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Gas Transporter Licence

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title: "Gas Transporter Licence" type: wiki related_canonical: ~/knowledge/sources/ofgem/licences/gas-transporter-slc.md last_updated: 2026-04-12 tags: [ofgem, licence, gas-transporter, riio, unc, ngt, gdn, igt]

Gas Transporter Licence

What It Is

The Gas Transporter (GT) licence is the regulatory authorisation required to operate a gas pipe-line system in Great Britain. Granted by Ofgem under section 7 of the Gas Act 1986, it applies to every company that conveys gas through pipes - from the national high-pressure transmission network down to local housing estate distribution systems.

Every GT licensee is subject to both standard conditions (identical across all licences) and special conditions (specific to each licensee or network type).

Who Holds One

There are approximately 30 GT licence holders across three categories:

National Transmission System (NTS) - 1 licensee National Gas Transmission plc (NGT, formerly National Grid Gas, formerly Transco) - operates the high-pressure gas transmission network covering most of Great Britain.

Gas Distribution Networks (GDNs) - 4 companies, 8 licences Each GDN company holds separate licences for its individual network areas: - Cadent Gas: 4 networks (North West, West Midlands, East of England, North London) - Southern Gas Networks (SGN): 2 networks (South East, Scotland) - Northern Gas Networks (NGN): 1 network (Northern England) - Wales and West Utilities (WWU): 1 network (Wales and South West)

Independent Gas Transporters (IGTs) - approximately 20 licensees IGTs operate local distribution systems, typically on new housing developments and business parks. They connect into GDN networks and access the market via the iGT UNC.

Standard vs Special Conditions

Standard conditions are determined centrally by the Secretary of State under section 81(2) of the Utilities Act 2000. They apply identically to every GT licensee. They cover: - Definitions (SC 1) - Licence fee payments to Ofgem (SC 3) - Connection charging methodology (SC 4B) - Access to the system (SC 4F) - Gas theft response (SC 7) - Smart Energy Code compliance (SC 10) - Agency services (SC 11) - Retail Energy Code compliance (SC 14) - Smart metering data restrictions (SC 15) - Standards of performance payments (SC 20) - Accounts and information separation (SC 30) - Transportation Services Obligations (SC 40A, SC 45)

Special conditions are set individually for each licensee or class of licensees and contain the economically substantive regulation. They are in four sub-parts:

  • Part A: Applies to both NTS and GDN licensees. Contains the UNC compliance obligation (SSC A11), ring-fencing, information restriction, regulatory accounts, and innovation obligations.
  • Part B: Applies to NTS licensees only. Contains cross-border capacity and metering conditions.
  • Part C: Applies to NGT (NTS) only. Contains the full RIIO-GT2 price control conditions - revenue restrictions, re-openers, incentives, and PCFM governance.
  • Part D: Applies to GDN licensees. Contains the RIIO-GD2 price control conditions for the 4 GDN companies.

RIIO Price Control via Licence Conditions

The GT licence is the primary vehicle for Ofgem's RIIO economic regulation. There is no separate regulatory contract - the price control is embedded directly in the licence.

The mechanism works as: 1. Ofgem conducts a periodic review (every 5 years - currently RIIO-GT2 2021-2026 for NTS; RIIO-GD2 2021-2026 for GDNs) 2. Final Determinations are translated into licence modifications via the Gas Act section 23/24 process 3. Revenue restriction conditions in Part C (NTS) or Part D (GDN) set the annual allowed revenue 4. The Price Control Financial Model (PCFM) calculates the actual revenue figure each year from these conditions 5. Regulatory Accounts (SSC A30) verify compliance 6. Re-opener conditions allow in-period adjustment for major cost deviations

Current controls: - RIIO-GT2 (NGT, 2021-2026): approximately GBP 3.2bn totex allowed - RIIO-GD2 (4 GDNs, 2021-2026): approximately GBP 14.6bn totex across all 4

UNC Obligation

Standard Special Condition A11 (Network Code and Uniform Network Code) is the core access condition. It requires GT licensees to: - Be a party to the Uniform Network Code (UNC) - Comply with all UNC provisions - Participate in the UNC modification governance process - Not act inconsistently with the UNC

The UNC is the central commercial framework covering: transportation arrangements, capacity allocation, balancing and settlement, emergency procedures, and the agency services used by all GT parties. Being a UNC party is effectively a condition of holding an active GT licence for NTS and GDN licensees.

IGTs access the UNC framework via the iGT UNC, a parallel instrument aligned with but distinct from the main UNC.

Key Safety and Emergency Provisions

SSC A8 (Emergency Services and Enquiry Service Obligations) Every GT licensee must maintain: - A 24-hour emergency service for gas escapes and safety incidents - An enquiry service for customers and shippers

For GDNs this covers domestic gas escapes. For NGT (NTS) it covers major system failures, off-specification gas events, and compressor station incidents.

SSC A9 (Pipe-Line System Security Standards) The licensee must operate and maintain its system to standards sufficient to meet reasonable demand. This interfaces with the Gas Safety (Management) Regulations 1996 (GSMR), which separately require: - Appointment of a Network Emergency Co-ordinator (NEC) - Maintenance of a Safety Case (the safety management documentation) - Compliance with prescribed gas safety management procedures

The GT licence conditions and GSMR are parallel obligations - both apply.

Hydrogen Future

As of early 2023, the GT licence contains no hydrogen-specific conditions. The RIIO-GT2 special conditions do include: - A Net Zero Re-opener (SC 3.6) that can fund hydrogen repurposing expenditure - A Strategic Innovation Fund (SC 5.7) supporting hydrogen projects - Net Zero pre-construction provisions (SC 3.9) for feasibility work

Full conversion of the NTS or GDNs to hydrogen would require primary legislation (the Gas Act 1986 does not authorise conveyance of pure hydrogen as "gas" at scale) and fundamental revision of the licence. The current GT licence structure is not hydrogen-ready in the sense of authorising hydrogen conveyance - it is gas-technology-agnostic but Gas Safety (Management) Regulations currently limit hydrogen blending.

Key Cross-References

  • Gas Act 1986 (primary authority, sections 7, 9, 10, 23-24, 33AA)
  • Utilities Act 2000 (standard conditions mechanism, Schedule 7 scheme)
  • Uniform Network Code (UNC)
  • iGT UNC (IGT version)
  • Gas Safety (Management) Regulations 1996 (GSMR)
  • RIIO-GT2 Final Determinations 2021 (NGT price control parameters)
  • RIIO-GD2 Final Determinations 2020 (GDN price control parameters)
  • Gas Directive 2009/73/EC (retained) (unbundling, access, accounts)
  • Smart Energy Code (SEC)
  • Retail Energy Code (REC)
  • Pipeline Safety Regulations 1996 (HSE)