P447 Urgent Modification Consultation
This Modification would prevent negative impacts to the cash-out price if NGESO’s Winter Contingency service is used.
Status
Who will this impact?
Currently we believe this Modification will impact the following market participants:
- Suppliers
- Generators
- Trading Parties
- Elexon
- NGESO
As a consequential C16 change to the System Management Action Flagging (SMAF) statement to identify the Winter Contingency Service as System Flagged is also needed, NGESO are running a C16 consultation to similar timeframes as P447.
The current versions of the C16, this consultation, industry responses and the consultation report are published at this link.
What is proposed?
Due to the ongoing war in Ukraine and the potential for scarcity over the winter period the Electricity System Operator (ESO) has entered into additional bi-lateral contracts with coal generators that would otherwise not have been generating over the winter period.
As per the agreed contract this service must be dispatched at £0/MW to minimise the impact on cashout and restrict payments to the providers of the service which would create unnecessary cash flows between parties and cause perverse incentives for Parties not to make generation available to the market leading to market price volatility and uncertainty.
The proposed solution would require changes to BSC Sections T and X to allow Offers from certain BM Units (“Winter Contingency BM Units”) to be treated (for purposes of calculating Imbalance Prices only) as having a very high price (£99,999/MWh).