National Grid PLC (LSE:NG.) said the UK energy regulator's proposals do not offer enough baseline return and incentives to cover its planned investment in the electricity transmission network over the next five years.
The FTSE 100 company said it has submitted its response to Ofgem’s draft determinations for the RIIO-ET3 price control, which covers its electricity transmission business for the period from April 2026 to March 2031.
Ofgem’s commitment to an £80 billion sector-wide investment plan was welcomed, as was the recognition of the need for urgency in delivery, and improvements to the financial package since earlier consultations.
However, National Grid said the current proposals do "not sufficiently recognise the practical realities of delivering the biggest expansion of the electricity system in more than a generation and the required two and a half times increase in investment in our transmission network".
Its response has called for changes to baseline returns, incentives and 'reopener processes' to ensure the framework is both investable and workable. Reopener processes allow Ofgem to adjust financial allowances, outputs and delivery dates in response to significant unforeseen changes.
The company said it will continue to engage with Ofgem ahead of the final determination due in December.
Its plans for the RIIO-3 five-year period include 25 new substations, five power flow control installations, upgrades to around 10% of its substation fleet, a new network control centre and system, improvements to about 3,500km of overhead power lines, and 1,100km of new circuits.