(Bloomberg) --
The U.K. will purchase a key part of National Grid Plc's business as it creates as a new authority oversee the nation's energy system.
The government is establishing a Future System Operator that will work to secure Britain's energy security while helping to lower carbon emissions in the coming decades, according to a statement. As part of that effort, it plans to buy National Grid's Electricity System Operator, which keeps power supply and demand in balance.
“We will continue to work closely with all relevant parties to ensure a smooth transition” in the creation of the new entity, National Grid Chief Executive Officer John Pettigrew said in the statement.
Last year's energy crisis, along with the record prices and volatility caused by Russia's war in Ukraine, have increased focus on energy markets and security. Individual nations as well as the European Union are drawing up plans on how to obtain more diverse supplies.
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The new authority will shift management of the energy network to what the government calls a “whole system” approach, integrating the oversight of power, gas and new technologies including hydrogen and carbon capture.
“A fully independent system operator will help to transform Great Britain's energy system and cut customers' energy bills,” said Jonathan Brearley, chief executive officer of energy regulator Ofgem.
The U.K. will compensate National Grid and any other relevant parties for assets that are transferred to the new entity, the government said in a response to a consultation.
The Future System Operator will operate as a public corporation that has operational independence from the government and is licensed and regulated by Ofgem, it said. The government plans to implement the new body in phases to ensure a smooth transition.
There is no set date for the operator to begin its work, but it will require legislation to be passed and could be established by 2024.
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