British lawmakers call for power transmission network shake-up

By Nina Chestney

LONDON, June 17 (Reuters) - British lawmakers called on Friday for the operation of the country's energy transmission network to be transferred from National Grid (LSE: NG.L - news) to an independent system operator, similar to the model used in the United States.

National Grid owns and operates Britain's main gas network and the high-voltage electricity transmission network in England and Wales, meaning it controls flows of power onto and around the grids, depending on overall supply and demand.

At a more local level, regional distribution networks carry electricity at lower voltages from the main grid via powerlines, cables and substations to homes and businesses. There are similar regional distribution networks for gas, carrying it the fuel at ever reducing pressure until it reaches customers.

National Grid owns half the regional gas distribution systems but does not own or operate any of local electricity distribution networks.

British lawmakers on parliament's Energy and Climate Change committee said in a report the system needed to be changed so regional distributors could control power flows on their networks better, especially as more renewable power was being generated at a local level.

For example, it said most of Britain's solar power is connected to local distribution networks and cannot be seen at the overall level. Instead, it is measured only as a reduction in the demand for power.

The report said smart grid technology would enable distribution network operators to move from a passive role to being responsible for balancing energy flows, effectively becoming system operators at a local level.

"There must be a transition to fully-functional Distribution System Operators which balance and control their local grids. At transmission level, we recommend creating an Independent System Operator (ISO)," the committee said.

In the United States, an ISO coordinates, controls and monitors the operation of an electrical power system in one state or sometimes several states. Regional transmission organisations do the same but cover a larger geographic area.

"The Independent System Operator model has worked in the USA. It (Other OTC: ITGL - news) is time for it to be brought to these shores," Angus Brendan MacNeil, chair of the committee, said in a statement.

National Grid is a private company listed on the London Stock Exchange. The company, which generates power and distributes electricity to homes in some parts of the United States, rejected the committee's conclusions.

"There is little evidence that an Independent System Operator model would provide any benefits that would justify the cost to households, potential disruption to much of the energy sector, and the risks to security of supply such uncertainty could create," a National Grid spokeswoman said. (Editing by David Clarke)