System Operator incentives

We develop System Operator (SO) incentive schemes that are designed to encourage National Grid Electricity Transmission (NGET) and National Grid Gas (NGG) to operate the electricity and gas transmission systems in an efficient and economic manner, and to effectively manage the costs of operating each system.

This is done through extensive consultation with the System Operator and and other stakeholders, in order to develop a fair and efficient set of incentives.

The System Operator incentive schemes currently establish cost targets that NGET and NGG are expected to achieve in performing their roles. If actual costs are below the relevant target then NGET and NGG are permitted to receive an incentive payment, and if actual costs exceed the target then each faces an incentive penalty.

The size of this payment or penalty is determined by the relevant sharing factors (which govern the percentage of over or underspend against the target that the System Operator will retain) that are agreed as part of the overall incentive schemes.  The sharing factors are in place to strike a fair balance between the risks and rewards faced by the System Operators and customers.

The maximum payment a System Operator can receive under the current incentive scheme framework is subject to an upper cap, and the maximum penalty it can be liable for is bounded by a lower collar.

You can find System Operator incentives information relating to gas and to gas / electricity issues combined in the publications and updates list below.

Publications and updates

  • Published: 20th Feb 2009
  • Other
  • 2 Associated documents
Decision to modify special condition C3 of NGG NTS GT licence and not to suspend C3 prices.

  • Published: 21st Jan 2009
  • Closed: 18th Feb 2009
  • Consultations and responses
  • 2 Associated documents
Consultation in relation to NGG’s current tender for the procurement of Operating Margins gas.

  • Published: 28th Nov 2008
  • Other
  • 1 Associated documents
Formal Information Request on Unaccounted For Gas.

  • Published: 9th Sep 2008
  • Decisions
  • 1 Associated documents
Direction under Section 23 of Gas Act 1986 to modify NGG’s transporter licence in order to implement a new environmental incentives scheme.

  • Published: 11th Aug 2008
  • Closed: 8th Sep 2008
  • Consultations and responses
  • 3 Associated documents
This Notice is a re-issue of the Methane Incentives Notice and now contains an amended definition of 'compressors'.

  • Published: 3rd Jul 2008
  • Closed: 31st Jul 2008
  • Consultations and responses
  • 2 Associated documents
Notice under Section 23 of Gas Act 1986 to modify NGG's transporter licence in order to implement external SO incentive scheme from 1 April 2008.

  • Published: 29th May 2008
  • Decisions
  • 1 Associated documents
Direction under Section 23 of Gas Act 1986 to modify NGG's transporter licence in order to remove the requirement for NGG to provide specific information to the Authority in respect of its SO incentive scheme under Special Condition C14.

  • Published: 29th May 2008
  • Decisions
  • 1 Associated documents
Formal information request in respect of information to be provided to the Authority in relation to NGG's SO incentive scheme.

  • Published: 12th May 2008
  • Open letters and correspondence
  • 1 Associated documents
Open letter to interested parties setting out our intentions for the process, scope and timetable for the review of the external gas and electricity System Operator Incentive Schemes to be implemented from April 2009 onwards.

  • Published: 29th Apr 2008
  • Closed: 27th May 2008
  • Consultations and responses
  • 1 Associated documents
Covering letter and Notice under Section 23 of Gas Act 1986 to modify NGG's transporter licence in order to remove the requirement for NGG to provide information in relation to its external SO Incentives Scheme under special condition C14 of its...

Pages