Cable Forum - View Single Post - Are industry regulators a danger to the public?

Vlad_Dracul · 02-02-2007, 14:13

Again i can provide further clarification.
The National Grid Gas transportation empire is split into two camps. One is known as UKT (UK Transmission) and the other is known as UKD (UK distribution)

The four regional gas distribution networks that were sold belonged to the UKD bit. The UKD bit is the bit that is ringfenced,regulated to death and cannot be cross subsidised by the wider NG empire. This is the very reason why NG sold a chunk of its UKD network. To generate a great wadge of cash (5.8B) which they then invested abroad. They have bought up various US based energy distribution businesses including Keyspan http://www.keyspanenergy.com/

and Niagara Mohawk
http://www.nationalgridus.com/niagaramohawk/

two name but two of its most recent acquisitions. The very reason why they sold the UKD operations was becuase they are regulated to death,NG have extracted as much value as they could out of them,so they sold them to generate cash to invest in the US businesses which still had good growth potential and could therefore generate shareholder value.

INVESTMENT.

Well yes they have continued to invest in infrastructure but note that most of this is in UKT (Transmission) the unregulated bit, the bit in which there can still be growth.

OUTLOOK
Yes it highlights expenditure and investment in UKD (distribution) The reason for this is that in past years,OFGEM continually squeezed how much could be spent on capital expenditure. Many of the gas mains in the roads have been there a long time. They are old,often cast iron,some even asbestos. Many are reaching end of life but for a long time,becuase of the squeeze on capex by OFGEM,they have just been repaired,repaired repaired. Constantly dug up,played around with instead of replaced. They couldnt be repalced becuase OFGEM has continually squeezed capex. About 5 or 6 years ago a tipping point was reached. There were some very high profile explosions,people got killed or injured in various parts of the country. OFGEM,probably secretly feared that the finger of blame would point to them. After all,it was they who had prevented expenditure on mains replacements for years,despite the fact that the industry kept telling them that it needed to be done. To save their own skins they authorised a massive ongoing project of expenditure within UKD to replace old mains. Thats why you see gasmen digging all over the place and replacing great tracts of main. OFGEM though want it both ways. In the recent periodic review it sought to penalise NG for working too fast and relaying too many mains. There was a conflict you see. The HSE was telling NG to replace x thousands of Km per year whilst on the other hand OFGEM was saying dont spend that much money. A direct and dangerous conflict. And one which is still ongoing.

02-02-2007, 14:13	#9
Vlad_Dracul cf.mega poster Join Date: Apr 2004 Location: Wherever I lay my hat, thats my home... Services: Dispensing wit and wisdom in so far as I am able . P3 500Mhz/ 2Mb BB when it works,no Tv,n Posts: 1,046	Re: Are industry regulators a danger to the public? Again i can provide further clarification. The National Grid Gas transportation empire is split into two camps. One is known as UKT (UK Transmission) and the other is known as UKD (UK distribution) The four regional gas distribution networks that were sold belonged to the UKD bit. The UKD bit is the bit that is ringfenced,regulated to death and cannot be cross subsidised by the wider NG empire. This is the very reason why NG sold a chunk of its UKD network. To generate a great wadge of cash (5.8B) which they then invested abroad. They have bought up various US based energy distribution businesses including Keyspan http://www.keyspanenergy.com/ and Niagara Mohawk http://www.nationalgridus.com/niagaramohawk/ two name but two of its most recent acquisitions. The very reason why they sold the UKD operations was becuase they are regulated to death,NG have extracted as much value as they could out of them,so they sold them to generate cash to invest in the US businesses which still had good growth potential and could therefore generate shareholder value. INVESTMENT. Well yes they have continued to invest in infrastructure but note that most of this is in UKT (Transmission) the unregulated bit, the bit in which there can still be growth. OUTLOOK Yes it highlights expenditure and investment in UKD (distribution) The reason for this is that in past years,OFGEM continually squeezed how much could be spent on capital expenditure. Many of the gas mains in the roads have been there a long time. They are old,often cast iron,some even asbestos. Many are reaching end of life but for a long time,becuase of the squeeze on capex by OFGEM,they have just been repaired,repaired repaired. Constantly dug up,played around with instead of replaced. They couldnt be repalced becuase OFGEM has continually squeezed capex. About 5 or 6 years ago a tipping point was reached. There were some very high profile explosions,people got killed or injured in various parts of the country. OFGEM,probably secretly feared that the finger of blame would point to them. After all,it was they who had prevented expenditure on mains replacements for years,despite the fact that the industry kept telling them that it needed to be done. To save their own skins they authorised a massive ongoing project of expenditure within UKD to replace old mains. Thats why you see gasmen digging all over the place and replacing great tracts of main. OFGEM though want it both ways. In the recent periodic review it sought to penalise NG for working too fast and relaying too many mains. There was a conflict you see. The HSE was telling NG to replace x thousands of Km per year whilst on the other hand OFGEM was saying dont spend that much money. A direct and dangerous conflict. And one which is still ongoing.