National Grid has slipped lower after the energy regulator issued its latest proposals on upgrading Britain's gas and electricity distribution network.
Ofgem has increased its initial investment allocation by £2bn to £24.4bn, and has cut £7bn from companies' original spending plans to offer better value for consumers. The proposals will still add £12 a year to household energy bills at a time when power prices are already rising.
National Grid, which hit out at the original proposals in July, said it would take time to review its response to the plans. Its shares are 7.5p lower at 700.5p, with some analysts saying it may need to cut its dividend or seek to raise funds. The general view seemed to be there was not much change in the latest plans from Ofgem's original proposals. Angelos Anastasiou at Seymour Pierce said:
Overall [there are] no big surprises obvious here. National Grid has 75 days to either accept or reject these proposals. It has also said that it will clarify its position on financing and dividend policy by the time of its final results in May.
A dividend cut and/or fund raising remains a possibility, but the market does not appear to be currently factoring this in.
