SSE Calls on Ofgem to Reconsider Decision over Western Isles Link -- Update

--SSE has called on energy regulator Ofgem to reconsider its provisional decision not to approve a 600 megawatt transmission link from the Western Isles to mainland Scotland.

--Ofgem said it had concerns the link may not be fully utilized and suggested SSE could plan for a lower capacity, although it is set to approve a similar project for the Shetland Islands.

--SSE said the larger link would be an economic solution and downsizing the plan could hinder its delivery.

By Adam Clark

SSE PLC (SSE.LN) has rejected a suggestion from U.K. energy regulator Ofgem to downsize its 663 million pound ($879 million) plan for an electricity link between the Western Isles and mainland Scotland.

Ofgem said Tuesday that SSE's proposal for a 600 megawatt link from the Western Isles could leave consumers paying for a "significantly underutilized" connection. The regulator said it could support a proposal with alternative funding or a 450 megawatt link.

SSE called on Ofgem to reconsider the provisional decision, saying the larger capacity link would be an economic solution and allow for additional renewable-energy projects.

"A 450MW link would be short sighted, limiting the potential for community schemes to benefit from renewables expansion. Moving to a 450MW at this late stage also introduces risks and uncertainty which, in turn, could impact on the delivery of a transmission link to the Western Isles," Colin Nicol, managing director for Scottish and Southern Electricity Networks, said.

However, SSE welcomed Ofgem's statement that it was minded to approve a GBP709 million plan for a 600MW subsea link from the Shetland Islands to the mainland. The regulator will consult on approving the link, subject to the Viking Energy Wind Farm on Shetland being awarded U.K. government subsidies.

Ofgem said the costs of building both links could be reduced significantly and it may use a competition-proxy model to set the revenue SSE can earn. The regulator will make a decision on the business case for both links in mid-2019.

SSE said it has "significant concerns" over the use of an untested competition model and it is considering all options to address Ofgem's concerns.

Write to Adam Clark at [e-mail]; @AdamDowJones

(END) Dow Jones Newswires

March 19, 2019 08:48 ET (12:48 GMT)

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