Policy decision on the Electricity System Operator regulatory and incentives framework from April 2018

Publication date
23rd February 2018
Information types
Policy areas

This is our decision on a new regulatory and incentives framework the Electricity System Operator from April 2018. Our new arrangements represent a material change from the previous approach. They aim to encourage the ESO to more proactively identify how it can maximise consumer benefits across the full range of its activities. Our decision includes a final set of principles for the ESO; a requirement to develop forward plans with industry; the publication of regular performance reports; the introduction of a new Performance Panel; and a move towards a broader, evaluative financial incentive. We expect this framework to remain in place for the next three years. However, we intend to keep it under review during the first year, and make any necessary refinements alongside the legal separation of the ESO in April 2019.

Alongside this decision, we have published a statutory consultation on the licence changes needed to implement the new framework. We welcome views on whether the drafting of this new condition reflects the policy intent behind the decision.

We have also published a draft version of a Guidance Document for the new reporting and incentive arrangements. We welcome any views on the drafting of this guidance document by 16 March 2018.