Electricity Transmission Licence

Page type: primary-anchored (mirrors Electricity Transmission Standard Licence Conditions)

Last updated: 2026-04-05

The Electricity Transmission Licence is granted under section 6(1)(b) of the Electricity Act 1989. It authorises the holder to participate in the transmission of electricity in Great Britain. The licence contains Standard Licence Conditions (SLCs) that apply to all transmission licensees, plus additional sections activated by Ofgem direction for onshore transmission owners (TOs) and offshore transmission owners (OFTOs).

Source file: sources/ofgem/licences/transmission-slc.md Consolidation date: 10 June 2025 Holders: National Grid Electricity Transmission plc, SP Transmission plc, Scottish Hydro Electric Transmission plc (onshore TOs); multiple OFTOs

Structure

The licence uses a layered activation model with five Sections:

This means the same licence document serves three types of transmission licensee. The Authority (GEMA) activates Section D or E by issuing a direction to each licensee.

Section A: Interpretation and application

Condition A1 (SLC A1) defines approximately 80 terms used across the licence. Key definitions include "the Act" (Electricity Act 1989), "the Authority" (GEMA), "ISOP" (Independent System Operator and Planner designated under Energy Act 2023 s.162), "national electricity transmission system", "transmission business", "STC", and the various industry codes (BSC, CUSC, Grid Code, SQSS).

Conditions A3, A5, A6 are the activation/deactivation mechanisms for Sections D, B, and E respectively. The Authority may issue directions to switch sections on or off, vary their terms, or reactivate them after cessation.

Section B: General conditions

Section B contains the core regulatory obligations that apply to all transmission licensees. These fall into several groups:

Financial protection regime (B1, B3, B5, B6, B7, B8, B9, B10)

The financial ring-fencing conditions protect consumers by ensuring that the regulated transmission business remains financially resilient and separated from riskier activities.

• B1 (Regulatory Accounts): Licensee must prepare, audit, and publish separate regulatory accounts for the transmission business by 31 July each year. Accounts must be audited to Companies Act standards and published as stand-alone documents (SLC B1.14, B1.19).

• B3 (Disposal of assets): No disposal of relevant assets (parts of the transmission system, control centres, land) without 2 months' prior notice to the Authority. No mortgages/charges over receivables post-April 2013 without compliance. Exceptions for Authority general consent and TO-to-TO transfers (SLC B3.1-5).

• B5 (Cross-subsidies): The transmission business must not give or receive cross-subsidies to/from any other business of the licensee or its affiliates (SLC B5.1).

• B6 (Ring fencing): Licensee must not conduct any business other than the transmission business. No electricity storage facilities except on-site for system resilience. No investments without Authority consent except in permitted-purpose subsidiaries. De minimis business allowed up to 2.5% of turnover (SLC B6.1, B6.1A, B6.2, B6.4).

• B7 (Availability of Resources): Licensee must ensure it has sufficient financial and operational resources at all times. Three annual certificates required by 31 July: financial (1F/2F/3F), operational (1R/2R/3R), and compliance (1C/2C). Before declaring dividends, must certify compliance and that distribution will not cause future breach. Must maintain an intervention plan for energy administrator use (SLC B7.1-17).

• B8 (Ultimate controller undertaking): Must procure legally enforceable undertaking from each ultimate controller not to cause licence breaches. Must not deal with controllers lacking undertakings (SLC B8.1-3).

• B9 (Indebtedness): No security, indebtedness, or guarantees except on arm's length/commercial/permitted-purpose terms. No cross-default obligations. Restrictions tighten when credit triggers are hit (SLC B9.1-9).

• B10 (Credit rating): Must use reasonable endeavours to maintain Investment Grade Issuer Credit Rating. Must notify Authority of Negative Rating Actions within 10 working days. Must produce Financial Resilience Report if near/at investment-grade floor or linked to covenant triggers (SLC B10.2-6).

Information and governance (B4, B15, B21, B22, B23, B24)

• B4 (Information): Authority may require any information/reports needed for its functions. Licensee must procure information undertakings from ultimate controllers (SLC B4.1-2).

• B15 (RIGs): Regulatory Instructions and Guidance are the primary data-collection mechanism for price control administration. Licensee must comply (SLC B15.10).

• B21 (Certification): Licensee must notify Authority of events affecting certification eligibility (ownership unbundling under Electricity Directive provisions retained post-Brexit) (SLC B21.1-5).

• B22 (Independent directors): At least two sufficiently independent non-executive directors at all times, meeting independence criteria (no prior employment by licensee/associates, no material business relationships, max 8-year term) (SLC B22.1-12).

• B23 (Data assurance): Licensee must carry out Risk Assessments of data quality, procure independent reviews if directed, and report to Authority (SLC B23.3).

• B24 (Housekeeping): Process for making minor modifications to licence conditions by Authority direction (renumbering, typographical corrections, updating references) without full s.11A process (SLC B24.1-6).

System governance (B11, B12, B16, B18, B19)

• B11 (Security): Comply with Fuel Security Code (England & Wales). In Scotland, enter into an agreement for compliance with Secretary of State directions under ss.34/35 if directed (SLC B11.1).

• B12 (STC): The centrepiece of TO-ISOP governance. Requires all TOs and the ISOP to maintain the System Operator -- Transmission Owner Code (STC) at all times, covering: planning/operation of the national electricity transmission system; revenue allocation; modification procedures including self-governance, fast track, significant code review, and Authority backstop directions. STC objectives include efficient obligations discharge, co-ordinated transmission, competition facilitation, and security of supply (SLC B12.1-16).

• B16 (Innovation): Licensee must develop and maintain an Electricity Network Innovation Strategy in cooperation with other Relevant Network Licensees, reviewed biennially (SLC B16.3-4).

• B18 (OTOLR): Authority may direct any transmission licensee to provide offshore transmission owner of last resort services for up to 5 years where a tender has failed, an OFTO licence is to be revoked, or a previous OTOLR direction has expired (SLC B18.1-10).

• B19 (Connect and manage): Licensee must give full effect to connect and manage modifications made by Secretary of State under Energy Act 2008 ss.84-86. Ceases at end of C&M transition period (SLC B19.1-3).

Section C: Not Used

Section C is headed "NOT USED" but contains one operative paragraph requiring the licensee to publish UoS charging methodology and charging statements with Authority approval and to conform to them. This references "condition C4 (Charges for use of system)" which appears to be a special condition rather than a standard condition.

Section D: Transmission Owner conditions

Section D applies only to onshore transmission owners (NGET, SPTL, SHETL) once activated by the Authority under A3.

Core TO obligations (D1, D2, D3)

• D1 (Interpretation): Defines connect and manage-specific terms including "connect and manage derogation" (temporary relaxation of SQSS Chapter 2/4 to enable C&M connections), "enabling works", "wider works", and connections methodologies.

• D2 (Transmission services): The fundamental obligation: licensee must provide transmission services to the ISOP in accordance with the STC, consisting of making the system available, enabling ISOP to direct configuration, and providing information (SLC D2.1-2).

• D3 (SQSS): Licensee must plan and develop its system in accordance with the SQSS and STC. Before making a TO offer, must assess SQSS compliance and determine if a connect and manage derogation is needed. Where a derogation is granted and the ISOP accepts the TO offer, the TO is not required to comply with SQSS to the extent of the derogation until wider works are completed. Must provide information for the annual SQSS compliance report (SLC D3.1-9).

Connections (D4A, D4B, D16, D18)

• D4A (Connection offers): On ISOP notification of a connection application, licensee must offer to enter into an agreement with the ISOP covering: works, reinforcement, meters, completion date, costs, and further terms. For non-Gate-2 applications, must provide information submission (indicative date/point). Must make offers as soon as practicable within STC timescales. Not obliged if compliance would breach s.9 duties or safety standards. Must produce semi-annual reports on connection offer timescales (SLC D4A.1-6).

• D4B (Authority functions): If ISOP proceeds on basis of a TO offer settled by the Authority, licensee must enter into agreement reflecting the settled offer (SLC D4B.1-2).

• D16 (Connect and manage): When ISOP notifies a C&M application, licensee must: comply with D4A; determine if a derogation is needed; use reasonable endeavours to complete enabling works on timescale consistent with Connections Network Design Methodology and applicant expectations; complete wider works as soon as practicable; cooperate with ISOP on interim offers to C&M transferees; ensure non-C&M connectees are not disadvantaged (SLC D16.1-7).

• D18 (Connections Network Design Methodology): Licensee must cooperate with ISOP to produce and maintain the CNDM, comply with it, and furnish information to ISOP (SLC D18.1-2).

Conduct and governance (D5, D6, D12, D17)

• D5 (Non-discrimination): Must not unduly discriminate in meeting D2, D3, D4A, and B12 obligations. Must keep compliance records if directed (SLC D5.1-2).

• D6 (No electricity trading): Must not buy or sell electricity except for providing transmission services (SLC D6.2-3).

• D12 (Scottish Settlement): Must comply with Settlement Agreement for Scotland insofar as it transmits to Scottish premises (SLC D12.1).

• D17 (Whole System): Must coordinate and cooperate with other TOs, the ISOP, and distributors to identify cross-network efficiency opportunities. Must consider proposals from transmission system users. Must use reasonable endeavours to implement actions that do not negatively impact its network and benefit the total system. Must publish a coordination register on its website and update annually. Must have due regard to Whole Electricity System Guidance (SLC D17.1-12).

Section E: Offshore Transmission Owner conditions

Section E applies to OFTOs once activated by the Authority under A6. It is a self-contained regulatory regime that substantially mirrors Sections B and D but with modifications reflecting the OFTO project-finance model:

Key differences from Sections B/D

Mirrored conditions

E2 mirrors B1 (Regulatory Accounts), E4 mirrors B3 (Disposal), E5 mirrors B4 (Information), E6 mirrors B5 (Cross-subsidies), E7 mirrors B6 (Ring fencing), E9 mirrors B8 (Ultimate controller), E10 mirrors B9 (Indebtedness), E13 mirrors B12 (STC -- abbreviated), E15 mirrors D2 (Transmission services), E16 mirrors D3 (SQSS), E18 mirrors D4B (Authority functions), E19 mirrors D5 (Non-discrimination), E20 mirrors D6 (No trading), E21 mirrors B18 (OTOLR), E23 mirrors B21 (Certification), E25 mirrors D18 (CNDM).

Defined terms

See source file sources/ofgem/licences/transmission-slc.md for the full defined terms register.

Cross-references

The transmission licence connects to the following external instruments:

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