From 1 March, in England and Wales, we’ll be implementing a new two-step process. This will reduce uncertainty for developers in the long-term and will apply our new background modelling and battery assumptions. In Scotland, these changes will be applied without the need to implement a new two-step process using the current process in place today.
This applies to new applications only, and mod apps will be updated as soon as possible.
We have published a letter to industry covering this, which you can read below.
What is the two-step process?
Step one: initial offer
Customers are provided with an offer in standard terms, which identifies a connection site reflecting the requested connection point in the application and a completion date, which may change in step two. This is based on the existing Transmission Entry Capacity (TEC) amnesty queue and current Transmission Reinforcement Works (TRW) reflecting the general scale of works to enable connection for projects applying now against the current contracted background.
It will not however include the detailed works, programme or indicative costs and charges that would usually populate the appendices. No transmission works will be identified in or undertaken for the purposes of the connection at this stage. Securities will be set at £0. Clauses will be inserted in the bilateral and construction agreement to reflect that this is an initial offer and that it, if accepted, it will be updated to identify the transmission works, programme, charges, connection site/point, and any updated terms as per step two.
Step two: follow-up offer
Where the step one offer is accepted, this offer will then be issued a maximum of nine months after counter signature of the step one offer. A meeting with each customer who has accepted the step one offer will be held to give an update on the wider results following the completion of the TRW review.
The meeting will also discuss when the customer can expect the follow up offer to be issued, and the likely results. The follow up offer will be updated based on the TRW review study results and contracted background, and identify the transmission works needed for each project.
This offer will include the complete populated suite of appendices for the agreement, including securities and programme of work, based on the identified TRW. These offers will be progressed in regional batches, so that they can be processed as efficiently as possible.
Where will it be implemented?
In Scotland, the Scottish Transmission Owners will carry out the above review while issuing new connection offers as normal. In England and Wales, National Grid Electricity Transmission (NGET) will put into a place a two-step process, to enable them to carry on issuing light touch connections offers while carrying out the TRW review.
This two-step process is an interim measure that will run for 12 months while the review is being carried out. It is anticipated that running the review and the two-step offer process concurrently should result in improved completion dates (reflecting less reinforcement works being required), making investments more viable and allowing net zero targets to be met.
When will it be implemented?
The interim two-step offer process will apply from 1 March 2023, so any new connections or use of system offers that clock start from this date (by reference to the England and Wales transmission system) will be part of the two-step offer process.
Two-step offer and transmission reinforcement works review update
We would like to share an update regarding the two step offer process. As planned, step one offers will come to an end at the end of this month. From 27 November 2023, any application that clock starts will be given a complete connection offer (as per the licenced process).
From 1 December 2023, NGET and ESO will be working together to produce the second step offers for all customers that currently hold a signed step one offer. These will be sent to customers by the end of February 2024, meeting the target set by Ofgem of 1 March 2024.
We continue to work on the transmission reinforcement works review, and will provide updates to customers involved with the process as soon as we are able to.
Two-step and queue management
CMP376 has now been approved, which enables us to introduce queue management milestones into contracts.
With this in mind, if you have an existing construction agreement as part of the two-step offer process and are waiting for your second step offer, it may be more efficient for both parties if queue management milestones are included in the second step offer, rather than asking you to submit another modification application (and be charged a modification application fee) when the programme for the connection offer will be provided with the second step offer.
We will therefore progress the second step offer on that basis. However, please let your connections contracts manager (CCM) know if you do not want queue management milestones to be included in your second step offer.
If you still have any questions, please either contact your CCM if applicable, or email us at: [email protected].
The two-step process forms part of point two of our five-point plan.
Please note that the queue management guidance document and notice as per the agreed implementation plan will be sent out to all existing customers on Monday 27 November, and will also be published on the ESO website.
We will work together with NGET to engage industry on a monthly basis via a regular webinar to deliver project updates.
We have also published a living FAQ document, which will be updated regularly with questions as they arise.