P361

Formal title: Revised treatment of BSC Charges for Lead Parties of Interconnector BM Units

Current Status

Submission
Initial Written Assessment
Assessment Procedure
Report Phase
With Authority
Awaiting Implementation
Implemented

Summary

Under the EU Third Package (Article 2 of Regulation 714/2009) Interconnector flows should be treated as part of the Transmission System and not as Production or Consumption. The current BSC charging arrangements are not aligned with the EU Third Package.

For the purposes of calculating Balancing and Settlement Code (BSC) Charges, Interconnector Balancing Mechanism (BM) Units in Great Britain, are currently treated as either a Production BM Unit  (generation) or a Consumption BM Unit (demand). The BSC Charges derived from Credited Energy Volumes are paid for by all BSC Parties having Production and Consumption BMUs with non-zero Metered Volumes, including Interconnector Users.

This Modification Proposal seeks to exclude Interconnector Balancing Mechanism (BM) Units from the Main Funding Share and SVA (Production) Funding Share BSC Charges, in order to better facilitate the EU Third Package.

Progression

P361 was raised by Nord Pool Spot AS on 31 October 2017. The Initial Written Assessment (IWA) was presented to the Panel at its meeting on 9 November 2017. The Panel agreed to progress P361 to the Assessment Procedure.

The Proposer requested P361 be treated as an Urgent Modification Proposal on 31 January 2018. The request was taken to the Panel on 8 February 2018, who unanimously recommended to Ofgem that P361 be treated as an Urgent Modification Proposal. Ofgem rejected the Proposer’s request to treat P361 as an Urgent Modification Proposal on 22 February 2018 – see Ofgem response letter below for details.

The first P361 Workgroup meeting was held on Monday 8 January 2018. The Workgroup discussed the issue and the proposed solution. The Workgroup agreed to seek additional legal guidance on the defect. A second meeting was held on Monday, 12 February 2018 and disucssed the ELEXON legal guidance and the solution options. The Workgroup agreed to seek external legal guidance and agreed a solution for impact assessment. A third Workgroup meeting was held on 13 March. In this meeting the external legal guidance was presented and discussed. Following this, the Proposer amended his solution as to only exclude Main Funding Share and SVA (Production) Funding Share charges from Interconnector BM Units. The Proposed solution will impact the Settlement Administration Agent (SAA), along with the ELEXON Funding Share System (FSS).

The Assessment Procedure Consultation and Industry Impact Assessment were issued on the 26 April 2018 with responses due by 15 May 2018. The next Workgroup is scheuled for the 24 May 2018, to discuss the consultation responses.

The intent of the Proposed solution is that the excluded BSC Charges will be recalculated and re-billed from the implementation date back to the start of the previous financial year (1 April). The effects of this will be that any BSC Charges in the current financial year to date, will be recalculated and re-billed as one lump sum payment, subject to P361 approval.

Next Events

The Assessment Procedure Consultation was issued on the 26 April 2018 with responses due by 15 May 2018.

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