National Grid defends £1.5bn half-year profit and payout to shareholders

Concern about the scale of energy company earnings and high fuel bills could surface again with National Grid unveiling first half operating profits of over £1.5bn.

The apparently lax oversight of the company's financial regime by the energy regulator was heavily criticised last week by Tim Yeo, the former chairman of parliament's energy and climate change committee.

Today the Grid, whose electricity and gas transmission charges have partly been blamed by power suppliers for their own bill increases, rewarded shareholders with a sizeable 14.49p per share dividend.

Steve Holliday, the Grid chief executive, defended the payout and the scale of profits saying they were needed to retain shareholder support for new investment in energy networks, which will cost £3.5bn this year alone.

"We continue to invest efficiently in essential regulated assets on both sides of the Atlantic, providing our customers with reliable networks while generating value and driving growth."

Operating profits were down 1% on the same period last year while pre-tax profits came in at just under £1bn and were 7% below the comparative figure for 2012.

The bulk of the earnings come from the UK where the level of profits allowed for looking after the pipes and pylons is controlled by the regulator, Ofgem, unlike the energy suppliers who can set their own tariff levels.

But Yeo told the Energy UK annual conference in London that a weak Ofgem was being too lenient in its price-setting agreements. "I think they [the Grid] need something more ferocious than the patsy down the road in Whitehall."