Octopus calls for clarity on FSO remit and accountability

Octopus has called for greater clarity on how the new Future Systems Operator (FSO) will be held accountable for its actions.

The UK’s second largest supplier says it “fully supports” the introduction of an independent system operator to impartially manage the network, adding that it is an essential change to enabling net zero.

However, it raises several concerns in its response to the House of Commons environmental audit committee’s ongoing inquiry into the transmission network.

The FSO is being set up via the Energy Bill, which the government is currently taking through Parliament.

Octopus’ submission states that “the sooner this new body is created the better.” However, it warns that progress on defining the exact roles and responsibilities of the FSO has been slow to date, urging the government to “take a stronger steer” and move quickly to define more detailed objectives and success criteria to measure the new organisation’s performance.

As the government has yet to finalise the FSO’s core roles, responsibilities and statutory duties, Octopus says it is difficult to assess whether it will have sufficient powers to carry out its functions.

The supplier’s submission adds: “More clarity is needed on how the FSO will be held accountable to achieve its statutory duties, to ensure that this body truly acts independently with consumer impacts at the heart of all decision-making.”

While fully supporting the intention for the FSO to take a whole system view of network planning, design and markets, the response says the new organisation’s powers around strategic decisions and enforcement, or how these can be challenged by industry, are not yet clear.

Octopus also echoes concerns, previously expressed by EnergyUK, about the growing scope of responsibilities being placed on the FSO, which it points out does not even exist yet.

It adds: “At all costs, we must avoid placing too much on this organisation during the transition period, as this could result in a hiatus in a number of policy areas so crucial to bettering GB’s chance of meeting our decarbonisation targets.”

These concerns are backed up in the Energy Systems Catapult’s response to the committee, which highlights a current tendency to “load the FSO with new responsibilities” before it has even been established.

To head-off the risk of this “scope creep”, the catapult suggests that National Grid ESO could set out a blueprint for the FSO’s medium-term operating model, while acknowledging the need for FSO to be flexible as the external context evolves.

But the catapult says it has “greater concern” about the FSO’s requirement to carry out both strategic planning and day-to-day system operations, which it warns are inherently different functions.

It adds: “Unless there is a clear deviation between these roles, with a clear articulation of the importance of both planning and operations, then there is a risk that the organisation would tend to focus on one (e.g. the day-to-day operations) over the other.”

It also says that the FSO will need to be able to exercise indirect influence in areas not directly within its control, such as electrification of private transport, that it must be able to engage with in order to truly deliver a whole-system perspective.

And it says that the FSO’s roots in the National Grid ESO means that it could initially have a tendency to favour large infrastructure rather than the large numbers of small, flexible assets that will increasingly characterise distribution systems.

In its own response to the inquiry, the ESO says the FSO’s status as a public sector body means its advice will be impartial because it will have no commercial interest.

The ESO estimates the FSO will be able to deliver £3 billion to £4 billion worth of savings across the energy system, which will feed through to lower consumer bills.