Future System Operation (FSO)
In the review of GB energy system operation published in January 2021, Ofgem recommended to Government that the system operators are given additional responsibilities, the system operator for the electricity is made fully independent from the transmission network owner, and that there could be a case for separating key gas network. A joint consultation with BEIS published in July 2021 proposed the creation of an independent system operator, known as the Future System Operator (FSO). In April 2022, we published the document setting out decisions of the joint consultation, which sets our collective commitment to proceed with the creation of the FSO, as an expert, impartial body with an important duty to facilitate net zero whilst also maintaining a resilient, and affordable system.
As a trusted and expert body at the centre of the gas and electricity systems, the FSO will play an important role in coordinating and ensuring strategic planning across the sector. It will have an ambitious long-term vision and provide independent advice to government and Ofgem. Further, the FSO will adopt a ‘whole system’ approach within the energy system through responsibilities in operating, strategic network planning, long-term forecasting, and market strategy. Through these roles, the FSO will drive progress towards net zero while maintaining energy security and minimising costs for consumers.
To ensure the FSO is independent and is free from actual or perceived conflicts of interest, the decision document concludes that the most effective model is to establish the FSO as a public corporation, with operational independence from government. The FSO will be licensed and regulated by Ofgem and funded by consumers through price control arrangements. As part of the price control regimes, Ofgem can implement incentive regimes for the FSO to promote high levels of operational performance, innovation, and ambition.
As the FSO project develops, we will continue to engage with stakeholders at key points in this process. Below are key milestones for establishing and implementing the FSO, and these will be updated accordingly as the FSO materialises:
- Primary legislation - To create the FSO and its associated duties and power through primary legislation.
- Secondary legislation, licensing, and code amendments - Assuming the primary legislation is enacted, some secondary legislation will be required in some areas to enable the FSO, new licencing arrangements and code amendments will take place where necessary to account for the new arrangements.
- Transitioning to FSO - Depending on a number of factors, including timings of legislation and agreeing timelines with key parties, we aim to deliver the FSO as soon as practicable, while maintaining the safety and stability of the energy system.
All policy publications, decisions, information, and consultations relating to FSO’s regulatory framework can be found in the publications and updates list below.