Written evidence to be reported to the House
Energy Bill
12:00 pm
Alistair Buchanan: May I start with an overview in respect of your concern about whether Ofgem can handle the new challenges? Over the past five years, we have shown in our price control decisions that we are very minded to the renewable task. In the price control review of 2004, on the local electricity network, we increased capital expenditure by 50 per cent. In the transmission price-control review—National Grid’s review, two years ago—we increased capital expenditure by nearly 100 per cent. The renewable elements within that have been clearly identified, and if they are such a large sum, we actually set the sums of money aside for that project. So there are four projects, effectively all in Scotland, under the banner of transmission of renewable projects, for which the consumer is going to provide £560 million in addition to our normal five-year price control review. So we are extremely minded to it.
Crudely, I believe that Ofgem, as an organisation, has been able to evolve because we have gone from the privatisation compact of “RPI minus x equals save” to “RPI minus x equals spend” to ensure that we have a reliable, trustworthy and renewable connected network that the consumers want. I feel confident about that.
On the specifics of the offshore regime, the Minister put his stamp on the non-exclusive competitive approach in March last year. The structure is now in place.
To answer your excellent questions as a business manager, yes, I am pleased that we have got the powers that we need to be able to do our job as set out in the Bill, which means that we will be able to push this forward quickly. I am also pleased that it is going to be paid for, so there will be no worry about administration costs dragging down the process.