Blackouts will mean instant fines for National Grid

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The Independent Online

National Grid Transco faces instant multimillion-pound fines if there is a repeat of last summer's devastating blackouts that caused chaos in London and Birmingham, the energy regulator warned yesterday.

Although Ofgem stopped short of declaring NGT in breach of its legal duties when the power failed across south London last August, it refused to give the company a "clean bill of health" after a 10-month inquiry.

The regulator also announced plans to establish an incentive scheme under which it could fine the company for similar blackouts. 'Under the new scheme, [NGT] will in future be penalised automatically... with costs that could run into millions of pounds," it said.

Its report revealed that "mistakes" by NGT had helped to cause the blackouts, although it concluded that the power failures were caused "by a series of unrelated events". It highlighted concerns about the "adequacy of certain installation procedures" and a "lack of evidence to show that procedure had been followed".

Sir John Mogg, Ofgem's chairman, said: "While the authority's finding is that NGT is not in breach of its licence obligations, its wider conclusions do not give the company a clean bill of health over the blackouts."

An NGT spokesman said: "Lessons have been learnt and we have taken a number of steps to improve our procedures to reduce the chances of similar incidents happening again. We are committed to working with Ofgem on the development of a new performance incentive scheme."

Separately, NGT revealed it was in advanced talks with Crown Castle over buying the US group's UK mobile phone masts and television broadcast towers for about $2bn (£1.1bn). "NGT confirms it has entered into discussions with Crown Castle. Further announcements will be made as appropriate," it said. A deal is expected to be announced next week.

NGT is keen to combine Crown's 3,500 mobile phone and broadcasting masts with its own 1,400. A deal would give NGT a 15 per cent share of the mobile phone mast market in the UK. The company, which owns the country's electricity and gas networks, regards owning a mobile phone network as a natural extension of its electricity pylons infrastructure operations.

It hosts services for all the leading mobile operators. Buying Crown's network would enable NGT to bypass the protracted process of getting planning permission to build new mobile phone masts.

Crown, which acquired the BBC's TV and radio towers business in 1997, wants to sell its UK arm to focus on expanding its business in the US. NGT shares slipped 2.5p to 430.75p on fears it would overpay for Crown's business.