TIDMNG.
RNS Number : 1515Y
National Grid PLC
07 September 2020
07 September 2020
National Grid plc
Ofgem's Draft Determination: Consultation Response
National Grid submitted its responses to Ofgem's RIIO-2 draft
determinations on Friday. Our detailed response sets out why we
regard a significant number of the current proposals, and the
overall package, as unacceptable, not being in the interests of
consumers, and not reflecting the views of our stakeholders.
Our largest ever stakeholder engagement programme, conducted as
part of the RIIO-2 consultation process, highlighted the importance
of maintaining reliable and resilient networks and the important
role National Grid has to play in the UK's transition to net zero.
For this to be achievable, it requires a flexible regulatory
framework that will incentivise investment whilst protecting
consumers.
The proposals within Ofgem's draft determination, in particular
the combination of the proposed low base level of total expenditure
("totex"), the uncertainty around the approval process for
additional totex and the low allowed baseline return and potential
inability to achieve it, does not allow this. The proposals also
risk disrupting our supply chain, inhibiting our ability to
maintain resilient and reliable networks and endangering the
critical investment required to put the UK on the path to meet net
zero targets.
Our response provides the remedies we believe are required to
enable us to deliver the networks and investment our stakeholders
clearly want. We have also included results from a consumer
preference test, performed by an independent body also used by
Ofgem, to show that consumers' preferences are for investment in
reliability and net zero above short term bill reductions.
Looking forward, we will continue to engage with Ofgem at all
levels, including through CEO and Chair meetings, and October's
open hearings, to facilitate an agreement that can create the right
incentives to drive the investment and innovation needed to allow
the UK to meet its clean energy ambitions, at a cost that is
acceptable to consumers.
We will be hosting a call at 11am. Joining instructions can be
found at:
https://nationalgridinvestorwebinarriio2ddresponse.eventbrite.co.uk
Details of the company's responses can be found at
ET -
https://www.nationalgrid.com/uk/electricity-transmission/planning-together-riio/our-riio2-business-plan-2021-2026
GT -
https://www.nationalgrid.com/uk/gas-transmission/about-us/business-planning-riio/our-riio-2-business-plan-2021-2026
ESO -
https://www.nationalgrideso.com/our-strategy/riio/riio-2-final-business-plan
Inside Information
This announcement is being disclosed in accordance with the
Market Abuse Regulation (EU596/2014) and has been determined to
contain inside information in line with the definition therein.
Investors and Analysts
+44 (0) 20 7004 3166 +44 (0) 7814 355 590
Nick Ashworth (d) (m)
+44 (0) 20 7004 3129 +44 (0) 7807 379 289
James Flanagan (d) (m)
Media
+44 (0) 7583 102 727
Molly Neal (m)
CAUTIONARY STATEMENT
This announcement contains certain statements that are neither
reported financial results nor other historical information. These
statements are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
statements include information with respect to National Grid's (the
Company) financial condition, its results of operations and
businesses, strategy, plans and objectives. Words such as 'aims',
'anticipates', 'expects', 'should', 'intends', 'plans', 'believes',
'outlook', 'seeks', 'estimates', 'targets', 'may', 'will',
'continue', 'project' and similar expressions, as well as
statements in the future tense, identify forward-looking
statements. These forward-looking statements are not guarantees of
National Grid's future performance and are subject to assumptions,
risks and uncertainties that could cause actual future results to
differ materially from those expressed in or implied by such
forward-looking statements. Many of these assumptions, risks and
uncertainties relate to factors that are beyond National Grid's
ability to control, predict or estimate precisely, such as the
impact of COVID-19 on its operations, employees, counterparties,
funding and legal and regulatory obligations, but also more widely
in terms of changes in laws or regulations, including any arising
as a result of the United Kingdom's exit from the European Union;
announcements from and decisions by governmental bodies or
regulators, including proposals relating to the RIIO-T2 price
control, as well as increased political and economic uncertainty
resulting from COVID-19; the timing of construction and delivery by
third parties of new generation projects requiring connection;
breaches of, or changes in, environmental, climate change and
health and safety laws or regulations, including breaches or other
incidents arising from the potentially harmful nature of its
activities; network failure or interruption, the inability to carry
out critical non-network operations and damage to infrastructure,
due to adverse weather conditions including the impact of major
storms as well as the results of climate change, due to
counterparties being unable to deliver physical commodities, or due
to the failure of or unauthorised access to or deliberate breaches
of National Grid's IT systems and supporting technology; failure to
adequately forecast and respond to disruptions in energy supply;
performance against regulatory targets and standards and against
National Grid's peers with the aim of delivering stakeholder
expectations regarding costs and efficiency savings; and customers
and counterparties (including financial institutions) failing to
perform their obligations to the Company. Other factors that could
cause actual results to differ materially from those described in
this announcement include fluctuations in exchange rates, interest
rates and commodity price indices; restrictions and conditions
(including filing requirements) in National Grid's borrowing and
debt arrangements, funding costs and access to financing;
regulatory requirements for the Company to maintain financial
resources in certain parts of its business and restrictions on some
subsidiaries' transactions such as paying dividends, lending or
levying charges; the delayed timing of recoveries and payments in
National Grid's regulated businesses and whether aspects of its
activities are contestable; the funding requirements and
performance of National Grid's pension schemes and other
post-retirement benefit schemes; the failure to attract, develop
and retain employees with the necessary competencies, including
leadership and business capabilities, and any significant disputes
arising with National Grid's employees or the breach of laws or
regulations by its employees; the failure to respond to market
developments, including competition for onshore transmission, the
threats and opportunities presented by emerging technology; the
failure by the Company to respond to or meet its own commitments as
a leader in relation to climate change development activities
relating to energy transition, including the integration of
distributed energy resources; and the need to grow the Company's
business to deliver its strategy, as well as incorrect or
unforeseen assumptions or conclusions (including unanticipated
costs and liabilities) relating to business development activity.
For further details regarding these and other assumptions, risks
and uncertainties that may impact National Grid, please read the
Strategic Report section and the 'Risk factors' on pages 227 to 230
of National Grid's most recent Annual Report and Accounts. In
addition, new factors emerge from time to time and National Grid
cannot assess the potential impact of any such factor on its
activities or the extent to which any factor, or combination of
factors, may cause actual future results to differ materially from
those contained in any forward-looking statement. Except as may be
required by law or regulation, the Company undertakes no obligation
to update any of its forward-looking statements, which speak only
as of the date of this announcement.
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END
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