NESO’s proposed Dynamic Response Services amendments to the terms and conditions related to balancing

Details 

The Dynamic Response Services are opt-in services for balancing service providers to receive payment from NESO to provide balancing capacity and balancing energy, acting quickly to help maintain system frequency around the target value of 50.0Hz.

Under Article 18 of the Electricity Balancing Guideline (EBGL), NESO had to develop proposed terms and conditions for balancing service providers and balance responsible parties. On 8 October 2019, we published our decision confirming that, once certain conditions were met, these terms and conditions would meet the requirements of Article 18 of the EBGL Regulation. All necessary conditions were met on 25 June 2020, and the terms and conditions came into force in Great Britain (England, Scotland and Wales).

On 1 May 2026, we received a proposal from NESO to make amendments to the terms and conditions related to balancing required by Article 18. The proposal aimed to update the Response Services Service Terms and Response Service Procurement Rules.

Outcome 

NESO proposed 10 amendments in total, 2 of which it withdrew for its final submission. These were: 

1. Continuous Transition Period (withdrawn)
2. Requiring Operational Baselines and Operational Data for the Assessment Period
3. BMU FPN flags set to false will result in deemed unavailability
4. New penalty to be introduced for incorrect use of disarming flag in performance monitoring data
5. Provision of additional Performance Data for the two settlement periods before a contracted service period (withdrawn)
6. Introduction of a Tiered Performance Regime
7. Ability to publish provider penalty data
8. Unit Suspension
9. Pre-approved baseline methodology required for stacking with other NESO services
10. Amendments to schedule 3

We have decided to approve 6 of the 8 proposals, and to reject proposal 6 ‘Introduction of a Tiered Performance Regime’ and proposal 8 ‘Unit Suspension’. Our full rationale can be found the in three decision letters below. The two approval letters are set out based on the implementation dates of the amendments, which are:

• 31 July 2026
• 1 January 2027

The third letter sets out the rationale for the two rejected proposals. This confirms that for the approved submissions, the response services procurement rules and service terms as mapped by NESO form part of the terms and conditions pursuant to Article 18 of the EBGL Regulation.

We expect providers to follow market rules and operate in the interest of consumers and in line with industry best practice.