Following their joint consultation on the future ownership of Elexon, the UK government and Ofgem have decided that the not-for-profit will remain in industry ownership.
Elexon Ltd (owned entirely by National Grid ESO) is the parent company of a group which provides the facilities and resources necessary for the implementation of the Balancing and Settlement Code (BSC).
In light of the creation of the Future Systems Operator (FSO) as a public corporation in April 2022, Ofgem and the UK government released a joint consultation in July 2022, to consider the future ownership of Elexon.
The publication closed in September 2022 having received 28 responses, the majority of which were from the energy industry.
The key decisions of the consultation have been confirmed as follows:
- Elexon will remain in industry ownership but moving the company to public ownership will remain as a ‘temporary fallback option’
- Shares in Elexon will be initially transferred to the 13 licensed BSC funding parties that own a funding stake in the company greater than 2% as of 1 January 2023
Ofgem and the UK Government have release the following response: “The Government and Ofgem response to the consultation on the Future System Operator set out our commitment to proceed with the creation of the Future System Operator (FSO).
“The FSO will be established in public ownership and will therefore require a transaction between government and National Grid plc (and any other relevant parties). Elexon is an independent entity, however it is wholly owned by National Grid Energy System Operator (NGESO). Given the creation and public ownership of the FSO, the ownership of Elexon will also change. Therefore, we are consulting to gather evidence and views to help us decide what the best ownership structure for Elexon would be. Elexon is widely considered to be an effective industry body.
“We are not consulting because we want to reform Elexon’s roles or its day-to-day governance. We are consulting on how best to structure the ownership of Elexon to ensure its current successful work can continue.”
A spokesperson for Elexon added: ”The decision is that Elexon will remain in industry ownership, with the 13 largest energy suppliers and generators being mandated to take on shares in Elexon.
“There was widespread support among Balancing and Settlement Code stakeholders for retaining the industry ownership model for Elexon. We look forward to working with government, Ofgem and the industry to transition smoothly to the new arrangements.”