Supplier Charges are liquidated damages that Suppliers incur if they fail to meet certain performance levels. They compensate Parties disadvantaged by those who aren’t meeting defined Standards. We consider them to be a remedial technique in our Performance Assurance Framework.
Click on the image below to view the PARMS training video where Kathryn Gay, Settlement Operations Analyst also details Peer Comparison, Supplier Charges, the PARMS Serials they relate to, liquidated damages, what a ‘genuine pre-estimate loss’ means along with Supplier Charge Caps.
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How are Supplier Charges calculated?
The Performance Assurance Reporting and Monitoring System (PARMS) software calculates the Supplier Charges due each calendar month.
These charges are capped for each Supplier to limit each Party’s liability in any one reporting period. A GSP Group monthly liability cap is calculated based on its annual take for the previous financial year. A Supplier’s monthly liability cap is calculated based on its total active import energy in the reporting period.
Who are they applied to?
Each month, the Performance Assurance Board (PAB) authorises Supplier Charges. The Supplier Charges are then distributed among Trading Parties.
90% of funds collected from a GSP Group are re-distributed to the Non Half Hourly (NHH) Suppliers operating in the GSP Group, based on their share of NHH energy traded in the GSP Group.
10% are re-distributed to all Trading Parties based on their Main Funding Share.
What are the Serials used to calculate them?
Supplier Charges are incurred for underperformance against six PARMS ‘Serials’. These are described in the table below. Supplier Charges are applied based on underperformance by Supplier ID, reporting period (Calendar Month) and GSP Group.
|SP01||Delivery of Routine Performance Monitoring Reports||Zero Working Days that a full set of PARMS Reports has not been submitted into PARMS|
|SP02||Delivery of Routine Performance Monitoring Logs||Zero Working Days that Drill Down or Ad-Hoc data has not been submitted to the Performance Assurance Administrator (PAA)|
|SP04||Installation of Half Hourly (HH) Metering||Zero Calendar Days where a mandatory HH Meter has not been installed|
|SP08a||Percentage of Non-Half Hourly (NHH) Energy Settled on Annual Advances||R3 – 80%
RF – 97%
|SP08b||Percentage of HH Energy Settled on Actual Readings||SF – 99%
R1 – 99%
|SP08c||Percentage of non-mandatory HH
Energy Settled on Actual Readings
|RF – 99%|
Performance Assurance Framework
Supplier Charges are a remedial technique in ELEXON’s Performance Assurance Framework.