On the 6 February 2025 NESO proposed the Connection Use of System Code (CUSC) modification CUSC Modification Proposal (CMP) 448. CMP448 proposes a framework be put in place that introduces an additional financial commitment from developers that can be activated if required. NESO sees this modification as necessary given the connection reforms which include TM04+ expected to become live later this year, these connection reforms will highlight the scarcity of connection capacity and it is intended that the Progression Commitment Fee (PCF) will reinforce how scarce connection capacity is and provide an incentive for projects to reflect on the viability of their projects as their projects progress post Gate 2 (see TMO4+) offer. Currently there is a cancellation charge applied to projects that are terminated (this protects other users from costs associated with the cancellation of projects in the connections queue) but the argument is that this does not provide an incentive for projects to leave the connection queue as soon as it starts to become apparent that their project may not be viable. This is an issue as project offered a connection at Gate 2 may become less viable over time due to a range of issues such as changing cost assumptions, changing risk appetites, changing market arrangements or financing issues the PCF looks to address these concerns. NESO views the period between Gate 2 entry and Milestone 1 as the period that carries the highest risk of projects failing to progress appropriately and persisting in the queue for longer than necessary. Hence the PCF proposal has been designed to apply only to projects in this phase of development but after achieving Milestone 1, developers will no longer be subject to the PCF if they terminate and there will no longer be a requirement to secure against the PCF.

The Progression Commitment Fee (PCF) Solution

To support timely delivery of energy projects and reduce speculative activity in the transmission connections queue, a new Progression Commitment Fee (PCF) is being proposed. The PCF would apply to projects that have accepted a Gate 2 contract offer, hold Transmission Entry Capacity (TEC), Developer Capacity (DC), or Interconnector Capacity (IC), and have not yet reached Queue Management Milestone 1. Initially, the PCF will be dormant and set at £0/MW. It will only be activated if a specific trigger threshold is met. Once activated, the PCF would start at £2,500/MW and increase every six months by £2,500/MW, capping at £10,000/MW. The fee becomes payable if a project terminates or reduces its capacity prior to achieving Milestone 1.

A key element of this proposal is the introduction of the Progression Commitment Fee Security (PCFS), which developers must post to cover the value of the PCF. This security must remain in place until Milestone 1 is achieved. If a developer exits the queue or reduces capacity before that milestone, NESO will draw on the PCFS to recover the applicable fee. Where the posted security is insufficient, NESO may pursue the outstanding amount. Once Milestone 1 is reached, both the PCF and PCFS obligations fall away. PCFS arrangements will follow existing provisions set out in the User Commitment framework (Section 15, Part 3, Paragraphs 4–6).

The trigger for activating the PCF is based on a metric that measures cumulative MW of projects that exit the queue before Milestone 1 and are not replaced within 12 months by comparable projects. The threshold for the initial period, ending December 2030, is 6,000MW—approximately 5% of additional capacity needed to meet CP30 targets. Once the threshold is breached, NESO may choose to activate the PCF and must notify Ofgem within one month. Ofgem then has two months to approve or override the decision. If approved, users are given a minimum three-month notice before the PCF becomes payable. Projects exiting or reducing capacity during this notice period will not be liable for the PCF.

If activated, all new Gate 2 projects will be subject to the PCF upon entry, beginning at £2,500/MW and rising in line with the established six-monthly increase schedule. Any PCF revenue received by NESO will be redistributed to users via Transmission Network Use of System (TNUoS) charges. The PCF operates in addition to current cancellation charges, not as a replacement. Ultimately, the PCF is intended to strengthen discipline in the connections queue, align with long-term network planning needs, and ensure that projects progressing toward connection are backed by genuine financial commitment.

This mechanism replaces NESO’s original proposal, which would have required all Gate 2 projects to post a financial security of £20,000/MW upfront. The revised PCF approach is more targeted and proportionate, applying only if a defined queue health threshold is breached and only to projects that have not yet demonstrated progress beyond Milestone 1. It aims to balance the need for strong incentives against premature withdrawal with fairness for developers actively progressing their projects.

For more information regarding grid reform, please get in touch with our Grid and Networks Policy Analyst, Samuel Adekanle, at sadekanle@r-e-a.net.