During the transmission of electricity, some energy is 'lost' from the transmission system, usually in the form of heat. This lost energy is known as transmission losses.
As part of the SO Incentives consultation, Ofgem proposed replacing the old financial incentive on transmission losses with a reputational incentive. This reputational incentive acknowledges that NGET only manages around 3% of the total energy on the system through the Balancing Mechanism (BM), and therefore its limited control over the level of losses.
By removing the financial incentive, it removes the possibility of windfall gains and losses due to market developments beyond NGET control. These market developments could impact on the level of transmission losses, therefore impacting on NGET's performance against the incentive scheme and BSUoS charges.
Under the new scheme, NGET is required to report on any actions taken in which it considers transmission losses and system transmission losses more generally. This information can be found in the Monthly Balancing Services Statement.
NGET is also required to report on the level of transmission losses and expected impact of market developments going forwards. This information can be found in our Electricity Ten Year Statement (TYS).
The Transmission Losses Strategy and annual Transmission Losses Report are to be used in conjunction with the TYS.