Ofgem has given support in principle to recommendations made by the Second Balancing Services Charges Task Force for the UK system for recovering grid balancing costs.
Ofgem said that solutions to deliver the Task Force’s recommendations will be developed through the code modification process.
It will undertake further work to support the evaluation of the proposals.
This will include exploring the cashflow exposure to the ESO of managing a fixed so-called Balancing Services Use of System (BSUoS) charge and any alternatives for which a different party manages the risk.
Ofgem will also undertake quantitative analysis to assess the net benefits of the proposals and the potential impact on energy intensive users.
The task force, set up by National Grid ESO at Ofgem’s request, recommended that the BSUoS should be levied on final demand and recovered by a volumetric (£ per megawatt-hours) charge.
The BSUoS charges should be fixed ex ante and combined length of fix and notice period should be 14/15 months, the task force proposed.