Ofgem investigates National Grid after preventable substation blaze
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A transformer fire near Heathrow Airport in March 2025 plunged parts of west London into darkness, shut down Britain’s busiest airport and disrupted tens of thousands of people. In the aftermath, what first appeared to be a catastrophic but freak failure was revealed to be the result of neglected maintenance flagged as early as 2018. Now, the United Kingdom’s energy regulator, Ofgem, has launched an enforcement investigation into National Grid Electricity Transmission, alleging the company may have failed in its legal duty to protect critical infrastructure.
Ofgem’s formal action is not just about one fire. It signals a broader reckoning with how essential energy assets are maintained and governed at a time when energy security and public safety are increasingly intertwined.
A Preventable Failure
The blaze, which originated at the North Hyde substation in west London, was caused by a moisture-ingressed transformer bushing. National Grid had identified the component as degraded in 2018. However, maintenance was delayed multiple times, including a cancellation in 2022 following a site inspection. The failure led to an explosion and the ignition of insulating oil. The station’s fire suppression system did not activate, and the oil containment system could not handle the discharge, according to reports by the National Energy System Operator.
The disruption was extensive. Heathrow Airport was forced to suspend operations for nearly 24 hours. Passengers were stranded, flights were grounded and nearly 70,000 customers in the surrounding areas lost power. The incident prompted questions across government and industry about the risk exposure of ageing infrastructure located in urban population centres.
Ofgem Opens Enforcement Case
On 2 July, Ofgem announced it was opening an investigation under sections 9(2) and B7(1) of NGET’s transmission licence. These sections cover the obligation to develop and maintain an efficient and secure electricity transmission system. The regulator cited potential non-compliance and is commissioning an audit of National Grid’s other high-risk assets.
The Civil Aviation Authority and the Department for Energy Security and Net Zero are also involved. Their participation signals that the scope of the probe is national in nature, touching on how grid assets are managed to protect critical institutions like airports, emergency services and data centres.
Financial Efficiency vs. Public Risk
Between 2021 and 2024, National Grid underspent its allowed maintenance budget by 19 per cent. While this was permissible under Ofgem’s price control mechanism, it now appears the deferred work had serious consequences. The NESO report found that the faulty bushing was known to be deteriorating and was removed from a maintenance schedule in 2022 without follow-up, despite prior warnings.
Critics of the current regulatory model argue that Ofgem’s RIIO framework can encourage short-term savings by allowing companies to retain unspent funds. While the model is designed to reward efficiency and innovation, it can also result in underinvestment in core infrastructure. As key assets continue to age, the risks associated with deferred maintenance are becoming harder to ignore.
National Grid Responds
National Grid has apologised and committed to a set of internal reforms. These include enhanced oil sampling procedures, fire risk modelling upgrades and an asset resilience review across the company’s transmission network. An independent engineering panel has also been appointed to assess site safety.
The company’s financial position remains stable. Analysts believe its multi-billion investment programme, which includes the “Great Grid Upgrade”, will continue to attract capital. However, any penalties from the Ofgem investigation could influence how funds are allocated in future capital cycles.
For investors, the bigger concern is regulatory clarity. Tighter enforcement rules could make cost control more difficult across the energy transmission sector. Utilities may face higher compliance costs, particularly if new resilience standards are introduced across the board.
Sector Implications
The Heathrow incident is not an isolated case. Substation fires in Maida Vale and other areas have raised similar concerns, pointing to persistent gaps in maintenance practices.
As the grid takes on more demand from electrification and renewables, pressure on ageing infrastructure will increase. Without tighter oversight and properly targeted investment, more failures are likely.
National Grid has promised reforms, but the outcome now rests with Ofgem. Whether these issues are addressed at scale will depend on the regulator’s willingness to enforce meaningful change.
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