Decision notice to establish National Energy System Operator (NESO)

The Secretary of State for the Department for Energy Security and Net Zero (DESNZ) and the Gas and Electricity Markets Authority (GEMA) have decided to establish the National Energy System Operator (NESO). The accompanying Decision Notice details decisions in relation to previous consultations on relevant supporting regulatory changes. Please note that this does not list all the decisions required to establish NESO. However, it includes:

• NESO’s two new licences, the Electricity System Operator Licence (ESO) and the Gas System Operator Planner (GSP) Licence 
• modifications to existing licences that are impacted by the designation of the ISOP
• modifications to industry codes (and in the case of the Balancing and Settlement Code, code subsidiary documents) to implement the Independent System Operator and Planner (ISOP)
• modifications to the electricity generation and electricity supply licences and the Balancing Settlement Code to support the change in ownership of Elexon 

The regulatory changes listed in these consultation responses will come into effect on 1 October 2024. Note, the Decision Notice includes decisions made by both the Secretary of State and the Gas and Electricity Markets Authority (GEMA). Please reference this for details of the Relevant Authority under the Energy Act 2023 for each decision.   

In addition, the Secretary of State of DESNZ has issued direction letters in relation to Elexon’s new ownership structure as a result of establishing NESO. These letters are issued to 13 licensees pursuant to Electricity Supply Standard Licence Condition 60 and Generation Licence Standard Licence Condition 21. These licence conditions are brought into effect by the Decision Notice, and Ofgem have today published the letters.