities Act 2000. In this note, the functions of the Authority under all the relevant Acts are, for simplicity, described as the functions of Ofgem.  

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Lisa O'Brien: 020 7901 7426

Chris Lock: 0207 901 7225

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