Mid-scheme decision on ESO's BP2 performance
Decision
- Publication date
- Industry sector
- Transmission Network
In April 2021, we introduced the RIIO-2 price control for the Electricity System Operator (ESO) covering the period between 2021-26. We introduced a pass-through funding approach, supported by incentives to deliver value for money. The incentives framework runs over a two-year period (aligning with the business plan period). We evaluate the ESO’s combined performance on outputs and costs, across three distinct roles and the incentives provide the ESO with additional returns where the ESO has delivered exceptional performance.
This is Ofgem's decision on the ESO's performance during BP2 at the mid-scheme point.
Cost Monitoring Framework
In our Business Plan 2 Final Determinations - Electricity System Operator document we introduced the Cost Monitoring Framework. As part of this framework we set out our intention to reassess the ESO’s IT at the mid-scheme stage using a Red Amber Green rating to determine whether there were any areas of significant concern in the ESO’s delivery and governance processes.
We have commissioned Coforge Ltd to perform this assessment. Following engagement with Coforge and the ESO we have opted to move away from a Red Amber Green assessment approach to a more nuanced scoring based approach. This approach maintains the same assessment criteria used in the initial RAG assessment performed by Zuhlke Engineering Ltd in 2022 but rather than a single Red Amber Green status, a score based on Capability, Maturity and Confidence was created for each investment and the wider Portfolio as a whole. Details of this scoring approach can be found in Coforge's BP2 mid-scheme review of ESO Digital Data and Technology performance.