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National Grid must complete SO separation by April 2019, Ofgem rules

Image: National Grid.

Image: National Grid.

National Grid must act on its plans to create a legally separate company to conduct its system operator (SO) duties and have it running by April 2019, Ofgem has said.

The confirmation, which came within an Ofgem note issued yesterday (3 August), follows a joint-statement from the regulator, SO National Grid and the government at the start of this year establishing its intention for the future SO role.

The trio’s argument at the time centred around the need to keep household bills down by enabling more competition and innovation across the whole system, which they said could only realistically be achieved if a legally separate company to National Grid carried out SO duties.

Ofgem simultaneously published a consultation seeking stakeholder views on the proposed separation, but it has now approved National Grid to proceed with its plans.

Respondents to the consultation largely agreed with Ofgem’s proposals, the regulator said, adding that separate licences for the transmission owner and SO elements of the wider group would be a “significant step forward” for the UK power market.

However the consultation did bring up the issue that any separation must be “as robust as possible” and, as a result, National Grid must now spend the next 20 months establishing an entirely separate office and staff for its two functions.