Consultation on NESO Business Plan Guidance

What this is about

Ofgem is consulting on the Business Plan Guidance that will govern how NESO prepares its next business plan, the first one to land under the enduring regulatory framework that takes effect from 1 April 2026. The current arrangement, BP3, is the tail end of the RIIO-2 price control, which was designed for the old Electricity System Operator function inside National Grid. NESO is now a much larger entity, independent, publicly owned, with statutory duties extending across electricity, gas, and strategic spatial planning. The price control framework that fitted ESO does not fit NESO, and Ofgem has spent the past year designing a replacement. This consultation is one of the operational documents that gives that replacement effect.

The Business Plan Guidance is not, in itself, a price control decision. It is the rulebook for how NESO writes its business plan: what activities have to be described, what cost categories have to be broken out, what outputs and performance metrics NESO is expected to propose, what evidence has to be filed alongside the numbers, and what process Ofgem will run to assess the plan and reach a Determination. The guidance sits upstream of every later argument about scope, allowances, and incentives. Tight guidance forces NESO to make its proposed activities legible and contestable. Loose guidance lets NESO frame the conversation around its own categories and gives the regulator less purchase when allowances are negotiated. The consultation paper itself is short (211 KB) but the downstream consequences are large: the structure of the next plan will shape what Ofgem can scrutinise and what slips through unchallenged.

How to respond

Deadline: 8 July 2025 (the page also lists a closed date of 9 July 2025; the body text gives 8 July as the response deadline).

Method: email to nesoregulation@ofgem.gov.uk. PDF, Word, or Excel attachments are accepted. Confidential material should be clearly marked.

Contact: David Beaumont, 0207 901 7000, NESORegulation@ofgem.gov.uk.

Main document: NESO Business Plan Guidance Document (PDF, 211.19 KB), available from the consultation page.

Status note: this consultation has since closed with a decision. The decision document is published as "Business Plan Guidance for NESO: decision" and the related "Consultation on the enduring regulatory framework for NESO" sets the wider context. Anyone responding to subsequent NESO regulatory consultations should read the decision rather than the consultation, since the decision is what binds the plan that NESO will submit for the cycle beginning 1 April 2026.

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A note on coverage: the source text captured here is the Ofgem landing page, not the Business Plan Guidance Document itself. The landing page sets out scope, audience, and process but does not list specific options or consultation questions, which sit in the attached PDF. The "Options on the table" and "Questions being asked" sections are therefore omitted rather than filled with inferred content. A follow-up read of the PDF, and of the published decision, would be needed before any substantive position is taken on what the guidance requires NESO to disclose, how cost categories are defined, what outputs NESO will be asked to commit to, and how Ofgem's Determination process is structured. That is the level at which the discipline-versus-discretion question gets answered, and it is not visible from the landing page alone.