SSEZY SSE PLC (PK)

By Adam Clark

U.K. energy regulator Ofgem said Tuesday that it expects to approve a proposal by SSE PLC (SSE.LN) to build a electricity-transmission link in the Shetland Islands but will ask the energy company to rethink its plan for the Western Isles.

Ofgem said it is minded to approve the 709 million-pound ($940 million) plan for a 600 megawatt subsea link to export wind power from Shetland to mainland Scotland and the rest of Great Britain.

The regulator will consult on approving the link, subject to the Viking Energy Wind Farm on Shetland being awarded U.K. government subsidies.

However, Ofgem said it is minded to reject SSE's GBP663 million plan for a 600 megawatt link from the Western Isles to the mainland due to the risk of consumers paying for a "significantly underutilized" connection.

The regulator said it would support an alternative proposal with different funding options, which could be 600 megawatts or 450 megawatts.

Ofgem said the costs of building the links could be reduced significantly and it may use a competition-proxy model to set the revenue SSE can earn. The regulator will make a decision on the business case for both links in mid-2019.

Write to Adam Clark at adam.clark@dowjones.com; @AdamDowJones

(END) Dow Jones Newswires

March 19, 2019 03:42 ET (07:42 GMT)

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