Decision on NGET’s cost recovery application for New Balancing Services Winter 2016/17

This letter sets out Ofgem's decision to allow the Supplemental Balancing Reserve  (‘SBR’) and Demand Side Balancing Reserve  (‘DSBR’) cost recovery for Winter 2016/17. Following our assessment, Ofgem has determined that the costs relating to the above were incurred in line with the relevant methodologies. Therefore, Ofgem is directing that costs in respect of SBR Availability Payment may be recovered and that no adjustments are required in respect of costs relating to SBR Capability Payments and SBR Testing Payments. 

On 31 March 2017 the Gas and Electricity Markets Authority (‘the Authority’) received a notice from National Grid Electricity Transmission plc (‘NGET’) setting out its application for cost recovery of costs incurred in relation to procurement and operation of Supplemental Balancing Reserve (‘SBR’) and Demand Side Balancing Reserve (‘DSBR’) for Winter 2016/17. These costs totalled £119,402,163.32. 

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