SSE and National Grid face tighter scrutiny over future electricity network investment Proactive uses images sourced from Shutterstock
Shares in power companies SSE PLC (LSE:SSE) and National Grid PLC (LSE:NG.) rose on Thursday, despite regulator Ofgem proposing tighter scrutiny over future electricity network investment.
The electricity watchdog published new draft rules governing the next regulatory period for Britain’s local power grids, with its sector-specific methodology set out for the ‘ED3’ price control period, which runs from 2028 to 2033.
This sets out stricter cost controls and tougher accountability measures for electricity distribution operators as demand rises from electric vehicles, heat pumps and wider electrification of the economy.
Ofgem said network companies would need to provide stronger evidence that major investment projects are necessary before costs can be passed on to consumers. The regulator also outlined a greater role for “build and flex” solutions, including smart charging and battery storage, to maximise existing grid capacity before approving large infrastructure upgrades.
Steve McMahon, Ofgem director of network price controls, said the framework aimed to strike a “tough but fair balance” between supporting investment and protecting consumers from speculative spending.
SSE said it welcomed the regulator’s recognition of the need for increased electrification investment but cautioned that further details on financial incentives, gearing and returns would require close assessment to ensure the framework remained attractive to investors.
The final ED3 settlement will be completed by the end of 2027, with new rules taking effect from April 2028.
SSE shares rose 1.6% to £23.75, while National Grid gained 1.4% to £12.72, joining other utilities in green as bond market pressures eased.