National Energy System Operator (NESO) licences and other impacted licences: statutory consultation
Read the full outcome
Detail of outcome
This consultation sought feedback on the 2 licences intended for the National Energy System Operator (NESO), as well as amendments to other impacted licences.
The joint response sets out government and Ofgem’s considerations of the consultation responses, and the decisions taken by both organisations on the shape and content of the licences.
Alongside the consultation response and the final versions of the NESO licences here, Ofgem has also published the Annexes and other connected documents, including:
- the amendments to existing licence conditions impacted by the creation of NESO
- an issues log
- the reasons and effects for NESO’s new licence conditions and changes to the existing licence conditions
- non-confidential stakeholder responses to our statutory consultations
These documents do not constitute a decision to grant (or treat as granted) the proposed licences and modifications to impacted licences. A final decision on the granting of licences and making the modifications to impacted licences is to be taken by the Secretary of State in sequence with a wider set of decisions to establish NESO. Once this decision is taken it will set the date for ‘Day 1’ when NESO will be created.
Original consultation
Consultation description
Update: 2 April 2024
Some of the annexes originally published here on 28 March had formatting issues, so we republished them later that day.
There were no changes to the modifications we are consulting on.
Ofgem and the Department for Energy Security and Net Zero are jointly consulting on 2 Ofgem regulated licences for the National Energy System Operator (NESO) which cover its obligations regarding electricity and gas functions.
The consultation document also acts as a response to previous consultations and includes connected announcements.
Government and Ofgem previously set out a commitment to create a publicly owned body, the Future System Operator (now called NESO), as an impartial expert, with responsibilities across both the electricity and gas systems.
The 2 licences will be regulated by Ofgem:
- an Electricity System Operator (ESO) licence covering its obligations regarding its electricity functions
- a Gas System Planner (GSP) licence covering its obligations regarding its gas functions
The licences will include conditions for:
- the business conduct and independence of NESO
- its strategic and operational functions
- its roles including the provision of advice and information to government
- its obligations concerning energy industry codes and charging
We are now consulting on:
- a proposal to grant (or treat as granted) an Electricity System Operator and a Gas System Planner licence
- modifications to various licence conditions which will be impacted by the creation of NESO and the designation of the Independent System Operator and Planner (ISOP)
We are consulting on these 2 elements now because they weren’t covered in our previous consultation, and are required for the NESO’s Day 1 licences.
We also provide:
- a response to the August 2023 government and Ofgem joint FSO [NESO] second policy consultation
- a response to the September 2023 Ofgem non-statutory consultation on draft ESO and GSP licence conditions
- a response to the December 2023 Ofgem proposed draft amendments to other impacted licences which would be required as a result of designating NESO
- a response to the December 2023 Ofgem consultation on policy direction for the FSO [NESO] regulatory framework
- an update on inclusion of Strategic Spatial Energy Planning (SSEP) in the NESO licence
- an update on inclusion of Centralised Strategic Network Planning (CSNP) and Future Energy Pathways in the NESO licence
This consultation brings together the outputs of multiple non-statutory consultations across NESO licences, new roles, financial design and incentives, and consequential changes to other licences.
It provides the complete proposed NESO Day 1 licence conditions, subject to the conclusion of this consultation.
How to respond
Please copy your responses to both:
Documents
Updates to this page
Published 28 March 2024Last updated 29 August 2024 + show all updates
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Joint government / Ofgem response published.
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Some of the annexes originally published here on 28 March had formatting issues, so we republished them later that day. There were no changes to the modifications we are consulting on.
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First published.