Determinations for NESO1 Business Plan

What changed

Ofgem published Draft Determinations on NESO's first enduring business plan, NESO1, on 10 February 2026, with a consultation closing 11 March 2026. Despite the "Determinations" label, this is a consultation on provisional views, not a final decision. The status is closed and awaiting decision: Ofgem has its responses and will issue Final Determinations before NESO1 takes effect. The draft sets out Ofgem's provisional positions on NESO's strategic aims, performance objectives, value for money, reporting requirements and innovation funding, and the method by which NESO's performance as system operator and planner will be assessed.

NESO1 is the first business plan period after BP3, the transitional plan that covered NESO's stand-up as an independent body following separation from National Grid. BP3 was a bridge. NESO1 is the start of the enduring regime: the funding allowance, the output obligations and the performance framework that will govern NESO on a continuing basis rather than as a transition arrangement. The draft signals the direction of travel on each: Ofgem accepts NESO's plan covers the right broad areas of activity, but is proposing "clearer, outcome focused expectations," strengthened reporting, and demanding further evidence on value for money before it will sign off the spend. That is a determination to revise the plan, not to accept it.

What this means in practice

The decision sets NESO's allowed expenditure, its deliverables, and how it is scored. NESO is funded through the SO part of network charges, recovered from suppliers and generators and passed to consumers. There is no separate market price for NESO's services; its cost is an administered allowance that Ofgem sets and that flows through to bills. The "value for money" framing matters here because consumers cannot exit. NESO is a monopoly planner and operator with no competitive constraint on its cost base, so the only discipline on its spend is the regulatory determination itself. When Ofgem says it wants "further evidence on value for money," it is acknowledging that the only check on a monopoly's costs is the body setting its allowance, and signalling that NESO's first submission did not clear that bar.

The substantive shift is from input and activity reporting to outcome-focused expectations and success measures, set out in Annex 2. This is the load-bearing change. NESO's core functions, connections reform and the strategic planning that sits behind Gate 2, transmission network planning through the CSNP and SSEP, and system operation, are areas where NESO's decisions determine what gets built and connected and on what timescale. An outcome-based performance framework is only as good as the outcomes chosen. If NESO is measured on delivery of plans and processes rather than on whether connections actually happen and capacity is actually built, the framework rewards activity, not results. The detail in Annex 2 (Ofgem Expectations and Success Measures) and Annex 1 (Impact Pathways Mapping) is where the regime is actually defined; the headline document is provisional framing around them.

Affected parties: NESO directly, on what it can spend and what it must deliver. Industry stakeholders indirectly, because NESO's planning and connections outputs set the timetable for everyone waiting on grid access and network reinforcement. Consumers, who fund the allowance through SO charges with no ability to opt out. The accountability strengthening Ofgem describes is real only to the extent that the success measures bite on availability outcomes (connections delivered, network capacity built) rather than on process compliance. Reporting requirements that are "strengthened" raise NESO's administrative cost, which consumers fund, and only earn that cost back if the reporting drives better delivery rather than documenting it.

What happens next

The consultation closed 11 March 2026. Final Determinations on NESO1 follow before the plan period takes effect. The timing of the final decision and the start of the NESO1 period was not stated in the consultation text; that detail sits in the Draft Determinations PDF and any subsequent Ofgem publication, not here, so the operative start date is unconfirmed from this source.

NESO1 does not sit alone. It is the implementation point for the enduring regulatory framework and the Business Plan Guidance work Ofgem ran through 2025. The framework set the rules; NESO1 applies them to the first real plan and allowance. Watch the Final Determinations for three things: the size of the allowance relative to NESO's submission (a material cut signals the value-for-money challenge had teeth, no change signals it did not), the specific success measures adopted in the final version of Annex 2 (whether they are framed on delivered connections and built capacity or on plans produced and processes followed), and the reporting cadence. The framework's credibility turns on whether the performance measures hold NESO to availability outcomes, given that NESO's planning decisions are the binding constraint on what the system can connect and build, and no market price disciplines its cost.