Our responses to consultations on code reform and the Future System Operator
Elexon has published its responses to the consultations by the Government and Ofgem on reforming the energy code arrangements and the Future System Operator (FSO) role. We believe that the proposed framework is a sound footing on which to build an energy system to deliver net zero and note that consolidation and simplification should follow. We look forward to working with the Government and Ofgem to deliver the outcomes of the consultations.
Code Reform
Elexon is a strong supporter of consolidation and simplification of the codes and we have also called for reform of the System Operator arrangements.
The consultations imply that that the FSO and Strategic Body (under the Codes Review) will be decided on first, followed by code consolidation and simplification. We agree that this is the right approach and that Ofgem can take on the Strategic Body role, if it is resourced accordingly.
We do not support tendering for code services as we do not believe the benefits have been established and yet there will be material costs associated with its implementation. Tendering also represents an unnecessary risk to establishing the new arrangements and further delays consolidation and simplification.
We are also unconvinced by the need to license code managers. If this were to go ahead, a proportionate approach is needed.
Tendering and licensing processes could also create further burdens on Elexon at a time when we are required to focus on implementing Market-wide Half Hourly Settlement.
We are keen to ensure that the strategic engagement forums adequately retain the interest and participation of industry.
Future System Operator
Elexon is a subsidiary of National Grid ESO and while we are committed to work well with any of the proposed ownership models, we do have some concerns if it were to be a public body as it could be subject to more bureaucracy and policy constraints than necessary, which may ultimately result in it being slow to react to change. We believe that the FSO must maintain independence both from the industry and from the government. This will be key to its credibility and effectiveness.
We believe that it is rightly recognised in the consultation that Elexon’s independence is of value to Government, Ofgem and the industry and should be maintained.
Read our responses in full