National Grid handed £12m extra to fund black start contracts

Ofgem has handed National Grid an extra £12.39 million to fund black start contracts, weeks after the system operator signed two contracts for Fiddler’s Ferry and Drax power stations.

A National Grid spokesperson said the contracts awarded to the plants fell outside its target spend for black start contracts.

Grid asked Ofgem to up its £22.35 million target for 2016/17 by £23.88 million last December. Ofgem responded in a letter published this week, agreeing a maximum increase of £12.39 million, short of the full amount Grid asked for.

The regulator turned down National Grid’s request for a £28 million increase to the amount available for warming payments, instead offering it an extra £16.51 million. The firm receives payments for going under the target and penalties for going over.

The company came under fire in the media for the timing of black start contracts for Fiddler’s Ferry and Drax, with unnamed critics suggesting National Grid had awarded them in a “panicked” bid to keep the coal stations open and avoid a capacity crunch this winter. National Grid denied the claims.

The contract was a key factor in SSE’s decision to keep Fiddler’s Ferry open for at least another year beyond its scheduled closure last month.

Tempus Energy has since called for Ofgem to investigate the contracts signed with SSE and Drax, saying the “behind closed doors transaction” had harmed other participants in the energy market. National Grid defended them on the basis they were awarded in a “competitive process”.

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BDC 305 Jun 2023