Who decides what in Great Britain energy in May 2026, the decision rights, actors, and tools that move the system

Decisions: how the Great Britain energy system actually changes a rule, the statutory hooks and the six gates

The decisions that move the Great Britain energy system fall into three broad shapes, and each shape has its own statutory hook. The first is the modification of one of the seven industry codes. The second is a regulatory determination by Ofgem under licence conditions issued under the Electricity Act 1989 or the Gas Act 1986. The third is a statutory authority decision by DESNZ, by Parliament through primary legislation, or by a Secretary of State acting under powers in the Energy Act 2023. The three shapes overlap and most live reforms cut across all of them, but the legal distinction matters for the timescale, the appeals route, and the level of scrutiny the decision attracts.

The six gates from a policy idea to an operational rule

A six-gate map clarifies any reform proposal. Each gate carries its own legal character and its own pace. A gate cannot be skipped without breaking the chain of authority that runs from primary legislation down to the licensed actor who implements the change.

Most of the working life of anyone employed in Great Britain energy is spent at Gates 4, 5 and 6. The earlier gates move on political calendars, with ministerial diaries and parliamentary windows constraining them. The later gates move on engineering calendars, with system release windows, freeze periods, and the lead time for safety-critical change governing them. The most common friction in May 2026 lives at the boundary between Gates 4 and 5, where a licence change and a code change have to land together to make the new rule operational. The Authority has the legal power to coordinate them, but the practical work of sequencing across three or four code bodies plus the licensee population is one of the hardest single jobs in the system.

How a code modification crosses Gate 5, in practice

Below the primary and secondary legislation, the day-to-day operating rules of the Great Britain electricity and gas systems sit in seven multi-party codes. Each one is a contract between the parties bound by it (the system operator, the licensees, sometimes the consumers), with a defined process for changing the contract. The process exists because the codes carry obligations that touch live operations: settlement, dispatch, charging, data exchange, connection. A change without due process can land a real cost on a party that did not see it coming. The change process is the consideration the codes offer in return for accepting the contract in the first place.

A code modification starts with a written proposal from any code party. The proposal goes to a workgroup of code parties chaired by the code body, which produces a written assessment of the proposal's merits, the alternatives, and the impacts on the parties. The workgroup typically runs for three to nine months. The workgroup's draft modification report goes to industry consultation for a defined period (usually fifteen to twenty-eight working days). The code panel meets, considers the consultation responses, and votes a recommendation to the Authority. Ofgem (acting as the Gas and Electricity Markets Authority) issues a decision under s.11A of the Electricity Act 1989 or s.23 of the Gas Act 1986. The Authority's decision is published with the reasoning that supported it. If the change is approved, the code body publishes a revised version of the code and the implementation date is set, often six to nine months after approval to give licensees time to ready their systems. The Authority can also reject the modification or direct that it be made in a different form.

Section 11A of the Electricity Act 1989 sets out the Authority's standing power. The Authority may direct that a code modification be made where it is satisfied that the modification better facilitates the achievement of the relevant objectives of the code, and the Authority may require changes to the proposed modification before it approves the change.²⁴ That single sentence is the legal foundation under every code change that has been made since the 1989 Act came into force, and it is what gives Gate 5 its character: the industry proposes, the regulator disposes, and the consultation in between is the route by which evidence is brought to the Authority's attention.

Two large modifications dominated the GB electricity modification register through 2025 and 2026. Connections Reform sits primarily in the CUSC under the CMP434 modification (which became TM04+ on connection-queue redesign and Gate 2 sequencing).¹⁵ Market-wide Half Hourly Settlement is BSC Modification P408, approved in 2021, in delivery since.²⁵ A third, GC0139 on enhanced planning-data exchange to facilitate whole-system planning, sits in the Grid Code and was last updated on 7 April 2026.⁵ Each of them is the operational vehicle for a strategic policy choice that was made years earlier. The modification is not the policy. It is the route by which the policy is given binding form on the licensees that have to implement it.

How a regulatory determination is taken under licence conditions, in practice

The Electricity Act 1989 created the licence regime that governs every party that generates, transmits, distributes, or supplies electricity in Great Britain. The Gas Act 1986 did the same for gas. Each licence is a document with conditions the Authority can vary, monitor, and enforce. The conditions cover everything from the physical safety of the connection (Grid Code compliance) to the duty to publish planning data (SLC 25.2, the LTDS condition), to the obligation to handle consumer complaints (supply licence consumer-protection conditions).^{1 23} When Ofgem wants to change how a licensee behaves without going to primary legislation or through an industry code, the licence is usually the route.

Three regulatory determinations have been particularly visible in May 2026. The LTDS Direction of 30 April 2024 issued under SLC 25.2 turned the distribution-network planning data the six DNO groups publish from spreadsheets into a validated CIM data model, with phased delivery across three stages.¹ The Direction has since been followed by three derogation letters that adjusted the delivery timetable. The first, dated 25 November 2024, extended Stage 1.3 to 28 November 2025.² The second, dated March 2025, extended the heatmap stages.³ The third, dated 13 May 2026, reshaped Stage 2 contents while holding the publication date of 29 May 2026 and rescheduled Stage 3 to 30 November 2026.⁴ The derogation is the lighter-touch counterpart to a fresh Direction: it adjusts the operative effect of an existing condition for named licensees and named deliverables, without reopening the underlying licence text. It is one of the most useful tools in the Authority's hand because it allows the regulator to respond to evidence on delivery without restarting the consultation cycle.

The CSNP Methodology Approval Decision of April 2026 is the second active determination.³⁰ The methodology is the document NESO will use to produce the Centralised Strategic Network Plan, which by the end of 2028 replaces the Network Options Assessment as the source of investment recommendations for the transmission network. The Authority approved the methodology after consultation, and the transitional T-CSNP that bridges from the NOA is due in June 2026. The CSNP itself is a public document and the methodology is the test the Authority will apply when it reviews the first delivery. Once the methodology is set, the question of which projects to build moves into the price-control window and the planning regime.²²

The Default Tariff Cap (the price ceiling for non-fixed tariffs on supply licences) is the third determination, and it runs on a quarterly cycle.²⁹ The Authority sets the cap level twelve weeks before each quarter under conditions written into the supply licence. The cap reflects wholesale energy, network charges, policy costs, allowances for supplier operating costs, and an earnings before interest and tax allowance. The mechanism is the most visible single piece of consumer-facing regulation in Great Britain and it carries a constant political audience. Every quarterly determination is published with a level breakdown that lets a household trace where its bill is coming from.

What unites the three determinations is the legal route. Each one operates on existing licence conditions, with the Authority's published decision setting out the evidence and the reasoning. Each one can be challenged in the High Court through judicial review on the standard public-law grounds (illegality, irrationality, procedural unfairness, breach of human rights), and licence modifications carry a separate appeal route to the Competition and Markets Authority for affected licensees. The licence is the workhorse of regulatory determination; the Direction, the derogation and the cap level are the operative outputs.

How a statutory authority decision is taken, in practice

Some decisions sit higher than the licence regime. They require primary legislation or secondary legislation made under it, ministerial decisions taken by DESNZ, or recommendations to the Crown made by the Privy Council. The Energy Act 2023 is the most consequential recent example of a statutory authority decision, because it created NESO, brought heat networks under economic regulation, set up the framework for the Future Homes Standard, and provided the legal hooks for the Energy Data Sharing Infrastructure. The Act received Royal Assent on 26 October 2023, with NESO's operational launch on 1 October 2024.

Four categories of statutory authority decision matter in May 2026. The first is the Strategy and Policy Statement that the Secretary of State issues to Ofgem under section 131 of the Energy Act 2013. The SPS sets out the government's strategic priorities, the policy outcomes the government wants Ofgem to contribute to, and the roles and responsibilities the government considers should sit with the regulator. Ofgem must have regard to the SPS when carrying out its functions. The current SPS was issued in April 2024 and runs through 2029.

The second category is the Capacity Market Auction Parameters letter that DESNZ issues to NESO each year for the T-4 and T-1 auctions.¹⁶ The letter sets the auction targets, the de-rating factors that apply to each technology class, the netting factors for distribution-connected and behind-the-meter capacity, and the price cap and price-taker threshold. The February 2026 letter set the parameters that drove the T-4 auction for 2029 to 2030 (cleared at twenty seven pounds ten per kilowatt year for 40.1 gigawatts) and the T-1 auction for 2026 to 2027 (cleared at five pounds per kilowatt year for 7.2 gigawatts).¹⁶ The Capacity Market itself was created by the Energy Act 2013 and is operated under SI 2014/2043.²⁸

The third category is the CfD allocation round budget. DESNZ sets the budget, the strike-price administrative parameters, and the technology pots ahead of each allocation round. Allocation Round 7 reported on 14 January 2026 with a record 8.4 gigawatts of offshore wind awarded; the AR7a budget for solar, onshore wind and emerging technologies was published alongside.³² The Low Carbon Contracts Company holds the CfD contract on behalf of the Secretary of State and runs the settlement.

The fourth category is the suite of one-off contracting decisions for technology classes that fall outside the routine support mechanisms. The Wylfa site contract for three Rolls-Royce small modular reactors signed in April 2026 is the current example. The contract sits inside the Regulated Asset Base model, with final investment decision expected in 2029 and in-service mid-2030s; £2.5 billion has been allocated.³⁷ The Sizewell C final investment decision of July 2025 took the same RAB route, the first time the model has been used for new-build large nuclear. CCUS Track 1 and Track 2 cluster contracts use bespoke contracting structures negotiated through DESNZ. Each of these decisions is operationally substantial, but the statutory frame is bespoke and the contract law that holds the deal together is what binds the parties.

What sets the timescale for a Great Britain energy decision

The timescale a decision actually takes is determined by which gates it passes through and how many parties it touches. Emergency dispatch by NESO under the Grid Code happens in seconds, because the rules are pre-positioned in the Grid Code and the parties are pre-bound by their connection agreements. A licence modification that affects only one licence area and does not touch any of the seven codes can land in six months. A code modification that touches the BSC, the Grid Code and the CUSC because the policy requires a settlement change, a connection-rule change, and a charging change can take three years even with skilled parties at the table, because the three code processes have to be sequenced.

The longest-running reforms in the system as of May 2026 illustrate the pattern. Connections Reform began in 2020 as a policy initiative, became CMP434 in CUSC in 2024, and TM04+ Gate 2 produced its first operational outputs in April 2026. Market-wide Half Hourly Settlement began in 2014 as Ofgem policy, became BSC P408 in 2021, and cuts over in July 2027. Smart meter rollout, which began in 2011, is operating under DCC licence variations and SEC modifications that have run since.²⁵ The Energy Code Reform programme that aims to consolidate code bodies and accelerate the modification process was announced in 2022 and is itself working through the modification regime it is trying to reform. The pattern is that any reform large enough to require a code change and a licence change runs for three to seven years from policy idea to operational delivery. The pattern is not a delay. It is the consequence of the consultative architecture the 1989 Act put in place.

Decisions describe how the system changes. The next section names the parties that hold the pen at each stage of the change, the responsibilities each one carries, and the relationships between them in May 2026.

Actors: who holds the pen across Great Britain energy in May 2026

Great Britain energy governance distributes statutory powers across a small number of named bodies, and the map shifted on 1 October 2024 when NESO launched as a public corporation independent of National Grid plc. The bodies break into six tiers in legal terms: Parliament, the Secretary of State and DESNZ at the policy and primary-legislation tier; Ofgem at the regulatory tier; NESO at the system-operator tier; the licensed network operators (transmission and distribution); the licensed market participants (generators, suppliers, traders, aggregators); and the consumer-facing advocacy and redress bodies (Citizens Advice, the Energy Ombudsman). Two further tiers sit alongside but do not direct: the code bodies (BSC Co, NESO for Grid Code, CUSC, STC and CMP, Xoserve for UNC, SECAS for SEC), and the advisory bodies (the Climate Change Committee, the Climate Change Committee's panels).

DESNZ and the Secretary of State: policy direction and primary law

The Department for Energy Security and Net Zero was established on 7 February 2023 as a successor to the energy responsibilities held by BEIS.¹² Its statutory role is to develop and implement government energy policy, to introduce primary legislation, to maintain the policy direction that the Climate Change Act 2008 and the Energy Act 2023 require, and to run the contracting machinery (Capacity Market, Contracts for Difference, CCUS Track contracts, the Wylfa SMR contract) that buys megawatts on the policy timetable. DESNZ does not regulate licensees directly. It sets the framework in which Ofgem regulates them, and it issues the Strategy and Policy Statement under section 131 of the Energy Act 2013 that Ofgem must have regard to. The Secretary of State for Energy Security and Net Zero is the political head of the department.

The current statutory anchor for the department's work is the Energy Act 2023, which received Royal Assent on 26 October 2023 and runs to 339 sections across thirteen Parts. The Act created NESO, brought heat networks under economic regulation, set up the framework for the Future Homes Standard, provided the legal hooks for the Energy Data Sharing Infrastructure, established the regulatory regime for hydrogen transport and storage, and built the legal basis for the CCUS contracting regime. Several provisions are still in commencement; the operational map of the energy system in 2027 and 2028 will reflect statutory hooks the 2023 Act gave the Secretary of State but which have not yet been switched on.

Ofgem (the Gas and Electricity Markets Authority): the regulator

Ofgem is a non-ministerial department of the United Kingdom government and the operating name for the Gas and Electricity Markets Authority. The Authority is the legal entity that holds statutory powers; Ofgem is the administrative body that exercises them. Its statutory duties run primarily from the Utilities Act 2000, with substantive powers in the Electricity Act 1989, the Gas Act 1986, and a long list of subsequent Acts including the Energy Act 2013 and the Energy Act 2023. Its statutory principal objective is to protect the interests of existing and future consumers in relation to gas conveyed through pipes and electricity conveyed by distribution systems or transmission systems.²⁷

Operationally, Ofgem issues and varies the eight categories of licence the Electricity Act 1989 created (generation, transmission, distribution, supply, interconnector, system operator, smart meter communication, and offshore transmission) and the corresponding gas licences under the Gas Act 1986.²³ It approves or rejects code modifications under section 11A of the 1989 Act. It runs the RIIO price-control framework that sets the regulated revenues for the transmission and distribution licensees over five-year periods (currently RIIO-T3 and RIIO-ED3 in flight). It determines the quarterly Default Tariff Cap level under the Domestic Gas and Electricity (Tariff Cap) Act 2018.²⁹ It enforces compliance through licence-condition enforcement notices, financial penalties, and ultimately licence revocation. From 27 January 2026 it has also been the regulator for the heat networks market under SI 2026/7.³³

Ofgem's independence from government on individual regulatory decisions is one of the load-bearing features of the post-1989 settlement. The Secretary of State sets policy and issues the SPS; the Authority decides each licence modification, code modification, and enforcement question on the evidence in front of it. In practice the boundary is sometimes blurred, particularly when an SPS is detailed or when a determination is politically sensitive. The legal route for resolving a dispute between the regulator and a licensee is the appeal to the CMA for licence modifications, judicial review in the High Court for other regulatory determinations, and the Energy Tribunal in some defined circumstances.

NESO: the National Energy System Operator

NESO became a public corporation owned by HM Treasury on 1 October 2024 under the Energy Act 2023, taking the system-operator role from the National Grid Electricity System Operator that had been part of National Grid plc. NESO holds an electricity system operator licence and a gas system planning licence, with the Authority as its regulator. The corporation is accountable to the Secretary of State for Energy Security and Net Zero through a strategic priorities framework, and reports to Parliament through the Public Accounts Committee.

NESO's statutory remit covers three broad domains. The first is the real-time operation of the electricity system: balancing supply and demand second by second, dispatching the Balancing Mechanism, maintaining frequency at 50 hertz, and coordinating the response to system events. The second is whole-system planning: producing the Future Energy Scenarios, the Electricity Ten Year Statement, the Strategic Spatial Energy Plan, and the Centralised Strategic Network Plan that replaces the Network Options Assessment from end-2028.^{13 14 21 22} The third is the administration of certain industry codes (the Grid Code, the CUSC and the STC), and the contractual coordination with the three transmission owners (NGET, SPT, SSEN-T) and the six DNO groups.

Two operational outputs published in 2026 give a sense of the scale. The Connections Reform Gate 2 detailed results of April 2026 set out the 283 gigawatts of generation and storage and 99 gigawatts of demand that NESO progressed to firm offers across two delivery phases, with offer-issuance windows running March to November 2026.³⁴ The CSNP methodology, submitted to Ofgem in January 2026 and approved in April 2026, defines the analytic frame that NESO will use to recommend transmission investment from end-2028.^{22 30} The transitional T-CSNP that bridges from the NOA is due in June 2026.

Network operators: the transmission owners and the DNO groups

The transmission network is owned and operated by three licensed transmission owners. National Grid Electricity Transmission (NGET) covers England and Wales and is the subsidiary of National Grid plc that retained the transmission assets when NESO took the system-operator role. SP Transmission (SPT) covers southern Scotland and is a subsidiary of ScottishPower. Scottish and Southern Electricity Networks Transmission (SSEN-T) covers northern Scotland and is a subsidiary of SSE. Each transmission owner holds a transmission licence under the Electricity Act 1989, with conditions including Grid Code compliance, planning obligations, and connection-offer duties. Each one operates under a RIIO-T price control set by Ofgem.

The distribution network is owned and operated by six DNO groups across fourteen licence areas. UK Power Networks holds three licences (London, Eastern, South Eastern). Western Power Distribution (now National Grid Electricity Distribution) holds four (South Wales, South West, East Midlands, West Midlands). Northern Powergrid holds two (Yorkshire, Northern). Scottish and Southern Electricity Networks Distribution holds two (Southern, North Scotland). SP Distribution holds two (Manchester and Merseyside, South Scotland; the Manchester and Merseyside licence is held by SP Manweb plc). Electricity North West holds one (North West). Each DNO holds a distribution licence under the Electricity Act 1989, operates under SLC 25.2 for LTDS publication and a long list of other conditions, and is regulated through the RIIO-ED price-control framework (currently transitioning into RIIO-ED3).²³ The DNO groups are moving toward a Distribution System Operator function in their own right, with NESO holding the transmission system operator role at the higher voltage tier and each DNO running active management of its distribution network in parallel.¹⁸ The DNO-to-DSO transition is one of the longer-running structural reforms in the system; the Open Networks Programme has been the industry forum for working it through since 2017.¹⁸

Market participants: suppliers, generators, traders, aggregators

The market participants are the licensees whose commercial activity the system is built around. Generators hold generation licences (or operate under the small-generator exemption) and sell electricity into the wholesale market and into the Capacity Market. Suppliers hold supply licences and sell electricity and gas to end consumers under the conditions that include the Default Tariff Cap, the supplier-of-last-resort obligation, fuel-poverty protections, and consumer-protection conditions. Traders operate under interconnector licences if they hold cross-border capacity, or under participant agreements in the wholesale market and the Balancing Mechanism. Aggregators have become a growing class of participant since the Balancing Mechanism opened to them under the Wider Access programme; they pool demand-side flexibility across many sites and offer it into NESO's balancing actions.

The supply market in May 2026 has about fifty licensed electricity suppliers and a similar number of gas suppliers, after the consolidation that followed the 2021 to 2022 wholesale price spike. The retail consolidation is one of the points the Energy Act 2023 reforms have not changed: the supplier-of-last-resort process for handling a supplier exit is the same one the 1989 Act set up, with the receiving supplier appointed by Ofgem and the residual costs spread across the market through a levy. The Energy Code Reform programme is examining whether to consolidate some of the seven codes the suppliers operate under, but the structure of the supplier business model itself is unchanged from the late-1990s opening of retail competition.

Code bodies: the parties that administer the seven industry codes

The seven industry codes that bind the operating layer of the system are each administered by a body that is owned by, or contracted to, the parties bound by the code. The Balancing and Settlement Code is administered by Elexon (the BSC Company), which runs half-hourly settlement, publishes the Balancing Mechanism Reporting Service, and administers BSC modifications.¹⁷ The Grid Code is administered by NESO. The Connection and Use of System Code (CUSC) is administered by NESO and binds NESO and the transmission-connected parties. The Distribution Connection and Use of System Agreement (DCUSA) is administered by Electralink and binds the DNOs and their customers. The System Operator Transmission Owner Code (STC) is administered by NESO with the three transmission owners. The Uniform Network Code (UNC) is the gas equivalent of the BSC, administered by Xoserve. The Smart Energy Code (SEC) is administered by SECAS and binds the DCC, the suppliers, and the network parties on smart-metering data exchange.

Each code body has a defined modification process and a panel of code parties that vote on recommendations to the Authority. The code panels are not regulatory bodies; they recommend, the Authority decides. The code body's role is to administer the process: to receive proposals, to convene workgroups, to run consultations, to publish the modification register, to prepare the panel paper, and to publish the final code text after the Authority's decision. The seven codes together govern almost every transaction that takes place in the operating layer of the system, and the modification register is the single best source for tracking live reform in any given week.

BSI and the standards layer for the data model

The British Standards Institution holds the standards layer of the data model that the Long Term Development Statement and the wider energy data architecture are built on. BSI runs the CIM Engagement Hub, the gated portal that hosts the GB profile artefacts (CIM/XML, RDF triples, SHACL shapes, JSON-LD context) and the technical change history.⁶ The Engagement Hub is the canonical source for the Form of LTDS that the DNOs use to publish Stage 2 on 29 May 2026 and Stage 3 on 30 November 2026 under the 13 May 2026 derogation letter.⁴ BSI's role is to maintain the technical artefacts and to coordinate with ENTSO-E on the underlying CIM profiles (CGMES 3.0 for transmission interchange; IEC 61968-13 for distribution; IEC 61970-301 for the EMS-API base).^{7 8 9} Ofgem holds the statutory duty (through SLC 25.2 and the Direction) and BSI holds the technical artefacts; the two work in parallel, with Ofgem owning the timetable and BSI owning the content shape.

Consumer advocacy and redress: Citizens Advice and the Energy Ombudsman

Citizens Advice has held the statutory consumer-advocate role for energy since the Consumers, Estate Agents and Redress Act 2007. It conducts research on consumer experience, runs the consumer helpline, and feeds evidence to Ofgem and DESNZ during licence and code consultations. Its role is advisory rather than directive; it has no veto over a regulatory or policy decision. Its political weight comes from the evidence it brings to the table and the public attention its reports attract.

The Energy Ombudsman is the independent redress body for supplier-consumer disputes. A consumer with an unresolved complaint against a licensed supplier can refer the matter to the Ombudsman, which can make a binding award of up to ten thousand pounds. The Ombudsman is funded by the suppliers under a scheme approved by Ofgem. Its role sits inside the supply-licence consumer-protection conditions, which require participation in an Ombudsman-approved scheme.

Advisory bodies that influence but do not direct

The Climate Change Committee is the statutory adviser established by the Climate Change Act 2008. It recommends each five-year carbon budget twelve years in advance and reports annually on government progress toward the carbon budgets and the 2050 net-zero target.¹⁹ The CCC does not make binding decisions. Its political weight comes from the technical authority of its recommendations and the parliamentary attention its progress reports attract. The current carbon budget covers 2033 to 2037 (Carbon Budget 7 was set in 2023). The CCC also advises the devolved administrations of Scotland, Wales and Northern Ireland on their own carbon targets.

Below the CCC, a long list of expert and stakeholder bodies feed into Great Britain energy decisions without holding statutory authority over them: the Energy Networks Association on the network engineering recommendations; the Energy and Climate Intelligence Unit, the Energy UK trade association, Renewable UK, the Solar Trade Association, the British Energy Storage Association, the Heat Pump Association, the Association for Decentralised Energy, the Royal Academy of Engineering, the Council for Science and Technology, the Institution of Engineering and Technology, the Power Industry Council, the Energy Systems Catapult, and the academic energy programmes at Imperial, UCL, Strathclyde, Edinburgh and Manchester. None of them holds statutory authority over a licensee or over the Authority. All of them feed evidence into the consultations that drive licence and code change.

Northern Ireland and the all-island electricity market

Great Britain and Northern Ireland operate different electricity markets. The Single Electricity Market (SEM) covers Northern Ireland and the Republic of Ireland under joint arrangements that pre-date the Energy Act 2023; the Utility Regulator (NIAUR) is the regulator for Northern Ireland; NIE Networks is the distribution licensee. DESNZ holds the policy lead at UK level for the energy and climate framework that all four nations sit inside; the operating arrangements for the Great Britain electricity market do not run into Northern Ireland. When someone speaks about "the UK energy market" they usually mean the Great Britain market. The distinction matters when reading the Energy Act 2023 (most of which applies to Great Britain rather than the United Kingdom) and the Climate Change Act 2008 (which applies United Kingdom-wide).

Actors describe who holds the pen. The next section names the instruments those actors hold: the licence conditions, the codes, the derogations, the methodologies, the price controls, the contracts. The instruments are what the actors actually move when they want the system to do something different next month.

Tools: the instruments that steer Great Britain energy delivery in May 2026

The actors hold the pen, but the instruments are what they actually move. A licence condition is one kind of pen. A code is another. A derogation, a methodology, a Strategy and Policy Statement, a Capacity Market parameters letter, a CfD allocation budget, an RIIO price-control allowance, a Wylfa-type bespoke contract: each one is a tool with a defined legal character, a defined revision cycle, and a defined route by which it can be challenged. The tool taxonomy sits alongside the actor map, because most live debates about Great Britain energy governance are about which tool to use, not about which actor should make the call.

The eight licence categories that the Electricity Act 1989 introduced

Licences are the most general instrument the regulator holds. Each licensed activity is one of the eight categories the Electricity Act 1989 (as amended) defines: generation, transmission, distribution, supply, interconnector, system operator, smart meter communication, and offshore transmission. The Gas Act 1986 defines the corresponding gas licences: gas transporter, gas supplier, gas shipper, interconnector. Each licence is a document with standard conditions (the SLCs) and special conditions that apply to that licensee. The Authority can vary any condition through the modification regime under s.11A of the 1989 Act or s.23 of the 1986 Act, and a licensee can appeal a modification to the CMA within six weeks.

The strength of the licence regime is that it allows the regulator to set obligations in detail on a known population of parties, and to revise those obligations as the technology and the policy frame change. The constraint is that the licence binds only the parties that hold it. A new market actor whose activity does not fit one of the eight categories needs primary legislation to create a new category before the Authority can issue a licence to it. The Energy Act 2023 added new licence categories for heat networks (operative from 27 January 2026 under SI 2026/7) and provided the legal hooks for licence categories for hydrogen transport and storage that have not yet been switched on.³³

SLC 25.2 of the Electricity Distribution Licence is one of the most visible single conditions in May 2026 because it is the statutory hook under the LTDS Direction of 30 April 2024 and the three derogation letters that have followed.^{1 23} The condition requires each DNO to publish, in a form and on a timetable the Authority directs, a Long Term Development Statement that describes the present and likely future planning of the distribution network. The Direction took that condition and turned it into a phased delivery of CIM artefacts, with the form and timetable adjusted by three derogation letters between November 2024 and May 2026. The condition itself has not changed since the Distribution Licence was issued; the operative effect has been adjusted by the Direction and the derogations under it.

The seven industry codes, looked at as instruments

Each of the seven codes is an instrument the actors hold. The codes look like rule documents from the outside; from the inside they are contracts between the parties bound by them. The Balancing and Settlement Code (BSC) is the contract under which half-hourly settlement of the Great Britain electricity market runs.¹⁷ The Grid Code is the contract under which transmission-connected parties operate alongside NESO.¹⁰ The Distribution Code is the equivalent for distribution-connected parties.¹¹ The Connection and Use of System Code (CUSC) is the commercial contract between NESO and transmission-connected parties. The Distribution Connection and Use of System Agreement (DCUSA) is the distribution equivalent. The System Operator Transmission Owner Code (STC) is the operational contract between NESO and the three transmission owners. The Uniform Network Code (UNC) is the gas equivalent of the BSC. The Smart Energy Code (SEC) is the contract that governs smart-metering infrastructure, data privacy, and supplier access to the DCC.

Each code carries a modification register that is the live indicator of where the operating layer of the system is changing. The CUSC modification register in May 2026 lists CMP434 (connection-queue redesign, TM04+) as the most consequential live item. The BSC modification register lists P408 (MHHS) as the largest single change in flight, with the cutover Milestone 16 due in July 2027.²⁵ The Grid Code register lists GC0139 (enhanced planning-data exchange to facilitate whole-system planning) as the most-watched item; the last update was 7 April 2026.⁵ The SEC register lists the DCC variant management changes that arrived alongside the DUA Act 2025 commencement orders.¹⁹ Reading the registers gives the current operational map of the system in any given week.

Directions, derogations, and the operative cycle

A Direction is the regulator's mechanism for translating a licence condition into a specific deliverable. The LTDS Direction of 30 April 2024 is the working example.¹ The Direction sat under SLC 25.2 (which had been the LTDS condition for years), took it from spreadsheet form into a validated CIM data model, and set the staged delivery dates. The Direction is published with the Authority's reasoning and the underlying licence text is unchanged. A licensee that does not comply with a Direction is in breach of the licence condition itself, and the Authority's enforcement powers apply.

A derogation is the regulator's mechanism for adjusting the operative effect of a Direction for named licensees and named deliverables, without reopening the underlying condition. The three LTDS derogation letters since November 2024 (the 25 November 2024 letter on Stage 1.3, the March 2025 letter on the heatmap stages, and the 13 May 2026 letter on Stage 2 contents and Stage 3 scheduling) are the working examples.^{2 3 4} The derogation is one of the most useful tools in the regulator's hand. It lets the Authority respond to evidence on delivery without restarting the consultation cycle and without changing the legal frame the licensees are operating under. The trade-off is that a derogation is bounded in scope, and a substantive change to the underlying obligation needs a fresh Direction or a code modification.

The 13 May 2026 derogation letter is signed by Steve McMahon as Director of Network Price Controls and is addressed jointly to the six DNO groups.⁴ It reshaped Stage 2 contents (the active geographies, the heatmap scope, the registered SHACL shapes) and rescheduled Stage 3 to 30 November 2026, while holding the Stage 2 publication date of 29 May 2026. The letter is the operative document under which the DNOs publish on the 29 May 2026 date the workspace timeline lists; the underlying Direction of 30 April 2024 is still the standing instrument under SLC 25.2 of the Distribution Licence.

Methodologies, in particular the CSNP methodology

A methodology is a document that defines how a recurring deliverable will be produced. The Centralised Strategic Network Plan methodology is the working example.²² NESO produces the CSNP under the Energy Act 2023 framework; the methodology sets out the analytic approach, the data inputs, the criteria for option appraisal, the stakeholder-engagement steps, and the publication format. Ofgem approves the methodology under the Authority's powers in the Energy Act 2023.³⁰ The approval is the regulator's confirmation that the methodology is fit for purpose. Once approved, the methodology is the standing test that the Authority applies when it reviews the first CSNP delivery.

The CSNP methodology was submitted to Ofgem by NESO in January 2026 and approved in April 2026.^{22 30} The transitional T-CSNP that bridges from the Network Options Assessment is due in June 2026. The first full CSNP delivery is due by the end of 2028. From end-2028, the CSNP replaces the NOA as the source of investment recommendations for the transmission network, and the recommendations are the input that feeds into the RIIO-T price-control review for the next investment cycle.

Methodologies are also used in the smaller-scale operational layer. The Connections Network Design Methodology (CNDM) is the working example.¹⁵ It sets out the analytic approach NESO uses to design network connections under Connections Reform. Each licensee that holds a connection agreement operates under the CNDM and under the methodology-set criteria that the CUSC modifications produce. The methodology is the analytic frame; the licence and the code modifications are the legal frames; the operational artefacts are what the licensees and NESO actually deliver.

RIIO price controls, the revenue allowance for the regulated monopolies

The transmission and distribution network operators are natural monopolies, so their revenue is set by Ofgem through a five-year price control framework known as RIIO (Revenue = Incentives + Innovation + Outputs). The framework was introduced for the transmission price control in 2013 and has been through three iterations since: RIIO-T1 (2013 to 2021), RIIO-T2 (2021 to 2026), and RIIO-T3 (2026 to 2031). The distribution price control has run on its own cycle: RIIO-ED1 (2015 to 2023), RIIO-ED2 (2023 to 2028), and RIIO-ED3 (2028 to 2033). The Gas Transmission and Gas Distribution price controls run in parallel: RIIO-GT2 and RIIO-GD2 cover 2021 to 2026, with RIIO-GT3 and RIIO-GD3 starting in April 2026 for a five-year period.

Each price control sets the total allowed revenue for the period, the output measures the licensees must deliver to earn the revenue (network reliability, customer service, connections quality, environmental performance), the incentive mechanisms that reward over-performance or under-performance, and the totex (total expenditure) baseline that the licensees can spend against. The framework is technical (the cost assessment runs on three years of data submission and engineering benchmarking), it is consultative (each price control runs an open consultation process across roughly two years), and it is incentive-based (the licensees earn or lose money against the outputs Ofgem sets). The framework is the route by which the regulator allocates roughly twenty billion pounds a year of network revenue.

The Strategy and Policy Statement, the Authority's policy steer

The Strategy and Policy Statement is the document the Secretary of State issues to Ofgem under section 131 of the Energy Act 2013. The SPS sets out the strategic priorities of the government, the policy outcomes the government wants Ofgem to contribute to, and the roles and responsibilities the government considers should sit with the regulator. Ofgem must have regard to the SPS when carrying out its statutory functions. The SPS is not a direction (it does not bind the Authority's decisions on individual licence or code modifications), but it is a published policy steer with statutory weight. The current SPS was issued in April 2024 and runs through 2029. Its priorities include net-zero delivery, security of supply, consumer protection in the round, and the transition to a smart and flexible energy system.

The Capacity Market parameters letter and the CfD allocation budget

Two annual contracting decisions are made by DESNZ rather than Ofgem. The Capacity Market parameters letter, sent to NESO each year before the T-4 and T-1 auctions, sets the auction targets, the de-rating factors that apply to each technology class, the netting factors for distribution-connected and behind-the-meter capacity, and the price cap and price-taker threshold.¹⁶ The February 2026 letter drove the T-4 auction for 2029 to 2030 (cleared at twenty seven pounds ten per kilowatt year for 40.1 gigawatts) and the T-1 auction for 2026 to 2027 (cleared at five pounds per kilowatt year for 7.2 gigawatts). The Capacity Market itself runs under SI 2014/2043 and the Capacity Market Rules.²⁸

The CfD allocation budget is set by DESNZ ahead of each allocation round. The budget defines the technology pots (Pot 1 for established technologies, Pot 2 for less-established, Pot 3 for offshore wind in the most recent rounds), the strike-price administrative parameters for each technology, and the cap on the total budget available. Allocation Round 7 reported on 14 January 2026 with a record 8.4 gigawatts of offshore wind awarded; the AR7a budget for solar, onshore wind and emerging technologies was published alongside.³² The Low Carbon Contracts Company runs the CfD settlement on behalf of the Secretary of State and is the counterparty under each contract.

The Default Tariff Cap, the consumer-facing operative instrument

The Default Tariff Cap is the price ceiling for non-fixed (default) tariffs on supply licences, set by Ofgem under the Domestic Gas and Electricity (Tariff Cap) Act 2018.²⁹ Ofgem determines the cap level twelve weeks before each quarter and publishes the level with the breakdown of wholesale, network charges, policy costs, operating-cost allowances, and EBIT allowance. The cap is the single most visible piece of consumer-facing energy regulation in Great Britain and it carries a constant political audience. The Tariff Cap Act was passed in 2018 as a time-limited measure; it has been extended by Parliament three times since, most recently to run through 2027.

The BSI Engagement Hub and the data-model artefacts

The technical artefacts that the LTDS Direction operates on (the Form of LTDS, the CIM/XML, the RDF triples, the SHACL shapes, the JSON-LD context, the change registers) are held by BSI in the CIM Engagement Hub.⁶ The Hub is the canonical source for the data-model artefacts. Ofgem holds the statutory duty under SLC 25.2 and the Direction; BSI holds the technical artefacts under its standards role. The two operate in parallel: the regulator owns the timetable and the legal frame, the standards body owns the content shape. The hub is also the route by which the GB profile artefacts are aligned with ENTSO-E's CGMES 3 profiles for transmission interchange, and with the IEC 61968-13 and IEC 61970-301 base standards.^{7 8 9}

What the tool taxonomy buys a reader of a live debate

The tool taxonomy is the route by which an actor's intent becomes operational. Reading a live policy debate in May 2026 (whether it is Connections Reform, the LTDS data model, the heat-networks regime, the CCUS Track 2 sequencing, the Capacity Market parameters) is easier starting from the question: which tool is being used? A licence change moves on Ofgem's calendar through the modification regime. A code change moves on the code body's calendar through the panel cycle. A derogation moves on a much shorter calendar because the underlying instrument is unchanged. A new licence category needs primary or secondary legislation, which moves on Parliament's calendar. A bespoke contract (Wylfa, Sizewell C, CCUS Track 2) moves on bilateral negotiation timelines that are entirely separate from any of the standing instruments.

The taxonomy also clarifies the friction between actors. Most of the visible friction in the system in May 2026 sits where two tools have to land together. A licence change plus a code change. A new methodology plus a price-control review. A derogation that needs an updated artefact set at the standards body. The friction is not a property of the actors; it is a property of the tools the actors are using. Once the two tools being asked to land in the same week are visible, the timescale and the parties become legible.

The three sections above describe one subject from three faces. Decisions are how the system changes. Actors are who holds the pen. Tools are the instruments those actors use. Any Great Britain energy reform proposal can be checked against all three. The proposal that does not name a tool, an actor, and a clear route to operational delivery is the proposal that will struggle at the gates set out in the Decisions section.