Derogations from the BSC
Derogations can be applied for by any BSC Parties or non-parties with innovative ideas that seek to test and potentially change a particular BSC obligation. Applications for derogations use the BSC Sandbox procedure which allows BSC Parties to participate in the BSC Trading Arrangements with certain obligations removed or altered for a period of time.
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Articles of Interest
Have your say – proposal to use the BSC Sandbox15 February 2021
COVID-19: Possible estimation derogation changes after lockdown announced2 November 2020
COVID-19: Consumption estimation derogations update28 August 2020
COVID-19: BSC Performance Assurance Board (PAB) approves further derogations4 May 2020
COVID-19: Estimation derogations to continue into 20219 November 2020
COVID-19: Estimation derogations to continue until further notice1 February 2020
An applicant does not need to be a BSC Party to apply to the Sandbox, but would need to accede to the BSC before any trial commences.
A non-party can be granted derogation from aspects of the BSC. However, that derogation will have no effect until they have acceded to the BSC. Once acceded, the recipient of the derogation will be subject to all BSC obligations except those from which they have received derogation.
Raising an application
BSC Sandbox Applications must be raised to the Authority (Ofgem), who will consider whether to forward the Application to BSCCo for progression under this Procedure. This enables the Authority to coordinate applications which have an impact on more than one Code, or on both Codes and Licenses.
BSCCo will help in processing the request for consideration by the BSC Panel. BSCCo will also act as a critical friend to Sandbox Applicants prior to submissions.
BSC Sandbox procedure
The BSC Sandbox enables limited pre-competitive trials of potentially innovative products or services in a live market environment. It achieves this by allowing BSC Parties to participate in the BSC Trading Arrangements with certain obligations removed or altered (a derogation).
The BSC Sandbox application is not a way of evading the rules of the BSC, and all applications will be assessed against the eligibility criteria set out in the Sandbox process document, the most important of which is how the Sandbox application would better facilitate the Applicable BSC Objectives.
Applications for the BSC Sandbox must set out the BSC Obligations the Sandbox Applicant is seeking to change, what benefit that will bring, and how long is needed for the trial.
Decisions to recommend derogation to the Authority must be made according to the Sandbox Eligibility Criteria. BSC Section H10.2.6 (a) makes specific reference to the BSC Applicable objectives, and there are a number of other provisions which the Panel must have regard to when considering applications (BSC Section 10.2.6(b).
Each derogation granted is a time-bound project to trial an innovative product or service. Following the expiration of the derogation, projects must transition to BAU either by becoming fully compliant with the BSC or by raising and implementing a Modification to make the alterations permanent and open to all BSC Parties.
Reporting on progress
Sandbox Applicants must provide the Panel with reports on their progress. The reports will be published to ensure learnings from the derogations can be shared across the industry.
BSCCo may determine that it is necessary to monitor progress of the derogated project using other such means as may be available, including the utilisation of Performance Assurance techniques.
The BSC Panel will make a recommendation on whether or not to grant a derogation (and whether any conditions should be applied) to the Authority. The Authority will then consider the recommendation and make a decision on whether or not to grant a derogation.
Depending on the nature of the derogation being requested, the Panel may apply conditions to derogations before making a recommendation to the Authority. The purpose of such conditions is to limit the risk and impact of derogation to the normal operation of Settlement and to other BSC Parties.
There are two possible outcomes from BSC Derogations:
- raising a Modification to the BSC
- returning to business as usual operation in compliance with the BSC (without derogation).
- BSC Section H – contains general legal provisions regarding the BSC arrangements, including information about BSC Derogations