Operations & Settlement

This page sets out the different areas of operations and settlement which you need to know about when participating in the electricity market.

Trading & Settlement

Electricity is traded in a wholesale market, with generators and suppliers entering into contracts with each other for every half hour of every day; sometimes years in advance. Non-physical traders such as investment banks also participate in this trading. For each half hour – known as a Settlement Period – they can continue to trade up to 1 hour beforehand.

Balancing Mechanism Units

Balancing Mechanism (BM) Units are used as units of trade within the Balancing Mechanism. Each BM Unit accounts for a collection of plant and/or apparatus, and is considered the smallest grouping that can be independently controlled.

Trading Dispute decisions

We assess all Trading Disputes (Disputes) against the three criteria that must be met. We send our view to the Raising Party and any affected Parties. The Trading Disputes Committee (TDC) hears all Disputes that we think are valid.

Line Loss Factors

Line Loss Factors are multipliers which are used to scale energy consumed or generated to account for losses on the UK’s Distribution Networks.

Transmission Losses

Losses on the Transmission System are allocated across BSC Parties through the use of Transmission Loss Multipliers (TLMs). Transmission Loss Factors exist for each TLF Zone (aligning with the existing Grid Supply Point Groups) for each BSC Season in order to allocate transmission losses on a geographical basis.

Market Domain Data

Market Domain Data is the central repository of reference data used by Suppliers, Supplier Agents and Licensed Distribution System Operators (LDSOs) in the retail electricity market.

Metering

Metering Systems accurately record the flow of electricity to (an Import) or from (an Export) a site. ELEXON uses Metering System data to calculate energy imbalance charges. These charges are applied to BSC Parties who use more or less energy than they have contracted to buy or generate.

Profiling

A Load Profile represents the pattern of electricity usage by day and by year for the average customer in each one of the eight Profile Classes.

We create Profiles (daily, seasonal, yearly, per day type, etc.) for each of the eight Profile Classes by randomly selecting sites and installing half-hourly meters at these sites or getting half-hourly consumption data directly from Suppliers. These samples are designed to provide Profiles that are representative of all meters in each Profile Class.

Supplier Hub Operations

Supplier Volume Allocation (SVA) is the set of processes used to estimate the quantity of energy used or exported by a Supplier’s customers in a given half hour (or “Settlement Period”).

Unmetered Supplies

An Unmetered Supply is any electronic equipment that draws a current and is connected to the Distribution Network without a meter recording its energy consumption.

Imbalance Pricing

There are two energy imbalance prices for each Settlement Period. These are:

  • System Buy Price (SBP)
  • System Sell Price (SSP)

However there is a single price calculation – so SBP will equal SSP in each settlement period.

ELEXON apply these prices to Parties’ imbalances to determine their imbalance charges. A Party is out of balance when its contracted energy volume does not match its physical production or consumption.

Trading Charges

Every day, Trading Charges are calculated for each BSC Party . Trading Charges are made up of:

  • Account Energy Imbalance Cashflow
  • Information Imbalance Charge
  • Period BM Unit Cashflow
  • BM Unit Period Non-Delivery Charge
  • Residual Cashflow Reallocation Cashflow (RCRC)

Section T of the BSC sets out how Trading Charges for each Trading Party and National Grid are determined; the data required in order to calculate the Trading Charges; and the processes undertaken by the Settlement Administration Agent (SAA) in connection with the determination of the Trading Charges.

Credit

The purpose of Credit Cover is to ensure that, should a Trading Party default, sufficient collateral is available to pay these debts.

The BSC does not stipulate the amount of Credit Cover that Trading Parties must provide. Instead Trading Parties decide on the level of Credit Cover that they wish to provide, and credit checking is intended to ensure that a Trading Party cannot accumulate a debt over the twenty-nine day period that exceeds the amount of Credit Cover provided.

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