Energy secretary Amber Rudd raised the prospect of reforms in her ‘energy reset’ speech in November, saying there was “a strong case for greater independence for the system operator”.
The paper said it had seen documents prepared by civil servants, which looked at three different options for the future of the role. The “lead option”, which it said was favoured by ministers, would see the creation of a not-for-profit company supervised by Ofgem.
The document is quoted as saying: “This option maximises independence of the system operator both from market participants and government. It is the approach taken by the majority of and has been demonstrated to work well.”
Under the second option the government would create an independent system operator, supervised by ministers. However, the document reportedly raised concerns that the government lacked “the expertise to hold a body involved in real-time decisions to account”.
The third option would be to maintain the status quo. Two other options, including the creation of an independent for-profit company, were reported to have already been ruled out.
A spokesperson for Decc said: “There is a strong case for greater independence for the system operator to promote more competition in our electricity system.
“We are working alongside National Grid and Ofgem to see how we can ensure our electricity system is as secure, flexible and independent as possible, whilst operating in the best interest of consumers.”
A National Grid spokesperson said: “The costs and risks of introducing further change to market structures must be proportional to the benefit to consumers. There is little evidence that an independent system operator model would deliver value to justify the significant consumer costs and risks to security of supply.
“We take very seriously the need to provide confidence that any potential conflicts of interest are properly managed.”
A spokesperson for Ofgem said: “We are working with DECC on whether there is a case for further independence for the system operator role.”
The regulators’ chief executive Dermot Nolan has previously said there is a “strong case” for such a change.