The job of keeping the UK’s electricity and gas flowing will be returned to public control by 2024, under government plans for the effective nationalisation of a division of National Grid.
A new public body, the “Future System Operator”, will have responsibility for planning and managing energy distribution, with a focus on the challenges posed by decarbonisation.
The government said the plan, announced on the eve of the publication of its long-awaited energy strategy, would “drive progress towards net zero while maintaining energy security and minimising costs for consumers”.
The Department for Business, Energy and Industrial Strategy (BEIS) said the National Grid, a stock market-listed company since 1995, would be “appropriately compensated” in a transaction that will see the government take control of its Electricity System Operator (ESO), the part of the business that keeps the lights on. Gas distribution assets will also be taken into state ownership.
The National Grid’s chief executive, John Pettigrew, said National Grid “has a critical role to play in the decarbonisation of the economy to reach net zero, while continuing to ensure security of supply at the lowest cost to consumers”.
He said: “We have been working closely with government, industry and the regulator to create a Future System Operator that enables long-term holistic thinking, drives progress towards net zero, and lays the foundations for the regulatory reform necessary to deliver a clean, fair and affordable energy transition.
“We will continue to work closely with all relevant parties to ensure a smooth transition, subject to parliamentary approval and conclusion of the transaction process.”
The Prospect union said it was vital that the skills and experience of people who worked in the National Grid ESO division were retained.
“Workers need certainty on exactly what the new ownership model will look like, and on their future prospects,” it said.
“The government and National Grid should engage with unions to provide commitments and certainty as soon as possible.”
The effective nationalisation of the ESO division comes just three years after it was formally separated from the rest of National Grid, albeit within the same corporate group.
The ESO manages supply and demand on the grid to prevent interruption of supply, keeping the lights on.
The grid houses the infrastructure assets that support the system.
