Ofgem spending decision gives Spice lift

Britain's three electricity transmission companies, including National Grid, expect to invest 5bn in transmission projects over the next 10 years.

Ofgem is concerned the companies may delay investments needed to connect wind farms and other clean energy projects until current controls on their spending run out in 2012.

The regulator added it is prepared to allow up to an extra 1bn to be spent on new projects over the next two years and will approve another 764m tranche if the grid companies support the investment cases.

Shares in Spice, which is a leading provider of services to the transmission sector, climbed 3.75p to close the day at 53.75p.

"We welcome the announcement from Ofgem and this is good news for our electricity business," said Spice chief executive Simon Rigby.

The extra 1bn package represents 20 per cent of the transmission companies' 10-year plan for network upgrades to connect new renewable generation needed to meet the government's 2020 carbon emissions target.

"The funding proposals will enable vital new generation, much of it renewable, to be connected to the grid," said Stuart Cook, an acting senior partner for transmission at Ofgem.

"Ofgem has been working with industry to overcome delays to critical investments and today's funding proposals mark a significant step towards facilitating the government's 2020 carbon emission reductions target."

Most of the extra grid investments are earmarked for Scotland where most wind projects are located.

Ofgem is close to concluding its review of the 20-year-old incentive scheme that ties spending to inflation under a regime designed to limit the cost to consumers.