Glossary

Change to Confirmation Notices relating to Shortfall

The energy industry is currently experiencing unprecedented and challenging market conditions. For that reason Elexon has been scrutinising the receipt and payment of Trading Charges (otherwise known as Imbalance Charges) by BSC Parties.

Calculating the Imbalance Charges

Every day Elexon calculates the Imbalance Charges for each half hour and collects this from Parties who have contributed to the imbalance and pays it out to those that have mitigated it.

As BSC Parties will be aware, the BSC sets out what action Elexon is to take in the case of non-payment to Elexon by BSC Parties of any sums they owe (be that Trading Charges or other liabilities). In the situation described, ‘Elexon’ here is meaning the Funds Administration Agent (FAA) which acts on behalf of the BSC Clearer, Elexon Clear Ltd.

This action includes firstly utilising any credit lodged by the non-paying Party and then requiring BSC Parties to contribute to any shortfall via subsequent mutualisation.

Such mutualisation has always been a feature of the market and has been used where there have been Supplier failures.

Shortfalls

The BSC further provides that Elexon can only pay out in Trading Charges what it receives in. Any shortfall is usually small and, given the ability to recover via mutualisation, usually short lived.

If the defaulting Party’s credit cover has been exhausted and Elexon still has insufficient receipts to be able to absorb the shortfall, the BSC provides for Elexon to scale back payments out.

Change to Confirmation Notices

Throughout the Supplier failures to date, Elexon has not implemented the shortfall provisions to scale back Trading Charges payments to Parties.

However, in anticipation of this being necessary at some point in the future, Parties will have noticed that their Confirmation Notices (i.e. invoices) now have entries titled ”shortfall amount” and “Non-VATable Shortfall Amount” which are currently shown as “£00.00”.

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