On Wednesday 21 June, Ofgem published a consultation on funding the transition to the Future System Operator (FSO). The consultation is seeking views on Ofgem’s funding proposals for cost recovery mechanisms that will allow for the Electricity System Operator (ESO), National Grid (NG) and National Gas Transmission (NGT) to recover efficient and economic costs incurred from activities related to the transition to the FSO. The consultation sets out the activities that need to occur to establish the FSO, which include the ESO separating from NG, the ESO needing to develop and integrate the capabilities that will be required when the ESO becomes the FSO, and building relevant gas capabilities from NGT into the FSO. The consultation has also published the estimated forecasted costs for the FSO implementation, including that the ESO is estimated to spend between £128mn – £172mn, that NG is expected to spend a total of £163mn – £200mn and that NGT is estimated to spend £2mn. Responses are requested by 2 August 2023.
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