National Grid said it was open to giving up its role managing the UK’s electricity system following reports it could be stripped of its responsibilities balancing the country’s supply and demand.
Ofgem, the energy regulator, has been examining the matter following suggestions from politicians and academics that a public body should take charge of the system as the country strives to meet a 2050 goal to cut emissions to net zero.
Press reports at the weekend suggested a decision could come shortly after a government energy white paper that has been repeatedly delayed, but is expected before Christmas.
“We remain open to the [system operator] role evolving going forward,” said John Pettigrew, chief executive of National Grid, although he insisted the arrangements had worked well.
“Whatever the outcome is, it needs to be something that is stable for the next several years as we gear up to deliver net zero [and] it needs to make sure that it supports the overall agenda around net zero more than the existing institutional arrangement does,” Mr Pettigrew said after publishing the company’s half-year results on Thursday.
The electricity system operator was spun into a legally separate entity following a previous review in 2017 but nevertheless remains part of the National Grid group.
It accounted for about 3 per cent of the group’s £1.15bn of underlying operating profits for the six months to September 30, which were down 12 per cent year-on-year owing to coronavirus-related costs such as higher bad debts from US customers.
Mr Pettigrew said it was too early to say how the company should be recompensed should it be stripped of the role.
National Grid is also awaiting a regulatory decision in December that will decide returns for energy network companies from April next year. Ofgem proposed in July to slash returns by almost half.
Mr Pettigrew said the company was in almost daily talks with the regulator, adding he was “hopeful we will get to a sensible outcome”.
National Grid said on Thursday it planned to continue raising its dividend “at least” in line with inflation despite the knock to its profits from the pandemic.
Underlying operating profit, which strips out exceptional items, fell to £1.1bn in the six months to September 30 from £1.3bn, although on a statutory basis it improved 13 per cent to £1.1bn as the company benefited from one-off gains, including from “commodity remeasurements”.
The group had already warned in June that its underlying operating profit would take a £400m hit over the full year, although it believes it can recover much of the impact in future years.
Shares were up marginally, by about 0.5 per cent, at midday in London.