Future System Operator duties will prevent electricity ‘bias’

The statutory duties of the Future System Operator (FSO) will contain “clear whole systems expectations” to mitigate the risk of a bias towards electricity, the government has said.

The Department for Business, Energy and Industrial Strategy (BEIS) published its joint response with Ofgem on Wednesday (6 April) to the consultation exercise carried out last year into the functions and powers of the new body, which will absorb both National Grid Electricity System Operator and parts of the system operator for gas.

The document said: “We are mindful of the need to avoid unintentionally building in an electricity bias, and we intend to set out clear whole systems expectations for the FSO in its statutory duties to help mitigate this risk.”

The FSO will have a new Gas System Planner licence to enable the discharge of its gas strategic network planning, long-term forecasting and market strategy functions.

The response said the FSO’s statutory duties will inform development of both its electricity and gas licenses.

To help fulfil its functions across the whole system, the FSO will be equipped with statutory powers to request data or information from gas licensees.

The response also set out the government’s thinking behind its decision to establish the FSO as a public corporation with operational independence from government.

It said feedback from the energy market revealed concerns that involvement by the FSO’s owners in the energy industry or related areas could “compromise its perceived independence and thus the credibility of its performance”.

“Mitigating these concerns would mean imposing very strict ‘anti-conflict’ ownership restrictions, which would likely severely limit the pool of potential owners and make a private sector model less straightforward and less attractive,” the document stated.

The response said funding the FSO via network charging will enable the organisation to remain independent of day-to-day government control.

Commenting on the government’s FSO announcement, Energy Networks Association chief executive David Smith said: “We are glad that the government has been able to give this clear direction on the Future System Operator.

“Coordination and cooperation across electricity and gas transmission and distribution networks, as well as all other players in the energy sector will allow us to make even greater strides towards decarbonising effectively and efficiently.”

David Cole, market director for net zero energy at engineering company Atkins, said: “The commitment to establish an independent body that will take a whole system approach should help to ensure that a net zero energy system is resilient, well-coordinated and delivered in the most efficient and cost-effective way for industry and consumers, providing it has the engineering capability required to create a viable and deliverable plan.”