Laone Roscorla

1
Introduction Seminar ELEXON, the BSC
Arrangements and the Electricity Industry
2
Welcome to ELEXON

• Purpose of today
• Aimed at new staff to the industry
• General education session more information
  available in your packs and from website

3
Todays Objectives

• Overview of ELEXON, the BSC and how the industry
  fits together
• Understand the change process, Supplier Volume
  Allocation, Central Volume Allocation and
  Assurance
• Meet the experts and understand the roles of
  Suppliers, Distributors, National Grid and Ofgem.

4
Health Safety Information

• See the Important Information leaflets in
  reception and this room for fire procedures and
  facilities information
• Evacuation points are on the diagrams on the wall
• If there is an alarm, follow the instructions of
  the Fire Wardens

5
ELEXON Evacuation Muster Point

• Opposite Prêt, next to the wavy grass

6
Agenda (1)

• An Introduction to the BSC Arrangements and
  ELEXON Emrah Cevik
• Central Volume Allocation and Imbalance
  Settlement Abi Akala
• Break
• Supplier Volume Allocation Roger Harris
• Role of Assurance Adam Richardson
• Changing the BSC Arrangements Stuart Holmes
• The Operational Support Manager Service -
  Jennifer Clark
• National Grids Role as System Operator Rob
  Smith
• Lunch

7
Agenda (2)

• After Lunch
• Ofgem - A Regulatory Perspective Dipen Gadhia
• A Day in the Life of a Supplier Mark Knight
• A Day in the Life of a Distributor Max Lalli
• Finish at about 15.30

8
An Introduction to the BSC Arrangements and
ELEXON

• Emrah Cevik
• 13 May 2009

9
The Big Picture GB Electricity Trading
Arrangements
BSC Trading Arrangements
Developed by the market
Gate Closure
Trading Period
Power Exchanges
ELEXON
Balancing Mechanism
Imbalance Settlement
Forwards and Futures Market
National Grid
T
T½hr
T-1 month
T1yr
T-1yr
T-1hr
10
Overview Imbalance Settlement

• Central arrangements required to
• Meter the energy produced and consumed by each
  party
• Compare these with quantities covered by
  bilateral contracts
• Provide financial settlement for differences (or
  imbalances)

Collectively referred to as imbalance
settlement
?
11
Balancing and Settlement Code

• The BSC defines
• Rules for balancing mechanism and imbalance
  settlement
• Central services required for BSC provisions to
  be met
• Processes for amending the BSC arrangements
• The role of ELEXON and the BSC Panel

12
Governance Framework
The Authority (Ofgem)
Determinations
BSC Panel
Recommendations
Powers Functions
Licence obligation to establish and sign BSC
Transmission Company (National Grid)
Licence obligation to sign BSC
Support
Support
Balancing and Settlement Code
Licensed Generators Suppliers
ELEXON
Non-licensed Participants
Procurement Management
Powers Functions
BSC Agents
Choose to sign BSC
13
ELEXON
14
ELEXONs Departments
CHANGE DELIVERY Chris Rowell Working with
customers and service providers to deliver
efficient and transparent industry-driven change
SERVICE DELIVERY Peter Davies Providing
operational support and data for BSC Parties and
Party Agents
STAKEHOLDER ASSURANCE Dorcas Batstone Meeting
customer needs, managing stakeholders and
delivering assurance and dispute services
CORPORATE SERVICES, HR AND LEGAL
15
Costs and Cost Control

• Transparency
• Business Strategy approved by Panel after
  consultation
• Annual Budget set by Board
• Fixed and variable costs
• ELEXON Operational
• Demand-led
• Contracted

16
Strategy/Budget

• Fulfilling our BSC obligations
• Providing a quality service to our customers
• Efficient, Effective and Economic
• Budget 2008/9 39.9m
• Innovative, Dynamic and Agile

17
The Role and Functions of the BSC Panel
18
The Role of the BSC Panel

• Two broad functions
• Oversight of the Modifications Process
• Other management responsibilities (eg parameters,
  referrals, enforcement, approving changes,
  establishing committees, approving ELEXONs
  Business Strategy)
• Panel Objectives include
• efficiency, transparency, non-discrimination, and
  
• the facilitation of the Applicable BSC Objectives
  (set out in Transmission Licence)

19
BSC Panel Independence

• Partly elected, but not directly representative
• BSC Panel Members must act impartially

20
BSC Panel Constitution
21
BSC Panel Committees (1)

• Performance Assurance Board (PAB)
• Conducts activities to provide assurance that
  relevant parties are suitably qualified
• Ensures that relevant operational standards are
  maintained
• BSC Audit
• Trading Disputes Committee (TDC)
• Determines all Trading Disputes
• May propose Modifications to the BSC

22
BSC Panel Committees (2)

• Imbalance Settlement Group (ISG)
• Specifically responsible for reviewing and
  reporting on the Imbalance Settlement Process
• Supplier Volume Allocation Group (SVG)
• Specifically responsible for reviewing and
  reporting on the operation of the Supplier Volume
  Allocation Process

• Delegated authority for approval of Code
  Subsidiary Documents and certain parameters

23
Further Information
www.elexon.co.uk

• Newscast
• Newscast Extra
• Fact Sheets
• Guidance Notes
• BSC and Related Documents

• BSC Summary
• Financial Information
• Information Sheets
• Panel/Committee Agendas Papers
• Helpdesks

www.elexon.co.uk/AboutElexon/new_to_industry.aspx
24
Using myELEXON
25
Questions
26
Central Volume Allocation

• Abi Akala
• 13 May 2009

27
Aim

• Define Central Volume Allocation Systems and
  Processes
• Define the Imbalance Settlement Process

28
Generation, Transmission, Distribution and Supply
Generation
Consumption
Transmission Network The Grid
Grid Supply Points
GSP Group
Distribution Network
Generation
Supply
29
GSP Groups
30
CVA or SVA?
CVA

• Large Coal Plant

• Single Wind Turbine

SVA

• Domestic meter

SVA

• Cement Works

CVA
31
The Handout

• A System diagram of the Imbalance Settlement
  Systems
• Colour Co-ordinated
• Look out for the coloured squares!

32
ELEXONs Responsibility

• As the BSCCo, ELEXON is responsible for the
  Operation of the following systems
  
  - SVA (Supplier Volume Allocation),
  - CVA (Central
  Volume Allocation), and
  - FAA (Funds Administration)
• Additional Systems feed into the Imbalance
  Settlement Process but are the responsibilities
  of Participants, Party Agents or the System
  Operator (National Grid)

33
The Central Registration Agent

• When a Party signs up to the BSC, their details
  are registered into a database administered by
  the Central Registration Agent (CRA)
• The database holds information such as Party IDs,
  Party roles and Authorised Signatories

34
Settlement Periods

• Electricity is traded over half hour periods,
  called Settlement Periods, where any electricity
  produced within a given half hour must also be
  consumed over that half hour
• There are 48 Settlement Periods (SPs) in a
  standard Settlement Day

35
Energy Contract Volume Notifications (ECVN)
Sells Electricity to

• An ECVN is the electronic data flow that
  reflects, in this example, the agreement made
  between a Generator and a Supplier.
• Submitted to Settlement through the Energy
  Contract Volume Aggregation Agent ECVAA

36
Gate Closure

• Parties can strike up contracts up until an hour
  before the respective SP commences
• This point in time is called Gate Closure

Gate Closure
Settlement Period
Bilateral Trading or
Power Exchange Trades
T- Years ahead
T - 1 Hour
½ Hour
37
Contract Notifications

Invisible to BSC
Visible to BSC
Contract volume details
Trading Party 1
ECVNA
ECVAA
Bilateral Contract
Trading Party 2
Trading Party/Agent Systems
BSC Central Systems
38
Contract Notifications

Invisible to BSC
Visible to BSC
Contract details
Trading Party 1
Power Exchange
ECVAA
Trading Party 2
When Prices Match
BSC Central Systems
39
The Balancing Mechanism (1)

• In Great Britain, the electricity transmission
  network (the system) is managed centrally by the
  System Operator (National Grid)
• The System Operator aims to ensure that
• total generation matches demand (energy
  balancing)
• constraints of the system are respected (system
  balancing)
• there is adequate backup to cover failures
• The Balancing Mechanism is a tool that allows
  National Grid to resolve operational system
  issues to meet shortfalls or surpluses in supply
  and demand

40
Energy balancing - Example

• Total generation 50,000MW
• Total demand 55,000MW
• 5,000MW generation called upon

41
System Balancing - Example

• Generation 5,000MW
• Demand 1,000MW
• Maximum North-South transfer 2,000MW
• Generation 5,000MW
• Demand 9,000MW

42
(Balancing) Notifications

• Initial Physical Notification (IPN) - expected
  operating levels throughout whole day - submitted
  by 11am day ahead
• Final Physical Notification (FPN) - proposed
  operating levels in a particular Settlement
  Period - submitted by Gate Closure

43
The Balancing Mechanism (2)

• Allows physical traders to submit, by Balancing
  Mechanism Unit (BMU), Offers to sell energy or
  Bids to buy energy from the System Operator

44
Bids and Offers

• Bids and Offers indicate a BSC Partys
  willingness to operate the BM Unit at a level
  other than FPN prices and volumes
• Bids - below FPN
• A willingness to decrease generation or increase
  demand
• Offers - above FPN
• A willingness to increase generation or decrease
  demand
• (BID Bids Increase Demand)

45
Bid/Offer Submission

• The graph below demonstrates what a Bid/Offer
  submission from a Generator with an FPN of 100MW
  would look like...

150MW
50 / MW
Offers
125MW
30 / MW
Energy
100MW
FPN
75MW
15 / MW
Bids
50MW
35 / MW
Time
46
Bid or Offer?

• Generation 50MW to 100MW
• Consumption 100MW to 50MW

OFFER
OFFER
47
Imbalance Settlement (1)

• Need to ascertain what has been generated and
  consumed within a Settlement Period and by who.
  This process is known as Imbalance Settlement
• The Central Data Collection Agent (CDCA) and the
  Supplier Volume Allocation Agent (SVAA) perform
  this function

48
Imbalance Settlement (2)

• The metered data is then compared with the
  volumes within the contract notifications and any
  Accepted Bid/Offer data
• This is carried out by the Settlement
  Administration Agent (SAA)
• Parties are charged for any mismatch (imbalance)
  between the two figures

Settlement Process (incl. Energy Imbalance
Contracted/ Bid-Offer Volume vs Metered Volume)
49
Energy Imbalance Prices

• Calculated for each half hour of the day
• System Sell Price (SSP)
• Paid to BSC Trading Parties for long imbalances
• System Buy Price (SBP)
• Paid by BSC Trading Parties for short imbalances
• Pricing mechanism intended to provide an
  incentive to balance
• Imbalance Volume Energy Imbalance Price
  Energy Imbalance Cashflow

50
System Prices
E.g. 20 November 2008
51
Energy Imbalance
Generation
MWh
Metered generation
Partys total notified contract volumes
Partys total notified contract volumes
Settled bilaterally
Settled bilaterally
Metered generation
Figure 1
Figure 2
52
Energy Imbalance
Consumption
MWh
Metered consumption
Partys total notified contract volumes
Partys total notified contract volumes
Settled bilaterally
Settled bilaterally
Metered consumption
Figure 1
Figure 2
53
The Main Price (1)
Balancing Mechanism
Bids Parties must decrease generation / increase
Demand
Offers Parties must increase generation /
decrease Demand
Bids
Offers
If more Bids are accepted by the SO then the
main price is SSP (average of balancing
actions) and applies to those Parties that left
the system long (too much energy available).
If more Offers are accepted by the SO then the
main price is SBP (average of balancing
actions) and applies to those Parties that left
the system short (not enough energy available).
54
The Main Price (2)
Balancing Mechanism
Bids Parties must decrease generation / increase
Demand
Offers Parties must increase generation /
decrease Demand
Bids
Offers
If more Bids are accepted by the SO then the
main price is SSP (average of balancing
actions) and applies to those Parties that left
the system long (too much energy available).
If more Offers are accepted by the SO then the
main price is SBP (average of balancing
actions) and applies to those Parties that left
the system short (not enough energy available).
55
The Reverse Price

• Derived from short term energy trading
  information from the forwards and spot markets
• Information provided from Market Index Data
  Provider (MIDP)

56
Short Market vs Long MarketMain Price / Reverse
Price Summary
SHORT MARKET (not enough electricity) Offer
Stack larger Actions to increase generation or
decrease demand System Buy Price main price
based on Offer stack System Sell Price reverse
price Market Index Data
LONG MARKET (too much electricity) Bid stack
larger Actions to decrease generation or increase
demand System Sell Price main price based on
Bid stack System Buy Price reverse Price
Market Index Data
57
Energy Imbalance
Generation
58
Energy Imbalance
Consumption
Imbalance Cash out
MWh
Metered consumption
Party pays SBP
Partys total notified contract volumes
Partys total notified contract volumes
Party is paid SSP
Settled bilaterally
Settled bilaterally
Metered consumption
Figure 1
Figure 2
59
The Funds Administration Agent

• Once the Energy Imbalance Cashflows have been
  calculated by the SAA, the information is sent to
  the Funds Administration Agent (FAA)
• The FAA is responsible for sending Parties their
  bills
• Parties are obliged to lodge Credit with the FAA
  to safeguard against Imbalance charges

60
Credit
Calendar Day 29 Payment Date
Total Energy Indebtedness
Estimated
Actual Energy Indebtedness
Time
Settlement Day 16 WD SF Settlement Run used
for billing
Settlement Day 5 WD II Settlement Run
Settlement Day 1
61
The BMRA (1)

• The Balancing Mechanism Reporting Agent (BMRA)
  publishes a range of market data
• Low Grade Public Domain Website
  (www.BMReports.com)
• High Grade Dedicated Communications link for BSC
  Parties
• TIBCO
• TIBCO Relay Service

62
The BMRA (2)
63
BSC Central Services Portal (www.bsccentralservice
s.com)
64
BSC Agents simplified

• CRA Registrations
• ECVAA Contracts
• CDCA Data Collection
• SAA Settlement
• BMRA Website
• FAA Funds/Invoices
• SVAA Supplier Volumes

65
Processes and Flows
Supplier Volume Allocation SVA
Central Volume Allocation CVA
Participant Systems
ECVNA
CRA
ECVNA
Outstations
GSP and Generator HH meter readings
CDCA
ECVAA
Energy Contract Notifications
GSP Group Takes
Participant Systems
Contract data
SVAA
Generation BMU HH data
Power Exchange
SAA
BMRA
Supplier BMU HH data
MIDP
Physical Notifications
Market Index Data (MID)
Funds Administration Agent FAA
BSAD and Bid/Offer data
Accepted Bids and Offers
Balancing Mechanism
FAA
Billing Report Imbalance Charges and Payments
System Operator Systems
66
Supplier Volume Allocation

• Roger Harris
• 13 May 2009

67
The Big Picture
Generation
Generation
Transmission Network
Grid Supply Points
GSP Group
Distribution Network
Supply
Supply
68
The Hand Out
Supplier Volume Allocation (SVA)
Central Volume Allocation CVA
Participant Systems
ECVNA
CRA
ECVNA
Outstations
GSP and Generator HH meter readings
CDCA
ECVAA
Energy Contract Notifications
GSP Group Takes
Participant Systems
Contract data
SVAA
Generation BMU HH data
Power Exchange
SAA
BMRA
Supplier BMU HH data
MIDP
Physical Notifications
Market Index Data (MID)
Funds Administration Agent FAA
BSAD and Bid/Offer data
Accepted Bids and Offers
Balancing Mechanism
FAA
Billing Report Imbalance Charges and Payments
System Operator Systems
69
SVA does what it says on the tin . . .
Supplier Volume Allocation
allocates energy volumes to Suppliers
70
SVA History

• 12 Regional Electricity Boards in England and
  Wales
• 1990 competition in Supply gt 1MW
• 1994 extended to gt 100 kW
• 1998 full competition
• 2001 NETA Arrangements in England and Wales
• 2005 BETTA Arrangements in England, Wales and
  Scotland

71
Competition in Supply
72
Metering Systems
29 million Metering Systems
73
Half Hourly / Non Half Hourly Energy
74
Half Hourly / Non-Half Hourly Metering
Non Half Hourly Import (MWh)
Half Hourly Import (MWh)
45
55
Less than 0.5 of Metering Systems are Half Hourly
75
Supplier Hub Principle
Customer
Supplier
Meter Operator
SMRA
Data Aggregator
Data Collector
76
Roles and ResponsibilitiesSupplier
Supplier
Meter Operator
SMRA
Data Aggregator
Data Collector

• Responsible for management of the Supplier Hub
• Registers Supplier Hubs in each GSP Group
• Supplier is a Party to the BSC

77
Roles and ResponsibilitiesMeter Operator
Supplier
Meter Operator
SMRA
Data Aggregator
Data Collector

• Meter Operation and Maintenance
• Meter Technical Details
• Meter Asset Provider

78
Roles and ResponsibilitiesSupply Meter
Registration Agent
Supplier
Meter Operator
SMRA
Data Aggregator
Data Collector

• Registration Service
• LDSO licence requirement, one per GSP Group
• LDSO Party to the BSC

79
Distribution Companies
80
Roles and ResponsibilitiesData Collector
Supplier
Meter Operator
SMRA
Data Aggregator
Data Collector

• Data retrieval and processing
• Calculates NHH EAC/AA consumption data

81
NHH Data Collector
An estimate of annual consumption is extrapolated
from meter advance using profile
1,150 kWh in 90 days
4,250 kWh per year
82
The EAC/AA Cycle
1st Meter Reading
2nd Meter Reading
3rd Meter Reading
EAC 1
AA 1
EAC 2
AA 1
EAC 3
AA 2
83
Settlement Timescales
84
Settlement Timescales for Today
85
Roles and ResponsibilitiesData Aggregator
Supplier
Meter Operator
Data Aggregator
SMRA
Data Collector

• Provides aggregated consumption data to the SVAA
• Data aggregated by Supplier, GSP Group and
  Profile Class

86
Data Aggregation
Estimated yearly demand values are added up for
customerswith same Supplier, Profile Class,
meter configuration by a Data Aggregator to
give the estimated yearly demand for a super
customer
87
SVA Model
Customer
Meter Operator
Data Collector
Supplier
SMRA
Data Aggregator
SVAA
88
The SVAA

• receives data from Data Aggregators
• calculates NHH line losses
• applies Group Correction
• sends Supplier deemed takes for each BMU to SAA

89
How SVA Links in with CVA
Supplier Volume Allocation SVA
Central Volume Allocation CVA
Participant Systems
ECVNA
CRA
ECVNA
Outstations
GSP and Generator HH meter readings
CDCA
ECVAA
Energy Contract Notifications
GSP Group Takes
Participant Systems
Contract data
SVAA
Generation BMU HH data
Power Exchange
SAA
BMRA
Supplier BMU HH data
MIDP
Physical Notifications
Market Index Data (MID)
Funds Administration Agent FAA
BSAD and Bid/Offer data
Accepted Bids and Offers
Balancing Mechanism
FAA
Billing Report Imbalance Charges and Payments
System Operator Systems
90
Profile Class

• Definition
• A classification of profiles which represents an
  exclusive category of customers whose Consumption
  can be reasonably approximated to a common
  profile for Settlement purposes

91
8 Profile Classes
92
Yearly Profile domestic unrestricted
April to March
93
Daily Profile domestic unrestricted
94
Profile Classes 1, 2
95
Profile Classes 3, 4
96
Profile Classes 5 - 8
97
Supplier Volume Allocation Agent (SVAA)
For each Half Hour
Apply profile to NHH and adjust for estimated
distribution losses
NHH Import
minus
Net off any HH (or NHH) export
HH Export
HH Import
GSP Group volume comparedto NHH HH totals
GSP Group Take
98
Before GSP Group Correction
Energy calculated for every HH in every GSP Group
What happens if GSP Group Volume is greater than
the SVA metered volume?
99
GSP Group Correction
NHH energy is scaled upsuch that NHH HH GSP
Group volume
100
After GSP Group Correction
Half Hourly corrected NHH GSP Group volume
101
Settlement Timescales
102
How SVA Links in with CVA
Supplier Volume Allocation SVA
Central Volume Allocation CVA
Participant Systems
ECVNA
CRA
ECVNA
Outstations
GSP and Generator HH meter readings
CDCA
ECVAA
Energy Contract Notifications
GSP Group Takes
Participant Systems
Contract data
SVAA
Generation BMU HH data
Power Exchange
SAA
BMRA
Supplier BMU HH data
MIDP
Physical Notifications
Market Index Data (MID)
Funds Administration Agent FAA
BSAD and Bid/Offer data
Accepted Bids and Offers
Balancing Mechanism
FAA
Billing Report Imbalance Charges and Payments
System Operator Systems
103
Questions
104
The Performance Assurance Framework

• Providing Assurance to our customers

• Adam Richardson
• 13 May 2009

105
What Assurance do we Provide?

• Independent assurance that
• Energy is allocated between Trading Parties
  efficiently, equitably and accurately
• Suppliers and Supplier Agents transfer Metering
  Systems data efficiently and accurately
• Our remit covers the operation of CVA and SVA
• BSC Central Systems, Supplier and Supplier Agent
  (MO, DC, DA) Systems, Distribution Businesses
  (including SMRAs and UMSOs), Meter
  Administrators, CVA Meter Operator Agents

106
Why does ELEXON provide assurance?

• Complex set of arrangements
• many obligations in the BSC
• large volume of data
• complex processes and calculations carried out
  across many participants
• large sums of involved
• Actions of one participant can affect others

107
How do we Provide Assurance?

• We apply a range of Performance Assurance
  Techniques (PATs) overseen by the Performance
  Assurance Board (PAB)

Preventative Designed to limit the possibility
of an undesirable outcome
Detective Designed to identify occasions of
undesirable outcomes
Incentive Designed to motivate action in order
to avoid the possibility of an undesirable
outcome
Remedial Designed to correct undesirable
outcomes
108
The Performance Assurance Framework
109
The Performance Assurance Framework
How Much Erroneous Energy is Being Misallocated
across Suppliers?
110
The Performance Assurance Framework
How Much Energy is Being Settled on Actual Meter
Readings?
111
Risk-based Assurance

• Identify Settlement Risks (i.e. the
  potential for non-compliance with the BSC to
  impact energy allocation or data transfers)
• Work out which PATs can best mitigate Risks
• Identify companies contribution to Risks
• Deploy PATs according to Risk Report Findings

112
More Information on the ELEXON Website

• Performance Assurance Pages
• http//www.elexon.co.uk/participating/MarketGuidan
  ce/PerformanceAssuranceFramework/default.aspx
• Non-confidential PAB business (including
  performance data)
• http//www.elexon.co.uk/bscpanelandcommittees/pane
  lcommittees/pab/default.aspx
• PAB Report provided to the BSC Panel each month

113
Questions
114
Changing the BSC Arrangements

• Stuart Holmes
• 13 May 2009

115
What?
116
Why?
Constantly moving industry

• Technologies change
• Requirements and needs develop
• Issues discovered

117
How?
BSC
Change Proposal
Code Subsidiary Documents
BSC Systems
118
How?
Modifications

• Changing Obligations

Definition Phase

• Can be raised by
• - Any BSC Party (including National Grid)
• - Other representative bodies
• - The Panel (in limited circumstances)
• - ELEXON and Ofgem cannot raise Modification
  Proposals

Initial Written Assessment
Proposal Raised
BSC Panel
Assessment Phase
Report Phase
119
How?
Definition Phase
Assessment Phase
Report Phase
Used to define issues and solutions

• Used to assess whether Mod
• Better than current Baseline
• Facilitates Applicable Objectives

120
Applicable Objectives

• The efficiency of Transmission Company
• The efficient and economic operation of the
  Transmission System
• Promoting effective competition
• Promoting efficiency of the balancing and
  settlement arrangements.

(a)
(b)
(c)
(d)
121
How?
Definition Phase
Assessment Phase
Report Phase
Used to define issues and solutions

• Used to assess whether Mod
• Better than current Baseline
• Facilitates Applicable Objectives

• Used to consolidate assessments and
  consultations
• Help Panel make a recommendation
• Legal text

122
How?
Modification Groups

• Independent Industry Experts
• 4 standing groups
• Volume Allocation Standing Modification Group
  (VASMG)
• Governance Standing Modification Group (GSMG)
• Pricing Standing Modification Group (PSMG)
• Settlement Standing Modification Group (SSMG)

123
How Does it all Fit Together?
Proposal Raised
Definition Procedure
Assessment Procedure
Report Phase
Initial Written Assessment

• Definition Report
• Modification Group
• Consultation

• Assessment Report
• Modification Group
• Impact Assessment
• Consultation

• Modification Report
• Consultation

To the Authority for decision
Panel Meeting
Panel Meeting
Panel Meeting
Panel Meeting
124
How?
BSC
Change Proposal
Code Subsidiary Documents
BSC Systems
125
Who can raise CPs?

• Any BSC Party including National Grid
• The BSC Panel
• ELEXON
• Party Agents cannot raise CPs. Any potential
  changes identified by Party Agents should be
  notified to their Party

126
How?
2 types of Change Proposal
Change Proposal (CP)
Draft Change Proposal (DCP)
If unsure of an issue An issue has one or more
potential solutions ELEXON issue Draft CP for
consultation Originator receives comments from
Impact Assessment and determines way forward i.e.
raise CP or Working Group
Once issue and solution clear Must only contain a
single solution Redline text must be
submitted ELEXON issue CP for Impact Assessment
consultation Presented to panel Committee
127
Change Proposal (CP) Process
Submission
Impact Assessment
Decision
Draft CP
DCP Raised
Change Proposal Circular (CPC)
Panel Committee Approval
CP Raised
ELEXON Assessment
Change Proposal Circular (CPC)
Service Provider Impact Assessment
CP published
Redline text finalised and approved
Working Group
Redline text issued for review
Redline text Drafted
128
When?
Change batched CPs Mods

• 3 Releases a year
• February
• June
• November

Based upon Lead Times
129
Further Information

• Information on Modification Proposals and Change
  Proposals can be found in the Change and
  Implementation section of the ELEXON Website
  (www.elexon.co.uk)
• Register for the Modification distribution list
  by emailing modifications_at_elexon.co.uk
• Contact details for analysts leading on
  particular changes are available via the ELEXON
  Website.
• For information on CPs please email
  ccc_at_elexon.co.uk

130
Questions
131
National Grids role as System Operator

• 13th May 2009

Rob Smith
132
Presentation Outline

• National Grid
• Legislative and Contractual Framework in
  Operation
• Framework
• Transmission Licence
• National Grid as System Operator
• Key Challenges
• Examples
• Incentives
• Information available to the market
• BMRS
• National Grid

133
1. National Grids main roles
National Grid Electricity Transmission
England Wales High Voltage Transmission Owner
Great Britain System Operator
134
1. National Grids position within the supply
chain
Competitive
Monopoly
Generation
Directly connected customers
Other Transmission Networks
Market Structure tending toward Vertical
Integration
Distribution Networks
Supply
Energy Companies
Regulated Systems
135
2. Legislative contractual framework
1989 Electricity Act 2000 Utilities Act 2004
Energy Act
Seven Year Statement
Transmission Licence
Charging Statements
STC
Grid Code
BSC
CUSC
136
2. Legislative and contractual framework
Transmission Licence themes

• Efficient and economic development, maintenance
  and operation of the system (C14)
• Non-discrimination (e.g. C7)
• Prohibition on buying and selling electricity for
  sale to third parties (C2 for SO and D6 for TO)
• Codes (B12, C3, C10, C14) and Balancing Services
  (C16)
• Charging (C4)
• Obligations to provide information to Ofgem (e.g.
  B4)
• Information on GB Transmission System (C11)

137
2. Legislative contractual frameworkFor
Balancing Services
138
3. National Grid as System Operator (SO)

• Summary
• Manage security and quality of supply
• Balance generation and demand economically and
  efficiently
• Provide information to the market
• GB SO since April 2005

139
3. National Grid as System Operator (SO)Key
challenges Capacity / Constraint
Generation 1000MW
Scenario Intact Network
Generation 500MW
Scenario Circuit Out
Circuit on outage or a Fault could have occurred
X
Demand 1000MW
Demand 1000MW
Generation 500MW
Gen 1000MW Demand 1000 MW
Gen 500MW Gen 500MW Demand 1000MW
140
3. National Grid as System Operator (SO)Key
challenges Voltage Management
Voltage Control is a critical to maintaining
security and quality of supply
400kV Line
Hydraulic analogy
141
3. National Grid as System Operator (SO)Key
challenges Frequency Control / car analogy
GD
GgtD
GltD
Demand
Acceleration Generation Gradient Demand
142
3. National Grid as System Operator (SO)Key
challenges frequency limits
143
3. National Grid as System Operator (SO)Key
challenges Demand
144
3. National Grid as System Operator (SO)Key
challenges Supply vs. Demand
Generation
Demand
Generator Physical Notifications
Demand Forecasting
SO Balancing Tools Generation Frequency Response
Plant Reserve Bid-Offer Acceptances (BOA)
Forward Trading
SO Balancing Tools Demand Demand Reduction LF
Relays
145
3. National Grid as System Operator (SO)Key
challenges Supply vs. Demand

• Frequency Response
• Automatic very fast change in output from a
  generator, in response to system frequency change
• Bid-Offer Acceptances
• Instructions from National Grid to Generators to
  increase / decrease output
• Within the Balancing Mechanism (BM)
• In line with plant dynamics
• Free pricing
• Reserve
• Headroom / footroom
• Short Term Operating Reserve (SToR)
• Forward Trading
• Economic and efficient Certainty of need
• Ancillary Service contracts
• Mandatory system services (reactive, fast
  reserve, frequency response) - provided by
  generators
• Commercial services (reserve, constraints,
  enhanced reactive and response) - anyone can
  provide

146
3. National Grid as System Operator
(SO)Balancing Mechanism
Rolling half hour trades
Response
Reserve
Trades
147
3. National Grid as System Operator (SO)3 min
silence for Boxing day Tsunami Disaster 5/1/2005
148
3. National Grid as System Operator (SO)Top TV
Pickups

• Top 5 TV-pickups
• 5. 5th April 2001 - Eastenders (Who shot Phil
  Mitchell) 2,290MW
• 4. 12th June 2002 - World Cup (Nigeria v
  England) 2,340MW
• 3. 21st June 2002 - World Cup (England v
  Brazil) 2,570MW
• 2. 22nd Jan 1984 - The Thornbirds 2,600MW
• 1. 4th July 1990 - World Cup Semi-final (W
  Germany v England) 2,800MW

149
3. National Grid as System Operator
(SO)Incentives

• Internal and external incentive schemes
• Internal scheme
• Incentive over the regulated period 5 years
• Agreed with Ofgem
• Aim to optimise internal SO costs
• External scheme
• Currently an annual scheme
• Agreed with Ofgem
• Aim to optimise external balancing costs

150
3. National Grid as System Operator (SO)External
Incentives - BSIS
2009/10 Incentive Scheme
25 Sharing Factor
15 Sharing Factor
151
Market Information Flows
152
Market InformationWhats available - BMRS

• Available Information
• Forecast Data
• System Demand
• Wind Output
• Outturn Data
• Imbalance Prices
• System Demand
• Historical
• Recent Prices
• Generation by Fuel Type
• Very useful summary page www.bmreports.com/bsp/bs
  p_home.htm

153
Market InformationWhats available National
Grid

• Additional Information available
• Information on Balancing Services
• Monthly Balancing Report
• Tender Information
• SToR
• BSUoS
• Cost of balancing the transmission system is
  charged to Users
• Daily Reserve Information
• C16 Documentation
• Operational Forum Information

154
Questions
155
ELEXONs Operational Support Managers

• Jennifer Clark
• 13 May 2009

156
Whats an OSM?

• Operational Support Manager
• Were here to support you, our customers, through
  the BSC Arrangements
• Contact point into ELEXON
• We have 3 key roles

157
Who are our main customers?

• Mainly Supplier Volume Allocation (SVA)
  focused
• BSC Parties (Suppliers and Distributors)
• BSC Party Agents (Data Collectors, Data
  Aggregators, Meter Operators, Unmetered Supplies
  Operators)
• Example OSM portfolio

158
A day in the life of an OSM

• Meetings with our customers to discuss
  performance, issues, our services, industry news
  and more
• Coordinate (and deliver) training services
• Performance issue resolution support
• Deliver our Service Offerings to Suppliers,
  including provision of performance data and
  reports
• Highlight industry change or projects that may
  impact or be of interest to our customers

159
Who are we? The Gallery
Charlotte Hutchinson
Helen Boothman
Jennifer Clark
Jack Barber
Kevin Spencer
Jon Spence
Damian Brooks
160
Where can I find out more?

• OSM profiles and our contact details are in your
  packs, in reception and available on our website
  http//www.elexon.co.uk/participating/OperationalS
  upport/default.aspx
• If you dont think you have an OSM and would like
  one, please come and talk to us or email
  OSMmanagement_at_elexon.co.uk
• OSM factsheet available in reception

161
Changing the BSC arrangements a regulatory
perspective

• 13 May 2009

162
Our presence in the market

• Driven by legislation
• Primarily Electricity Act 1989, Gas Act 1986,
  Competition Act 1998, Utilities Act 2000,
  Sustainable Energy Act 2003, Energy Act 2004,
  Energy Act 2008
• Key provisions from BSC perspective
• EA89 section 3A sets out the principal objective
  and general duties of the Authority
• EA89 sections 6 and 7 sets out the scope of
  licensing
• New statutory duties Carrying out of impact
  assessments (SEA03), regard to principles of
  better regulation (EA04)
• Right of appeal against Authority decisions (EA04)

163
Principal objective and statutory duties

• Principal objective is to
• protect the interests of consumers in relation
  to electricity conveyed by distribution systems
  or transmission systems, wherever appropriate by
  promoting effective competition
• whilst having regard to
• Security of supply
• Diverse and viable long term supply
• Ability to finance licensed activities
• Vulnerable customers
• Sustainable development
• Efficiency and economy of the networketc

164
Our role in the BSC

• Focused on three areas
• Panel (and Panel Committee) activity
• Presence at modification and standing issue
  groups
• Act as the decision making body for modifications
• (Generally) non-interventionist
• We cannot raise modifications
• Respond to requests for views on process, some
  early decisions on urgency etc
• Attend and speak at Panel, but not vote
• Set out in sections B and F of the BSC

165
Our role mods and issues groups

• Peripheral role (?) observer status
• Validate that process is fair, transparent and
  consistent
• Understand the evolution of the groups thinking
• Contribute to the discussion, largely on an
  invitational basis
• Policy context and precedents
• During a Group meeting Ofgem is keen to ensure
• Balanced consideration of an issue
• All reasonable solutions properly considered

166
Our role decisions

• Provide an overview of the proposed change
• Explain why we approve or reject the change
• Against the Applicable BSC Objectives and our
  wider statutory duties
• Due regard for context (consultation responses,
  past precedents etc)
• Contain a direction or notice to National Grid
• that the BSC should/should not be amended
• the implementation date (if mod is approved)
• Public domain
• ELEXON will circulate to Parties and publish on
  its website

167
Appeals against modification decisions

• Introduced by the Energy Act 2004 (Sections 173
  177)
• The appellate body is the Competition Commission
  (CC)
• will only consider matters to which Ofgem should
  have regard
• may consider fresh evidence if we would have been
  entitled to have regard to it had it been
  available to us
• Key Issues
• Which decisions can be appealed?
• What are the grounds for allowing an appeal?
• What happens if an appeal is allowed?

168
Which decisions can be appealed?

• Applies to Codes designated for that purpose by
  Secretary of State
• currently applies to BSC, CUSC and MRA on
  electricity and Network Code, UNC and SPAA on gas
• decisions where we agree with Panel
  recommendation automatically excluded
• we may exclude where progressing an appeal would
  adversely affect security of supply

169
What are the grounds for allowing an appeal and
what happens next?

• An appeal may be upheld if the CC considers that
• we failed to have regard to our statutory duties
• we failed to have proper regard to the applicable
  code objectives
• we failed to give appropriate weight to one of
  the above
• that the decision was based on an error of fact
  or was wrong in law
• An appeal may be partly or wholly successful
• if partly, we will reconsider the issues in line
  with the CC decision
• if wholly, our decision is quashed another
  modification will need to be raised

170
Whats changing?

• Considering carbon costs within existing
  applicable objectives
• Ofgems Code Governance Review
• Alignment of code objectives with wider
  considerations, i.e. sustainability
• Improving quality of analysis
• Reduce fragmentation and complexity, potential
  for greater self-governance
• New governance around charging methodologies
• Greater interaction with Europe cross border
  trading?

171
Code Governance Review potential BSC impacts

• Major policy reform and self governance
• Ofgem plays a greater role in driving major
  change, e.g. smart meters
• Increased self governance, enhanced decision
  making by code Panels
• Quality of analysis
• Send mods reports lacking robustness back to
  the process?
• Ofgem calls in code administrators if mods not
  proceeding expeditiously through the process?
• Performance of code administrators
• Does current custom and practice work well?
• Transparency, accessibility of processes for new
  entrants/small players/consumer representatives
• Benchmarking of costs/quality of service

172
(No Transcript)
173
Day in life of a Supplier
174
(No Transcript)
175


176
SUPPLIER ROLE
Many different models thats competition!

• Sustainability
• Excellence
• Teamwork

• Safety
• Service
• Sustainability

energy made better
Generation Energy Supply Contracting Energy
Services Energy Systems Gas Storage National
Networks Retail Scotia Gas Networks - Telecoms
177
Lets go behind the counter
178
Meet the Buyers
Forecast and meet demand
Whats likely to happen? Past history Known
differences Sales projections Etc..
What have we got already? Long term
contracts Own capacity Offers Etc.
What do we need? prices, outages, special events,
marketing performance, trends
179
Taking risk Meeting demand
?
180
Contracts, Contracts
Electricity cant be stored contracts are
promises performance critical
181
Supplier N
Supplier SSE
Supplier N
Supplier SSE
Supplier V
SSE
James Electric
BR
Frank Co.
SSE
Smiths
182
Customer fuse box
Metering
MPRN / MPAN a unique identifier which describes
this physical point.
Cut out / Tap
Service Pipe / Cable
Property boundary
Joint Often in street
DISTRIBUTION NETWORK
183
Customer Service
Meters our hidden secret!
184
Though we are many we all fit one profile..
C o n s u m p t i o n
Time of day
Estimated Averaged Consumption
185
C o n s u m p t i o n
Time of day
Readings bring reality Annualised Actual
186
Have Supplier, have Meter Operator, have Data
Collector
Supplier Hubs
MPAS
Data aggregator
The gremlin effect of Our legacy, Mergers,
Technology improvements,
Eased by- Entry testing, Supplier hubs, Audits
187
The Suppliers TEAM
Manage contracts
Manage team
Supply
MOPco
Read Ltd

• IF it all works
• Correct billing customer perception
• Purchase / Demand balance right
• No rework cost

188
And we havent even met a salesman..
189
Suppliers do it for you!
190
THE LDSO ROLE
A PRESENTATION BY THE COMMERCIAL OPERATIONS GROUP
OF THE ENERGY NETWORKS ASSOCIATION

• How the role of the Licensed Distribution System
  Operator (LDSO) impacts settlements processes

PRESENTED BY MAX LALLI SCOTTISH and SOUTHERN
ENERGY POWER DISTRIBUTION
November 20, 2009
energynetworks.org
190
191
Overview
A PRESENTATION BY THE COMMERCIAL OPERATIONS GROUP
OF THE ENERGY NETWORK ASSOCIATION

• History/Background
• The LDSOs core role
• LDSOs and the BSC

November 20, 2009
energynetworks.org
191
192

• History / Background

November 20, 2009
energynetworks.org
192
193
Electricity Supply Chain
November 20, 2009
energynetworks.org
193
194
UK Structure after Privatisation in 1990

• Scotland
• 2 vertically-integrated companies
• Transmission and distribution
• England and Wales
• National Grid Company
• Transmission in England and Wales
• 12 Regional Electricity Companies (RECs)
• Retail Supply
• Distribution
• Unregulated businesses
• Generators

London
November 20, 2009
energynetworks.org
194
195
Today
November 20, 2009
energynetworks.org
195
196
New Distribution System Operators

• In addition to the traditional distributors, a
  number of new independents (IDNOs) are now
  connecting customers and operating last mile
  networks across the UK
• The traditional distributors licences also
  give nationwide coverage so they can also
  connect customers and operate networks across the
  UK (and some are currently doing so)

November 20, 2009
energynetworks.org
196
197
Legislation

• Distribution activities regulated by
• 1989 Electricity Act (as amended by the Utilities
  Act 2000)
• Utilities Act 2000 - created separate supply and
  distribution licences
• Ofgem
• Electricity Distribution Licence

November 20, 2009
energynetworks.org
197
198

• The core role of a LDSO

November 20, 2009
energynetworks.org
198
199
What is an LDSO?

• Business undertakes core network activities
• Network design, construction, operation,
  maintenance, repair
• Asset replacement, network reinforcement and
  improvement
• Customer call centre for no supply calls and
  other technical enquiries
• Operation of a Meter Point Administration System
• Provision of legacy meters
• Increasingly competitive activities
• Provision of new connections
• Last mile distribution (IDNOs)

November 20, 2009
energynetworks.org
199
200
Regulation

• Independent regulator
• Regulation
• Network service requirements
• Allowed income
• Determination of disputes
• Performance incentives
• LDSO independence
• Financial ring-fence
• Branding

November 20, 2009
energynetworks.org
200
201
LDSO Charges

• LDSOs charge suppliers to distribute electricity
  to their end customers
• Distribution Use of System (DUoS) charges based
  on published tariffs
• LDSOs have to give three months indicative
  notice and forty days firm notice of any change
  to charges
• Charges usually only change in April and October
  (April is the norm)
• LDSOs currently working on the future structure
  of charges and aiming for greater commonality
• Information about SoC project is on the ENA
  website http//2009.energynetworks.org/structure-
  of-charges

November 20, 2009
energynetworks.org
201
202

• The LDSOs core role

November 20, 2009
energynetworks.org
202
203
LDSO Settlement Obligations

• LDSOs must comply with
• Standard Licence Condition 20 Compliance with
  core industry documents
• The BSC is a core industry document
• Therefore LDSOs must be parties to and comply
  with the BSC

November 20, 2009
energynetworks.org
203
204
LDSO Role in BSC

• LDSOs have an input into the settlements
  mechanism through
• Supplier Meter Registration Service (SMRS)
• Core MPAN creation
• Loss adjustment factor calculation and
  publication
• Unmetered supplies
• Representation on various forums including BSC
  Panel, SVG, and ISG
• Otherwise LDSOs are mainly recipients of
  settlements data

November 20, 2009
energynetworks.org
204
205
Settlements Data

• LDSOs receive SVA and CVA market settlements data
  to
• Calculate Use of System Charges
• Calculate units distributed and losses
• Different data flows for SVA and CVA markets from
  SVAA (D0030/D0036/D0275) and CDCA (IO12, etc)

November 20, 2009
energynetworks.org
205
206
Supplier Meter Registration Service

• Each LDSO has its own SMRS
• LDSO creates core MPAN and supplier registers
  customer against it
• Change of Supplier process
• New supplier notifies SMRS
• SMRS notifies old supplier
• Energisation Status
• LDSO notifies Data Aggregator of Supplier
  appointment and MPAN status i.e. traded,
  energised, de-energised
• LDSO de-energises / disconnects on supplier
  request

November 20, 2009
energynetworks.org
206
207
Supply Number (MPAN)
LLFID
S
XXX
XXX
XX
XXXXXXXXXXXXX
Core MPAN
November 20, 2009
energynetworks.org
207
208
Line Loss Factor Class

• LLFC is a key identifier within 21 digit MPAN
  code, reflecting both the appropriate network
  losses and applicable DUoS charges
• LDSOs create additional LLFCs for any new use of
  system tariffs
• LDSOs send a notification to Elexon through
  Market Domain Data route, inclusive of alignment
  to Meter Timeswitch Code and Standard Settlement
  Class

November 20, 2009
energynetworks.org
208
209
Loss Adjustment Factors

• LDSOs create, publish and submit for settlements
  use (annually) Loss Adjustment Factors
• LDSOs methodologies for setting LAFs contained
  within their charging methodology statements
• Submission of information to Elexon independently
  for SVA and CVA LAFs, in accordance with BSCPs
• BSC modification P216 tightening up procedures
  around LLFs

November 20, 2009
energynetworks.org
209
210
Unmetered Supplies

• LDSO is Unmetered Supplies Officer (UMSO)
• Predictable load, less than 500W per exit point
• Technically / economically impractical to meter
• LDSO ensures compliance with BSCP520 Unmetered
  Supplies Registered in SMRS
• Obtains accurate Inventories from UMS customers
• Produces all data, from EAC to UMS Certificate

November 20, 2009
energynetworks.org
210
211
LDSO Contribution To Industry Groups

• BSC Panel
• Supplier Volume Allocation Group
• Imbalance Settlement Group
• Various Modification Groups and Issue Groups

November 20, 2009
energynetworks.org
211
212
A PRESENTATION BY THE COMMERCIAL OPERATIONS GROUP
OF THE ENERGY NETWORK ASSOCIATION

• Questions?

November 20, 2009
energynetworks.org
212