Issue 18: Sleeper Bids
Current Status
Summary
During the discussions on P171-173 it was generally recognised that there were wider issues associated with so-called sleeper bids in circumstances where balancing actions are taken outside of the normal operation of the market. Ofgem echoed these concerns in its P173 and P175 decision letters, referring to the potential to distort competition.
More light was shed on this matter at NGC’s interim operational forum on 3 August. In a presentation now posted on NGC’s website, NGC concluded that there were a substantial number of BMU bids at “abnormal prices”, and many of these were from non-nuclear plant. NGC data also shows the incidence of posting high sleeper bids is now greater in the light of decisions on P173 and P175. The conclusion reached by NGC was that there is “fairly substantial industry risks” arising from these circumstances, which might be triggered by high demand scenarios or transmission constraints. It is clear that the ability of generators to post bids up to the theoretical maximum of £99,999 needs examination with a view to identification of appropriate rectifying modification proposals. One option for such change might be impose a requirement on all participants (the issue applies in principle to all offers and bids) that offers and bids must be related to their reasonable cost.
Progression
The first Issue 18 Group Meeting was held on 14 September 2005. The Issue 18 Group discussed the issues surrounding ‘sleeper’ Bids raised in the Opus Energy letter and P173/P175 decision letters and their associated impacts. A second meeting will be held on 10 October 2005 where:
• The Group should agree defects, if any
• The Group should agree to develop potential solutions at the next meeting, if the defects could be agreed
• Elexon will provide a summary of potential solutions to the defects outlined above
• The Group should assign responsibility for solutions for BSC and Non BSC issues
28 October 2005
The second Issue 18 Group met on 10 October 2005. The Group agreed that there are issues with:
1. High priced Bids and Offers including a Party’s compensation requirements, which results from the risk that a Party carries that they will not be fully compensated for lack of access to the Transmission System under the current arrangements; and
2. High priced Bid/Offer Acceptances made for System Balancing reasons potentially impacting the Energy Imbalance Prices.
The Group discussed 3 potential ways forward for dealing with the issues, but did not agree on any Modification Proposal bing raised
The Group have agreed to close the Issue and a paper will be submitted detailing the
Groups discussions at the November Panel meeting.
The Final report was submitted to the Panel on 10 November 2005 HTU(Paper 99/001(e)).UTH