Sophia Furber
Estates Gazette (EGI)
22 August 2014

Crossed wires: Blowing a fuse over utility connections

When it comes to getting connected to the grid, the UK ranks lower than a swathe of developing and war-torn countries, including Iraq, with close to a four-month wait. No wonder London developers are ready to blow a fuse.

Last month, a dinner and debate hosted for the GLA as part of 'The Big Think on the Future of London' - the ongoing dialogue developed by Central and Mishcon de Reya on the changing face of London - shed more light on the property world’s concerns about the commercial risks posed by electricity issues. The intimate gathering of property developers, policymakers and academics shared their views on the future of London’s infrastructure development.

One of the major issues that emerged from the discussions was the contention between property developers and their electricity network providers over the grey area around liability for cost overruns.

Nick Lane, head of construction litigation at Mishcon de Reya, said: “If the delivery of electricity infrastructure is delayed for whatever reason, the contractor will still get paid, and the developer will have to foot the bill, which could run into tens of thousands of pounds per day on really big projects.”

Part of the problem, Lane believes, is that the Electricity Act 1989 gives providers a high degree of protection.

Contracts with developers will usually feature a clause about an exclusion of liability for economic loss that the utility company can invoke if there is a delay. In a sense, it’s not a very level playing field,” he says.

Developers should think long and hard about whether they want to accept these clauses, but so far no one in the property community has fought back.”

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