Ofgem explained its decision on 18 September to revise Scottish Hydro Electric Power Distribution’s (SHEPD’s) allowed expenditure for subsea cable costs.
This will allow SHEPD to recover £45.2mn of efficient costs for protecting subsea cables, up from £42.5mn from Ofgem’s minded-to position.
In its decision Ofgem did not allow the proposed £6.2mn for cable inspection costs. It allowed £33.7mn of the proposed £37.7mn for proactive replacement costs, £5.9mn of the proposed £9.4mn for cable fault costs (noting an increase of £2.8mn from its initial view), £5mn of indirect costs, and £0.6mn of costs associated with SHEPD’s marine risk assessment tool.
Adjustments to SHEPD’s allowed revenue will take effect from 2020-21.