Calculating credit cover

Glossary

The Credit Cover calculation assesses indebtedness over a 29 calendar day rolling period. The timing is linked to the timing of our Initial Settlement (SF) Run. The SF Run determines the Trading Charges you need to pay or be paid. Charges are also calculated for information at five Working Days in.

How it relates to you

We check your Energy Indebtedness (EI) every half-hour. EI is measured in MWh.

Credit Cover, however, is lodged as a cash figure.

To convert your Credit Cover into Energy Credit Cover we divide it by the Credit Assessment Price (CAP).

What will determine the credit cover calculation would be the Credit Assessment Energy Indebtedness (CEI), Metered Energy Indebtedness (MEI) and Actual Energy Indebtedness (AEI) values that will accrue for the rolling 29 day period after each settlement day.

How much Credit Cover do I need to lodge?

We don’t specify an amount of Credit Cover; it’s up to you to decide. You will need to make this decision based on your trading characteristics. Some things you may want to consider are:

  • How much indebtedness could I accrue over 29 days
  • How would my indebtedness be affected if I experienced a plant trip/system outage
  • Other operational scenarios e.g. contract rounds
  • An additional mark-up (25%) as you must only use up to 80% of the Credit Cover to avoid Credit Default processes
  • Potential price changes during a period of price volatility

Credit Qualifying BM Units and Non-Credit Qualifying BM Units

If the Primary BM Unit is not an Interconnector BM Unit and is required to submit Final Physical Notifications to the System Operator, it can qualify as a Credit Qualifying BM Unit as long as it has:

  • A Production Status flag (i.e. it’s classed as a generating BM Unit)
    or
  • Exempt Export status

If you have any non-Credit Qualifying Primary BM Units (excluding Interconnectors), you are required to declare your GC and DC as accurately as possible. The GC and DC for each Primary BM Unit is the expected maximum positive and negative metered volume for a single Settlement Period in the BSC Season.

If calculated in MWh, these will then be multiplied by two to give the Primary BM Unit’s GC and DC in MW. Declarations are required 10 Working Days prior to the start of a BSC Season.

In addition, ELEXON will determine the CALF values for all non-Credit Qualifying BM Units (excluding Interconnectors) before the start of each BSC Season.

This is generally the average generation/consumption divided by the maximum generation/consumption over a previous equivalent BSC Season with separate Working Day and Non Working Day calculations. Where the BM Unit has a zero DC and non-zero GC, it will qualify for a Supplier Export CALF (SECALF).

Locating your energy indebtedness

You can monitor your Party’s energy indebtedness position by accessing your account on the BSC Portal. The Energy Indebtedness History portal page will show the CEI, MEI and AEI volumes coming in each half hour and any changes to the credit cover percentage.

The Parties credit position can also be viewed on the Credit Cover History page. To access the information you will need to have registered your company to use the BSC Portal. Go to Participant/Colleagues tab, Organizations, and key in your Participant ID and click on Request Participant.

This request will be sent to ELEXON for approval.

You can also see a breakdown of the trading charges for each on the party imbalance history page below,

Credit Assessment Energy Indebtedness

Credit Assessment Energy Indebtedness (CEI) is an estimate of Energy Indebtedness used until we carry out the Interim Information (II) Run after 5 Working Days.

For Credit Qualifying BM Units and Interconnectors it is based on the Primary BM Unit’s contractual position at Submission Deadline compared to the latest Physical Notification submitted to NGESO before Gate Closure (Final Physical Notification).

For non-Credit Qualifying Primary BM Units it is based on each Primary BM Unit’s contractual position at the Submission Deadline compared to an estimated metered volume based on the Credit Assessment Load Factor (CALF) and the expected maximum demand and consumption over the BSC Season, called Demand Capacity (DC) or Generation Capacity (GC).

The methodology for determining CEI and the length of time for which it applies is based on the type of Primary BM Unit.

CEI for Credit Qualifying BM Units

This is based on a comparison of its Final Physical Notification (FPN) and the Aggregated Contract Volume. For Credit Qualifying BM Units the CEI is only used for the most recent two Working Days.

CEI for Interconnector BM Units

This is based on a comparison of the Interconnector BM Unit’s FPN and the Aggregated Contract Volume. For Interconnector BM Units the CEI is used for the most recent five Working Days.

CEI for non-Credit Qualifying Primary BM Units

This is based on a comparison of its Import or Export Capability and the Aggregated Contract Volume. For non-Credit Qualifying Primary BM Units the CEI is used for the most recent five Working Days.

Metered Energy Indebtedness

Metered Energy Indebtedness (MEI) uses Central Data Collection Agent (CDCA) metered data to replace FPN data for Credit Qualifying BM Units. The MEI data is available for use in the credit calculations after two Working Days.

For all other Primary BM Units, including Interconnector BM Units, the MEI doesn’t apply and these days are part of their CEI. The MEI for a Virtual Lead Party that holds a Virtual Balancing Account is zero.

Actual Energy Indebtedness

The Actual Energy Indebtedness (AEI) is an estimate of your Trading Charges for a given Settlement Period expressed in MWh. It is calculated from five Working Days after a Settlement Day using the Interim Information (II) Run data.

It replaces the CEI (and MEI) for those particular Settlement Days. Like CEI and MEI, the AEI is a MWh quantity and is calculated by dividing your Trading Charges by the CAP.

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