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Frequently Asked Questions
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1. What is ELEXON's Role in the electricity industry?
2. What is the Balancing and Settlement Code (BSC?
3. What is the Balancing Mechanism?
4. What are Bids and Offers?
5. What is the Imbalance Settlement Process?
6. Where can I find details of wholesale prices of electricity
in Great Britain?
7. What is the System Sell Price and the System Buy Price?
8. How are the System Sell Price and the System Buy Price
calculated?
9. Who are the BSC Panel Members?
10. What does the BSC Panel do?
11. What is a BSC Party?
12. What happens when a BSC Party does not adhere to certain conditions
in the BSC?
13. When is a BSC Party in Default of the BSC?
14. Can the Balancing and Settlement Code be altered?
15. How quickly can Modification Proposals be progressed?
16. What is BETTA?
17. What is www.bmreports.com ?
18. Can I use market data from www.bmreports.com or from www.elexon.co.uk
?
1. What is ELEXON's Role in the electricity industry?
New arrangements for the buying and selling of electricity were introduced in England
and Wales in March 2001 and extended to Scotland in April 2005 (see Q.17). These
arrangements consist of three main components:
The arrangements enable electricity to be traded bilaterally between willing buyers
and sellers in an open and competitive market. Trades are carried out primarily
using forwards and futures markets. The rules and governance arrangements for the
balancing mechanism and imbalance settlement processes are contained in the
Balancing and Settlement Code (BSC) and it is these two areas that
ELEXON manages in conjunction with the BSC Panel.
ELEXON is responsible for providing the systems and services that enable the implementation
of the Balancing and Settlement Code (BSC).
2. What is the Balancing
and Settlement Code (BSC)?
The Balancing and Settlement Code (BSC) sets out the rules and governance arrangements
for the balancing mechanism and
imbalance settlement processes which were established under
the new arrangementsto ensure that supply and demand for electricity
is balanced and that subsequent payments are reconciled. ELEXON
supports the BSC Panel in supervising the operation
of the BSC.
The BSC and a
summary of the BSC is available from download from this website.
3. What is the Balancing
Mechanism?
The balancing mechanism is one of the tools available to the National Grid Transco – www.nationalgrid.com/uk to enable
it to balance electricity supply and demand close to real time. It is needed because
electricity cannot be stored and must be manufactured at the time of demand. Where
the National Grid predicts that there will be a discrepancy between the amount of
electricity produced and that which will be in demand during a certain time period,
they may accept a ‘bid’ or ‘offer’
to either increase or decrease generation (or consumption). The balancing mechanism
is used to balance supply and demand in each half hour trading period of every day.
4. What are Bids and Offers?
The balancing mechanism allows BSC Parties (if they wish) to
submit offers to sell energy (by increasing generation or decreasing consumption)
to the system and bids to buy energy (by decreasing generation or increasing consumption)
from the system, at prices of the BSC Party's choosing.
Accepted bids and offers for individual BSC Parties are reported at http://www.bmreports.com/bwx_reporting.htm
5. What is the Imbalance
Settlement Process?
The imbalance settlement process settles discrepancies between the amount of electricity
that a company has contracted to generate or consume and that which they actually
generated or consumed. Due to the nature of electricity, generators may generate
more or less energy than they have sold; customers of suppliers may consume more
or less energy than their supplier has purchased on their behalf and traders may
buy more or less energy than they have sold. In such circumstances, these BSC Parties
are regarded as being ‘in imbalance’ and the ‘energy imbalances’ (i.e., the amounts
of energy generated or consumed and not covered by contracts) have, in effect, been
bought or sold from or to the National Grid system. Two ‘cash-out’ prices, also
known as ‘energy imbalance price’ are calculated for each half hour of the day and
are used to settle these differences. These are called the System Buy Price (SBP)
and the System Sell Price (SSP).
6. Where can I find details of wholesale
prices of electricity in Great Britain?
ELEXON does not have any involvement in the setting of wholesale prices in Great
Britain. Wholesale trading takes place directly between willing buyers and sellers
of electricity at a price agreed between them. Alternatively, organisations such
as ‘Power Exchanges’ can be used to purchase or sell electricity on behalf of organisations.
An indication of wholesale prices can therefore be obtained from one of these organisations,
for example, APX Group - www.apxgroup.com
or from electricity price reporting or from electricity price reporting organisations.
Under the British Electricity Trading and Transmission Arrangements (BETTA), wholesale
prices for Great Britain will not be available until BETTA Go Live, planned for
1 April 2005.
7. What is the System Sell
Price and the System Buy Price?
The System Sell Price (SSP) and the System Buy Price (SBP) are the ‘cash-out’ prices
or ‘imbalance prices’ that are used to settle the difference between contracted
generation or consumption and the amount that was actually generated or consumed
in each half hour trading period. SSP is paid to BSC Trading Parties who have a
net surplus of imbalance energy, and SBP is paid by BSC Trading Parties who have
a net deficit of imbalance energy. These prices are designed to reflect either the
prices associated with the balancing mechanism offers and
bids selected by National Grid to balance the energy flows in the Transmission
System, or to reflect the prices associated with the sale and purchase of (short-term)
energy ahead of Gate Closure (set at one hour before each half our trading period)
in the forwards and spot markets.
Indicative SSP and SBP is reported in
www.bmreports.com
As settlement data is retrieved and information becomes finalised more accurate
data is published in the
Pricing Data section of www.elexon.co.uk.
8. How are the System Sell
Price (SSP) and the System Buy Price (SBP) calculated?
For each half hour trading period one of the ‘cash-out prices or ‘energy imbalance
prices’ (System Sell Price and System Buy Price)
will be associated with balancing mechanism offers
and bids. In this case the price will be known as
the main price. The other price will be derived from short term energy trades and
is known as the reverse price.
More information about how the prices are applied can be found in the Information
Sheet entitled, ‘Overview of
SSP and SBP’ available to download from the Publications section of this
website.
9. Who are the BSC Panel Members?
The BSC Panel has eleven members and
is chaired by Nick
Durlacher. The BSC Panel comprises five elected industry members, two consumer
appointees and two independent members, as well a member appointed by the Transmission
Company, National Grid.
10. What does the BSC Panel do?
The BSC Panel supervises the operation of the Balancing and
Settlement Code to ensure that it is given effect fully, promptly
and in accordance with its terms. It plays an important role in overseeing the process
of changes to the rules set out in the BSC. The BSC Panel is supported by
ELEXON.
The BSC Panel, under
normal circumstances, meets on a monthly basis.
11. What is a BSC Party?
A BSC Party is any company that has signed the Balancing and Settlement Code Framework
Agreement. This includes all licensed electricity companies in Great Britain who
are obliged by their licence obligations to sign the BSC. Other companies may choose
to do so. A BSC Party is bound by the terms of the BSC, and is subject to certain
consequences if they fail to abide by these terms.
A full list of
BSC Parties can be found on this website.
12. What happens when a BSC Party does not adhere
to certain conditions in the BSC?
Under the terms of the Balancing and Settlement Code,
the BSC Panel has certain decision-making powers. This includes
taking decisions on how to deal with a BSC Party that is in Default
of the BSC. The options open to the BSC Panel in taking decisions are set
out in Section H of the BSC and include: suspension of the rights of the Defaulting
Party (such as notification of contract and metered volumes), naming of the Defaulting
Party to all other BSC Parties and, in extreame cases, expulsion from the BSC.
13. When is a BSC Party in Default of the BSC?
Section H3.1.1 of the
Balancing and Settlement Code (BSC) sets out the circumstances under which
a BSC Party is in Default of the BSC.
14. Can the Balancing and Settlement Code be
altered?
Yes, a process for modifying the Balancing and Settlement
Code (BSC) exists, which is set out in
Section F of the BSC. Any BSC Party (except
ELEXON) and the consumer organisation, energywatch, can raise a
Modification Proposal and in limited circumstances, the BSC Panel. Modification
Groups are set up to evaluate and define Modification Proposals. Modification Groups
consist of industry experts, a member appointed by the party proposing the Modification
Proposal, a National Grid Transco employee and ELEXON employees. Modification Proposals
follow a defined set of procedures and Modification Groups are responsible for providing
the necessary reports that the BSC Panel needs in order to make its recommendations.
All Modification Proposals are consulted upon by the industry and responses to these
consultations are factored into the relevant reports as these views are critical
in assisting the BSC Panel and Ofgem in reaching recommendations and decisions.
The BSC Panel assesses the recommendation put forward to it by the Modification
Group and decides whether to uphold it or not. The BSC Panel then makes its recommendation
to Ofgem who takes the final decision on whether or not the Modification should
be made.
An overview of the Modification process is detailed in the Information Sheet entitled,
Overview of the Balancing and Settlement Modification Procedures(80Kb)
.
15. How quickly
can Modification Proposals be progressed?
Modification Proposals can be progressed as ‘urgent’ with prior approval from Ofgem.
Urgent Modification Proposals can be progressed within one day under specific circumstances.
16. What is BETTA?
The British Electricity Trading and Transmission Arrangements (BETTA) were
proposed by Ofgem and the Department of Trade and Industry (DTI) to create a competitive
Great Britain (GB) wide electricity market through the creation of GB trading and
transmission arrangements. The new arrangements were implemented on 1 April 2005.
For information about ELEXON’s role in implementing BETTA, visit the
BETTA section of this website.
www.bmreports.com is a website
that provides near real time and historic data about the
balancing mechanism. The website contains information such as the indicative
System Buy Price (SBP) and System Sell Price (SSP)
for each half hour of trading. Logica is the Service Provider or BSC Agent who
has responsibility for the development and maintenance of this facility.
ELEXON procures and manages contracts with all BSC Agents.
All Intellectual Property Rights in the data and information on these websites are
owned in accordance with the terms of the Balancing
and Settlement Code (BSC). If you wish to use the data and information from
either of these websites you must write to ELEXON detailing which information you
wish to use and the purpose of intention. Send your letter to:
Company Secretary
ELEXON Limited
4th Floor
350 Euston Road
London
NW1 3AW