National Grid PLC (LSE:NG.) shares fell after regulator Ofgem said it was launching an investigation into the Heathrow fire earlier this year after a report found it was caused by a preventable fault.
A report by the National Energy System Operator said the fire at the North Hyde substation, which cut power to the airport in March this year, was "most likely" caused by moisture entering the insulation around wires, an issue that National Grid had been aware of since 2018 but failed to fix properly.
Heathrow said the power outage highlights "inadequate safety mechanisms and National Grid’s failure to maintain its infrastructure".
The March 21 outage affected more than 1,350 flights and cut power to 67,000 homes.
National Grid had detected an elevated moisture reading in July 2018, "but mitigating actions appropriate to its severity were not implemented," the 77-page report said.
The report used forensic analysis from both National Grid Electricity Transmission and London Fire Brigade.
A spokesperson for National Grid said that the company has taken action since the fire, including "an end-to-end review of our oil sampling process and results, further enhancement of fire risk assessments at all operational sites and re-testing the resilience of substations that serve strategic infrastructure".
Energy regulator Ofgem said it has opened an investigation into National Grid because the NESO report suggested the fire was caused by a "preventable, technical fault".
It said it would review whether the FTSE 100 company complied with legislation and licence conditions relating to the maintenance of the substation.
An independent audit will also be launched into National Grid’s critical infrastructure assets and their status, "to satisfy Ofgem on whether the failings identified in NESO’s report into North Hyde were one-off in nature, or more systemic across the National Grid estate".
Shares in the company fell over 2% to 1,050.5p by lunchtime on Wednesday.