National Grid Gas Transmission overspending on data centres
National Grid Gas Transmission is forecast to overspend the totex allowance for its system operator role by £177.5 million by 2021 due to increased spending on data centres and cyber security.
6th April 2016 by Networks
According to the annual report released by Ofgem on National Grid Gas Transmission’s (NGGT’s) progress in the second year of the current RIIO price control, the gas system operator (SO) has accrued £80.3 million totex expenditure for the period 2014-15, above its allowance of £78.7 million.
NGGT’s eight-year SO totex allowance is £559 million, but its forecast totex expenditure is £736.5 million for the period.
NGGT said this increase in spending is dependent on the level of additional investment required to deliver its data centres, £54 million, and cyber security at £4 million.
Ofgem provided NGGT with over £35 million at final proposals for its data centres programme for necessary refurbishments and upgrades to its data centres. It said National Grid did not provide sufficient justification for its preferred solution of constructing new data centres.
However NGGT may apply at the 2018 reopener window for additional funding for the new data centres.
It is currently consulting with the Department of Energy and Climate Change (DECC) to ascertain what levels of cyber security will be necessary.
NGGT’s eight-year SO capex forecast indicates that NGGT will overspend on its allowances, spending £293.5 million against an allowance of £193.8 million.
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