UK’s National Grid wins approval for 200 million stg early payment to consumers

LONDON (Reuters) – Britain’s energy market regulator Ofgem said on Wednesday it has approved National Grid’s request to make an early payment of 200 million pounds ($246.9 million) to consumers to help reduce household energy bills.

Payments will be carried out over the next two years rather than at the end of the standard five-year review period.

Energy prices for millions of Britons have soared as of April after a 54% hike to the regulatory price cap, forcing the government to stump up 9 billion pounds of fresh support for already cash-strapped households.

Interconnectors, which are subsea electricity cables connecting the UK and Europe, enable the import of cheaper, cleaner energy from European neighbours, supporting security of supply and reducing carbon emissions.

“Given how challenging the current rise in overall energy costs is for people across the country, we want to play our part in helping reduce consumer bills,” John Pettigrew, National Grid CEO, said in the statement.

National Grid, which invests more than 2 billion pounds in interconnector capacity, said in November that its annual underlying earnings per share growth would come in “significantly above” the top end of its 5%-7% outlook range.

The forecast was partially driven by higher auction prices across its interconnector portfolio.

Ofgem sets a yearly maximum cap and minimum floor level for the revenues that the interconnector licensees can earn over a 25-year period. Top-up payments are made to the interconnector licensee if revenues are lower than the floor; and similarly, the licensee pays revenues in excess of the cap to consumers.

(Reporting by Marwa Rashad; Editing by Kim Coghill)