- Publication date
- 26th July 2018
- Information types
- Policy areas
In order to improve how the Electricity System Operator (ESO) manages the changing electricity system in consumers’ interests, we have introduced a new regulatory and incentives framework. The incentive scheme has changed from a mechanistic ex-ante scheme limited primarily to short-term balancing costs, to an evaluative ex-post scheme covering the ESO’s full range of short and long-term responsibilities. The new scheme came into effect from April 2018.
Feedback from, and engagement with, a broad range of stakeholders will be key to ensuring the new scheme functions as intended and the ESO is effectively incentivised to deliver good outcomes.
Both Ofgem and the ESO will seek feedback on an ongoing basis to help support this, and to ensure stakeholders have a clear voice in holding the ESO to account. Furthermore, as a central part of the new scheme, we will establish an independent panel of experts, who will assess the ESO’s performance and provide recommendations to Ofgem on whether any incentive payments or penalties should be paid. This working paper provides an update on the setup of this new Performance Panel, and invites trade bodies and industry associations to nominate a voluntary representative to be part of the Panel.