UK energy regulator Ofgem and the UK Government have announced plans to create greater separation between the system operator role performed by National Grid and the rest of the National Grid group.
As part of that, Ofgem has published a consultation for a legally separate electricity system operator to be established within National Grid.
The proposals envisage the more independent system operator will have distinct employees, directors and offices from other National Grid electricity subsidiary companies. The process for establishing the proposed new company was set out in a joint statement between Government, Ofgem and National Grid issued January 12.
“A more independent system operator will help to keep household bills down by working to ensure and enable more competition, coordination and innovation across the system” Ofgem said in a statement.
It added the system operator role includes balancing the electricity grid “second by second” and “in future as the electricity system becomes more flexible this role will need to evolve.”
“The system operator will also have to work more closely with local electricity distribution network operators to manage electricity flows across the grids,” it said.
“We need a more flexible energy system so that we can make the transition to a lower carbon future” commented Ofgem's CEO Dermot Nolan.
“As the system changes, it’s important that all the monopoly networks adapt” he said, adding that “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.”
“Separating our system operator will give greater confidence to investors that Great Britain offers a level playing field for companies wanting to be part of our clean, secure and flexible energy system - keeping costs as low as possible for our homes and businesses” said the UK business and energy secretary Greg Clark.
The decision comes after ministers and regulators had mulled stripping altogether National Grid of its role of operator as well as owner of the UK electricity infrastructure, amid concerns over a potential conflict of interest related particularly to the company's interconnector business which imports power from France and the Netherlands, the Financial Times reported January 12.