NESO has announced a freeze on the bi-annual securities process for the next two security periods, on 15th January 2025. The freeze covers the period from 1st April 2025 to 31st March 2026.
What are securities
We collect financial securities from our customers, in case they cancel a connection project or need to reduce the capacity of a project. Normally, NESO will provide updated security statements to SSEN twice a year, in January and July, and we collect the appropriate amounts, set out in these statements during February, March and August and September.
If a customer cancels or reduces the capacity of a project, a cancellation charge may be payable by the customer. If the customer pays the cancellation charge, the security amount is returned to the customer but if the customer does not pay the cancellation charge, then the security held by us, is subsequently paid to NESO.
Why are changes being made to securities
This proposed freeze is in recognition of the variations that may be made to existing agreements later this year, should Connections Reform (CMP434 and CMP435) be approved by Ofgem. The reassessment of the existing queue according to Gate 2 and strategic alignment criteria will mean that we may need to make changes to existing contracts, and therefore the value and schedule of securities may change.
Who is affected by these changes:
- All generation or storage projects who plan to export over 1MW in SEPD and 200kW in SHEPD who have a current signed agreement which includes Transmission reinforcement works and place securities with SSEN.
- All generation or storage projects over 1MW in SEPD and over 200kW in SHEPD which are due to receive a variation for Transmission access which may contain a securities value.
Who will not be affected:
- Demand projects
- Generation projects that export below 1MW in SEPD and 200kW in SHEPD.
What is the impact of these changes
As a result of this change, security values will remain as per your current statement period for September 24 to March 25. This means that applicable customers must still provide securities in line with their security statements, but that the amounts will not change as NESO will not issue updated MM statements to SSEN.
For customers due to receive a variation due to a modification offer, security statements will be issued as part of the distribution variation process. Customers will be required to provide updated security in accordance with the value specified in their statement, following the standard process upon signing. Until then, they must maintain security at the most recently requested level. Once the updated security is in place, it will remain fixed until the freeze period concludes.
The transmission generation securities freeze will continue until one of the below happens:
- You receive a Gate 2 offer following the reassessment exercise, expected to be by 31st March 2026. At that point, your securities amount and schedule will be updated in line with your new Transmission access date and works.
- You do not meet Gate 2 criteria following the reassessment exercise, and so your security requirement falls away.
- Ofgem does not approve CMP434 and CMP435 and that connections reform is not implemented. In which case the BAU process resumes.
Cancellation prior to Connections Reform Implementation
If a customer decides to terminate during the freeze period, or before receiving a revised contract, then NESO would levy the Cancellation charge in the MM2 Cancellation Charge Secured Amount and follow the current process 1
Achieving milestones during the freeze period
NESO has confirmed that, despite the freeze on securities, where a customer reaches a milestone (such as secured planning), that securities will be reduced – in line with CMP 192.
What do you need to do next?
If you secure via Cash into Escrow, then, so long as SSEN has the value required already in Escrow, no further action is needed.
If you secure via a bank Letter of Credit, please check the validity period of the Letter of Credit supplied to SSEN and as needed please update.