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.
As energy is transported from the point of production to the end user, some of it is lost. Under the BSC arrangements there are two ways in which these losses are accounted for:
- Losses on the Distribution Networks are allocated through the use of Line Loss Factors (LLFs)
- Losses on the Transmission System are allocated across BSC Parties through the use of Transmission Loss Multipliers (TLMs)
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 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.
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”).
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.
Pricing and related data used in BSC processes includes:
- System Sell Price and System Buy Price
- Market Index Price and Volume
- Parameters used in the calculation of System Prices (Energy Imbalance Price): •NIV – Net Imbalance Volume
- PAR – Price Average Reference Volume
- DMAT – De Minimis Acceptance Threshold
- CADL – Continuous Acceptance Duration Limit
- MIDS – Market Index Definition Statement
- LoLP – Loss of Load Probability
- VoLL – Value of Loss Load
- RSP – Reserve Scarcity Price
- Utilisation Price
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)
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.