Major powercuts could cost the National Grid Company (NGC) up to a maximum of £12 million a year under a new incentive scheme announced today by the UK energy regulator Ofgem.
As well as penalties for powercuts, the incentive scheme allows NGC to earn up to a maximum of £8 million a year for improving performance on the National Grid.
Ofgem announced its decision to introduce an incentive scheme for NGC last year, after its investigation into power cuts in London and Birmingham in 2003.
“It was clear from our investigation into the London and Birmingham powercuts that strengthening the incentives on NGC to maintain and improve the performance of the National Grid would help to better protect customers’ interests,” said Ofgem Chief Executive, Alistair Buchanan.
“Ofgem’s objective in designing this new incentive scheme is to strengthen the incentives on NGC to minimise interruptions to customers’ electricity supply,” added Buchanan. “The scheme offers NGC an incentive to improve on the grid’s high standards of performance and complements its existing duties to operate the high voltage network in an efficient, co-ordinated and economical manner.”