Each Trading Party is liable to pay or receive Trading Charges for each Settlement Day. These charges are calculated in relation to Imbalance Settlement and Balancing Mechanism activity.
The Settlement Administration Agent (SAA) determines the trading charges.
On this page
How it relates to you
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)
- System Operator BM Cashflow
The SAA calculates these charges at every Settlement Run. It will receive and validate the latest data for the relevant Settlement Day. BSC Parties are required to submit data to Elexon so that trading charges can be calculated.
A clearing account must be established with the BSC Banker to facilitate payment to or from BSC Parties, in respect of Trading Charges and Reconciliation Charges for each Payment Date.
You will receive an Advice Note on the last working day of the quarter when the amount that you owe, or are owed, is £500 or above. Parties pay the initial Settlement Final Run (SF) Charge, and then any ‘deltas’ or differences in Trading Charges when they are recalculated in subsequent Settlement Runs.
Backing Sheets provide a breakdown of your Trading Charges. These are sent whenever you incur a Trading Charge.
If you incur Trading Charges daily, you’ll receive a Trading Charge backing sheet every day. You should not pay Trading Charges from the backing sheet.
You will only need to pay Trading Charges when you receive an Advice Note.
- Delivery of Advice Notes, Backing Sheets and Confirmation Notices
- How to Read Advice Notes and Confirmation Notices
- How to read your Trading Charges Backing Sheets
- How to complete the Funds Accession Form
Failure to pay
An event of default will occur when a BSC Party fails to pay trading charges in full by 9am on the 2nd business day on three or more occasions within a 30 day period.
Any late payment results in temporary borrowing with associated interest charges.
As Elexon has a limited borrowing (overdraft) facility, used to cover payment delays, it can operate the shortfall process when the borrowing facility is exhausted.
What is the shortfall process?
The shortfall process is operated to reduce payments out from Elexon to balance the shortfall caused by unpaid Trading Charges.
This is a delay of full payments out and the shortfall amounts are returned to the Parties once they have been recovered through the Default Funding Share (mutualisation) process.
How does Elexon know when the shortfall process is needed?
Where a failing BSC Party has stopped paying Trading Charges, Elexon will forecast the non-payments and have information in advance of the Payment Date. Where it is possible Elexon will advise BSC Parties in advance when a shortfall is likely.
Even though Elexon monitors the cash-flow and its bank balances, there may be no notice of a payment default on a particular day, which can result in the need to run the shortfall process.
Why has the shortfall process in the BSC not been used before?
Any shortfall is usually small and, given the ability to recover via mutualisation, usually short lived. Throughout the Supplier failures to date, Elexon has not implemented the shortfall process to scale back Trading Charges payments to Parties.
However, as the market conditions have changed significantly in 2021. Higher System Prices have resulted in higher Trading Charges. This, combined with a high volume of non-payments from failing BSC Parties, has resulted in a higher proportion of the borrowing facility being used, making shortfall more likely.
Calculating trading charges
The Settlement Administration Agent (SAA) collects data from the following:
- metered volume data from the CDCA and SVAA
- energy contract volume data from the ECVAA
- Balancing Mechanism actions from National Grid
- Market price data from the MIDP
It uses this data to calculate the Energy Imbalance Volume of each Trading Party (i.e. the difference between the Party’s metered volumes and its contracted volumes).
The SAA also calculates System Sell and System Buy prices, which are multiplied by the Energy Imbalance Volumes to calculate the Trading Charge cashflows.
The SAA passes data on the amounts owed to, or by, each BSC Party to the Funds Administration Agent (FAA).
Claims & Disputes
Trading Disputes provide a mechanism for correcting identified Settlement Errors. It allows for energy that was incorrectly calculated to be re-calculated, and the corrected Trading Charges distributed accordingly.
Reviewing data trends
There are three Market Reports, each aimed at providing a simple collated and aggregated version of Settlement Data that enable time series analysis and peer comparison. This information is available from the Elexon Portal.
Market Report 1A
Provides a summary of the core components for calculating the Total Cashflow that Parties pay in the Advice Notes. The data is summed for each Party on each Settlement Date.
Market Report 2A
Provides data that can be used to analyse and view trends of Trading Charges that are paid through the Funds Administration Advice Notes.
Market Report 3A
Provides data on the operation of individual Balancing Mechanism (BM) Units for each BSC Party. It can be used to view the performance of BM Units and for reviewing the Generation and Demand Capacity.
Types of Trading Charges
Account Energy Imbalance Cashflow
These are payments by Trading Parties at System Buy Price for negative energy imbalance volumes, i.e. top-up, and payments to Trading Parties at System Sell Price for positive energy imbalance volumes, i.e. spill.
Information Imbalance Charge
These are payments by Trading Parties at the Information Imbalance Price on the magnitude of any deviations of BM Unit Metered Volumes from Final Physical Notification.
Since the BSC was introduced, the Information Imbalance Price has been set always to be zero.
Period BM Unit Cashflow
These are payments to Trading Parties at Offer Price for accepted Offers, and payments by Trading Parties at Bid Price for accepted Bids.
BM Unit Period Non-Delivery Charge
These are payments by Trading Parties either:
- for non-delivered Offers, in the event that a payment at an Offer Price to a Trading Party exceeds the imbalance price paid on the shortfall resulting from any non-delivery
- for non-delivered Bids in the event that the imbalance price paid to a Trading Party for the spill caused by any non-delivery exceeds the price paid by the Trading Party for the Bid
Residual Cashflow Reallocation Cashflow (RCRC)
Any excess or shortfall in cashflow after all BSC Parties have paid their Imbalance Charges is redistributed amongst BSC Parties on a scale proportional to their volume of non-interconnector Credited Energy.
This redistribution is paid as Residual Cashflow Reallocation Cashflow (RCRC) on a £/MWh basis:
System Operator BM Cashflow
Typically, this is a payment by the Transmission Company to cover the net cost of Offer and Bid Acceptances.