It said in a recent submission to an Ofgem consultation that a reduction in cover to its piepelines from the development of intensive farming measures, flooding and other environmental factors is a “significant emerging risk”.
It had not identified the issue at the time of its business plan submissions in 2010 and 2011, so did not receive upfront allowances to improve asset health in the price control.
However it said as costs will “remain uncertain until we have deployed the corrective actions” and therefore would be best addressed through an end of period review rather than a mid-point review.
National Grid said it did not currently have “sufficient evidence and costs to justify triggering the materiality threshold for consideration at the mid-period review” and instead expects the ongoing management of these assets to be a “key part of applying the monetised risk trading element of our Network Output Measures methodology”.
Two years of manually investigating the pipelines in the East of England has so far revealed 227km of high pressure and 106km of intermediate pressure pipes buried at a depth of less than 0.6 metres beneath the ground.
This is below the current accepted policy threshold for these pipeline assets so investigation and remedial action will need to be taken.
The third year of manual investigation will not be completed until March 2016.
National Grid operates around 5000km of high pressure and 3000km of intermediate pressure pipelines in the UK.
The energy industry is divided over the need for a mid-point review to the current eight year price control for network companies. Ofgem has recommended holding an MPR for transmission but not for gas distribution.