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Gas system operator incentives

We are the system operator (SO) of the gas transmission network. To imitate the commercial pressures that would normally apply to a company in a fully competitive market, we are subject to a number of performance incentives. These SO performance incentives aim to maintain and improve our daily operational efficiency and are subject to renegotiation at set intervals.

About gas incentives

The SO incentive framework was implemented by Ofgem in 2013/14 and will last for eight years. Under this framework, we have a set of outputs that we have agreed with our stakeholders. We deliver these outputs in return for an allowance that we have agreed with the regulator Ofgem. You can find a general overview of gas system operator Incentives in our Supporting Information document. Documents relating to previous consultations and schemes can be found under the Data and documents header below. 

Current SO incentives

These are the areas where incentives are in place:

NTS shrinkage

Minimising energy costs associated with operation of the network and managing the end-to-end service of forecasting, accounting for, procuring, and supplying energy to the NTS.

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Residual balancing

Balancing supply and demand on the gas day and minimising the impact it has on the market when it deems it necessary to trade gas to balance the network.

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Demand forecasting

Demand forecasts over a range of timescales to assist the industry to make efficient decisions in balancing their supply and demand positions.

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Greenhouse Gas (GHG) emissions

Incentive to limit the quantity of greenhouse gas emitted from our system compressors (the most significant venting source currently).

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Information provision

How we provide operational and forward-looking information to the market in the form of both available data and information on the overall market.

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Transportation Support Services (TSS)

Additional tools available to National Grid to support the provision of a network in periods of high demand.

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Operating Margins (OM)

How we use gas to manage short-term impacts of operational stresses (e.g. supply loss) where the market response is not sufficient, or during a gas system emergency.

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Unaccounted for Gas (UAG)

Gas that remains unallocated after accounting for all measured inputs and outputs from the system to ensure correct measurement and billing of its users.

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Maintenance

Essential undertaking as part of our role to keep the National Transmission System (NTS) safe, fit for purpose and operating efficiently and economically.

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Constraint management

How we manage gas constraint actions and materials to help you understand localised system management.

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Incentive development

Development

Most of the incentive schemes agreed for the RIIO-T1 price control period (2013-2021) were set for an eight year period but some were set for a shorter time. Where new incentives were introduced or where incentives had been substantially changed, the incentives (known as Shallow Incentives) were set for a shorter period to enable the effectiveness to be assessed before committing to longer timescales. All of the incentives will be due for review as part of the RIIO-T2 price control period, which will commence in 2021. The table in the next tab lists the incentives and their review date.

Review dates

Scheme

Expiration date

Scope

Maintenance

01 April 2018

Scheme expires 31/03/18

Demand forecasting D-2 to D-5 incentive

01 April 2018

Scheme expires 31/03/18

Greenhouse gas incentive

01 April 2018

Scheme expires 31/03/18

NTS shrinkage

01 April 2018

Review and possible redevelopment of regression model if viewed unfit for purpose

Residual balancing

01 April 2018 - 21

Scheme Operation Review

Transportation Support ServicesOctober 2018Scheme expires 10/18

Demand forecasting D-1 incentive

01 April 2021

Scheme expires 31/03/21

NTS shrinkage

01 April 2021

Scheme expires 31/03/21

Residual balancing

01 April 2021

Scheme expires 31/03/21

Operating margins

01 April 2021

Scheme expires 31/03/21

Unaccounted for gas

01 April 2021

Scheme expires 31/03/21

Information provision

01 April 2021

Scheme expires 31/03/21

Shallow Incentives Review (2017)

Download the following documents to find out more.

Shallow Incentives Review: Review of the maintenance, demand forecasting for two-to-five days ahead, and greenhouse gas emissions schemes. (June 2017)

Shallow Incentives Proposal:  (August 2017)

Shallow Incentives Conclusions Report: (October 2017)

Operating Margins Incentive Proposal (2017)

Download the following documents to find out more.

Operating Margins Incentive Proposal Consultation on the potential re-introduction of a financial incentive for Operating Margin's costs designed to help ensure that the costs customers pay for Operating Margins are kept to a minimum. (August 2017)

Operating Margins Incentive Consultation Outcome (November 2017)

Data and documents

NTS shrinkage

Published Sort ascending Name
2017/18 NTS Shrinkage Incentive Ex-Ante Baseline Value Statement March 2017
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement December 2016
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement September 2016 v2 260916
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement June 2016
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement December 2015
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement September 2015
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement June 2015
NTS Shrinkage Audit 2014/15 consolidated
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement for 2015/16
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement for 2015/16
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement for 2014/15 CVS Correction
CVS Baseline Amendment 2014/15 v2
2015/16 NTS Shrinkage Incentive Ex-Ante Baseline Value Statement September 2014
2015/16 NTS Shrinkage Incentive Ex-Ante Baseline Value Statement June 2014
NGG Open Letter Methodology Statement June 2014
NGG Open Letter Methodology Statement March 2014
2014/15 NTS Shrinkage Incentive Ex-Ante Baseline Values Statement March 2014
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement for 2014/15
NGG Open Letter Methodology Statement
NTS Shrinkage Incentive Ex-Ante Baseline Values Statement for 2014/15

Past schemes

Electricity system operator incentives

Designed to deliver financial benefits to the industry and consumers by reducing the cost and minimising the risks of balancing the system.

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Market, operations, and data

The latest operational data and real time flow data, maintenance plans, information about gas quality, and entry and exit capacity details and reports.

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