Ofgem wants the developers of a new underwater cable to knock their spending down by £173.9 million.
The Caithness Moray project will carry up to 1200 megawatts (MW) of electricity from the tip of north-east Scotland – around the bay from John O Groat’s – and south across the Moray Firth.
The regulator believes energy firm SSE’s network arm, Scottish Hydro Electricity Transmission can trim its costs for the 100-mile cable to £1.1 billion.
In a statement today, Ofgem said: “We don’t think the project cost of £1,236.2 million SHE Transmission proposed is justified on the evidence presented.”
The project is set to be ready in 2018 and will help connect wind turbines to Britain’s electricity grid.
The funding proposals are now under consultation for four weeks, with a final decision due in December, said Ofgem.
It’s unlikely the transmission operator will challenge Ofgem’s decision but if it wants to, it can appeal to the Competition and Markets Authority or ask for a Judicial Review.