SSE Sse Plc

By Adria Calatayud and Adriano Marchese

--SSEN has made a proposal to address the regulator's concerns

--The company remains confident of its proposal as the most economic and efficient solution

The U.K. energy regulator said Wednesday that SSE PLC's (SSE.LN) 1.33 billion-pound ($1.72 billion) proposals failed to win subsidies for the Shetland and Western Isles transmission links to mainland Scotland in a recent government auction.

Ofgem said it encouraged Scottish and Southern Energy Networks, a subsidiary of the FTSE 100 energy company, to submit revised proposals that provide greater certainty on the future of wind farms that support the need for these links. The company's current proposals failed to meet conditions for approval, Ofgem said.

However, SSEN said that it remains "very confident" that the proposed links remain the most economic and efficient solutions for each island group, and added that SSE has made a proposal to Ofgem to address the regulators concerns that consumers may be paying for a potentially oversized link.

Managing Director for SSEN Transmissions Rob McDonald said: "We will now work with all parties to provide all necessary information with the upmost urgency to ensure any delays to the process are kept to an absolute minimum and to help provide the island links the best chance of success."

The regulator said it was unable to approve SSEN's plan to build a 600 megawatt subsea electricity transmission link to mainland Scotland from Shetland as the project was based on a wind farm securing subsidies from the U.K. government. The wind farm failed to get those subsidies in last month's auction, Ofgem said.

In March, Ofgem said it was minded to approve the estimated GBP709 million link.

For the Western Isles, Ofgem said it was unable to give green light to SSEN's proposal to build a 600 megawatt transmission, GBP623 million link to connect them to mainland Scotland. Only one of the two wind-farm projects that supported the link received subsidies from the U.K. government.

Write to Adria Calatayud at adria.calatayudvaello@dowjones.com and Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

October 23, 2019 11:59 ET (15:59 GMT)

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