Energy regulator Ofgem has rated the National Energy System Operator (NESO) as having ‘met expectations’ during the final year of its RIIO-2 business plan, while highlighting weaknesses in connections reform and value for money.
The assessment covers NESO’s third Business Plan period (BP3), which ran from April 2025 to March 2026. It said the company delivered its business plan aims overall, although it only fully achieved three of its eight performance objectives.
Connections reform was identified as a key area of underperformance. Ofgem said the operator missed deadlines, provided inaccurate offers and showed inconsistent customer engagement. Stakeholder feedback on the process was also significantly negative.
Ofgem also gave NESO a ‘below expectations’ rating for value for money. The regulator said NESO had not provided enough evidence that it was consistently balancing the benefits of its work against costs.
NESO spent £686 million during BP3, compared with a proposed £690 million. Ofgem said the £4 million underspend was largely due to deferred expenditure rather than efficiency savings, with £34 million of spending moved into the following period.
Despite the concerns, Ofgem said it had not identified examples of obviously poor value-for-money decisions.
The regulator praised progress in areas including electricity system operation, digitalisation, whole-system planning and support for market reform.
NESO also successfully began implementing the government’s Clean Power 2030 Action Plan and was on track to exit its transitional service arrangements by October 2026.
Ofgem added that NESO’s handling of electricity system events during the June 2026 extreme heat is being investigated separately and was not included in the BP3 assessment.
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