The National Grid Electricity System Operator (NGESO) company will be part of the National Grid Group but legally separate from the Electricity Transmission Owner (ETO). This follows the consultation Ofgem and the UK business ministry in January proposing to create a more separate role for the Electricity System Operator which will be up and running by 2019.
The new company will carry out its existing electricity network functions, as well as taking on new responsibilities, including the promotion of smart solutions, in place of traditional network investment, says the National Grid. This will establish a level playing field for all technologies, it says.
“This marks a significant milestone that enables a more secure, competitive and flexible energy system which will ultimately benefit consumers,” said John Pettigrew, CEO of the National Grid. “We are pleased the Government and Ofgem have recognised our vast experience and expertise in balancing the electricity system and ensuring the market runs efficiently.”
“We need a more flexible energy system so that we can make the transition to a lower carbon future. A more flexible system will also ensure customers get the most out of new smart technologies,” said Dermot Nolan, chief executive of regulator Ofgem. “As the system changes, it’s important that all the monopoly networks adapt. Having a legally separate system operator will allow it to take on a more proactive role in managing the system and working with others, while mitigating any conflicts of interest.”
The NGESO will be incorporated as a separate company, wholly owned by National Grid, with its own board which will appoint three sufficiently independent directors. NGESO employees will be physically separate from other National Grid electricity subsidiary companies by April 2019.