Introduction of a seasonal Zonal Transmission Losses scheme
The Competition and Markets Authority (CMA) Energy Market Investigation concluded that the absence of locational pricing for transmission losses has an adverse effect on competition. Therefore, in line with the CMA’s determination, P350 will introduce a Transmission Loss Factor for each TLF Zone (which will align with the existing Grid Supply Point (GSP) Groups) for each BSC Season in order to allocate transmission losses on a geographical basis. The CMA is mandating, through secondary legislation and licence changes, an Implementation Date of 1 April 2018.
P350 was raised by National Grid on 4 July 2016. The Panel unanimously agreed an initial recommendation that P350 should be approved and agreed to submit P350 to the Report Phase at its meeting on 19 January 2017. The Report Phase Consultation closed on 2 February 2017. The Draft Modification Report was presented to the Panel on 9 February 2017. The Panel unanimously recommended that P350 should be approved. The Final Modification Report was issued to Ofgem on 10 February 2017 and Ofgem approved P350 for implementation on 1 April 2018 on 24 march 2017.
The CMA’s Order requires P350 to be identical in its technical aspects to P229, except for the inclusion of a small number of additional solution elements expressly permitted by the CMA that have emerged since P229 was progressed between 2008 and 2010. These are the the treatment of Interconnectors and High Voltage Direct Current (HVDC) circuits that are internal to the Transmission System, National Grid’s rights of ‘step in’, and a new Transmission Loss Factor Adjustment value to neutralise the impact on certain strike price adjustments conducted outside the BSC by the Low Carbon Contracts Company for Contracts for Difference (CFD).