National Grid Says Disappointed With Ofgem's Decision On Drax Contract

(RTTNews) - National Grid plc. (NG.L) said that it is disappointed with Ofgem's decision regarding the Drax contract as it believes the costs could not have been reasonably foreseen.

Ofgem has announced its response to the Proposed Income Adjusting Event filed by National Grid in May 2016 for the recovery of up to 113 million pounds of additional costs in order to contract Black Start capability with Drax and Fiddler's Ferry and meet its obligations across the country.

The result of Ofgem's decision is that National Grid will recover 95 million pounds of the additional costs, and the Group's exposure is limited to a maximum of 18 million pounds. This reflects full recovery of the Fiddler's Ferry contract and recovery of 70% of the Drax contract, after applying the sharing mechanism.

In 2015/16 the Balancing Services Incentive Scheme or BSIS contributed £27 million in profit before tax, and the 18 million pounds impact will be set against any BSIS out performance in the current year.