NGET had rejected Ofgem’s proposed system operator incentive-based approach and it was left to Ofgem’s governing authority to decide whether or not to refer the matter to the Competition Commission (CC).

Ofgem’s governing authority has decided that it will not be referring the matter at this stage to the CC. It believes the interests of consumers are best served by Ofgem using existing license requirements to regulate NGET’s external costs for the next year.

The regulator said in a sternly-worded statement that it takes its duty to monitor compliance very seriously and if there is any evidence that NGET is incurring costs inefficiently, Ofgem will take enforcement action accordingly.

Ofgem intends to develop a new incentive scheme for NGET’s internal and external balancing costs to come into force from April 2007.