NESO forecasts BSUoS on declining trend for 2026-27

BSUoS cost

This latest draft shows diverging trends between the two periods. For Tariff 7, NESO forecasts balancing costs at £1,292m – a 6% reduction from the June projection of £1,379m. This decrease is driven by lower constraint costs (-8%), reduced wholesale price assumptions (-2%), and lower other costs (-4%).

In contrast, Tariff 8’s balancing costs are now forecast at £1,348m – up 9% from the June figure of £1,239m. The increase is mainly due to expected constraint costs (+20%), partially offset by a 7% reduction in other costs, while wholesale price assumptions remain unchanged. These forecasts are based on forward curves taken between 26 August and 1 September 2025.

The tariffs include a negative £117m adjustment to reflect an expected over-recovery of BSUoS revenues by the end of Tariff 6 in March 2026. This has been allocated across Tariffs 7 and 8 to target a neutral cash position by the close of the 2026-27 charging year. NESO has also made other adjustments for:

• Cumulative cashflow at the end of Tariff 5, which is now forecast at -£33.9m. This is £90.9m lower than in June, due to higher actual costs in summer 2025. Tariff 6’s cumulative position is forecast at £117.2m – that’s £39.8m below June expectations.
• NESO forecasts £14.6m of GC0156-related costs (this is to recover the costs of smaller CUSC parties to upgrade their equipment to meet new requirements for the provision of system restoration services) in 2026/27, split evenly between Tariffs 7 and 8.A negative £21m adjustment, reflecting RF income from 2023-24 and 2024-25, allocated across both tariffs.

NESO forecasts Tariff 7 demand volumes at 117.2 TWh, down 1.0% from June, while Tariff 8 volumes are expected at 144.0 TWh, up 0.6%.

Next steps

The 2026-27 tariffs are the first published under the changes that shortened the notice period from nine to three months (CMP408) and extended the fixed tariff term from six to twelve months (CMP415). This establishes a new annual cycle of initial forecast in June, draft in September, and final in December.

NESO will host a webinar on 14 October 2025 to discuss the draft tariffs. The final BSUoS tariffs for 2026-27 will be published in December 2025.

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