Funding National Grid’s consequential costs from the separation of the Electricity System Operator
Consultation
- Upcoming
- Open
- Closed (awaiting decision)
- Closed (with decision)
Publication date
Closing date
In April 2022, Ofgem and the Department for Energy Security and Net Zero (DESNZ) jointly decided to proceed with the creation of a new, independent system operator, known as National Energy System Operator (NESO).
To deliver NESO, the existing Electricity System Operator (ESO) is being separated from National Grid plc (NG) and acquired by Government. This process has associated costs for the ESO and NG. In June 2023, we consulted on a cost recovery framework for these companies to fund and deliver the separation work needed to achieve Day 1 of NESO, which is the first day NESO will be established as a standalone entity that is independent from NG. As part of this consultation, we acknowledged that there could be consequential costs to NG resulting from the ESO no longer being part of NG’s shared services function.
This consultation sets out our proposals for funding these consequential costs via a new term to adjust to NGET's totex allowance for the remaining duration of RIIO-2.
The consultation is open for 6 weeks, until 14 October 2024. Responses should be sent to FSO@ofgem.gov.uk and clearly marked where considered to be confidential.
Respond name
David Beaumont