Panel 195 - Meeting Slides

BSC Panel 1959 February 2012Report on Progress of Modification ProposalsAdam Lattimore8 March 2012Modifications OverviewNew Definition-Assessment P272, P274, P275, P276, P277, P278, P280, P281Report-With Authority-Authority Determined-Self-Gov Determined-#Modifications OverviewMod.TitleIWAAssessmentReportPanel RecommendationOfgem DecisionDecision ByImpl. DateDecision ByFall Back Impl. dateP272Mandatory Half Hourly Settlement for Profile Classes 5-809-Jun-1113-Sep-1211-Oct-1214-Feb-1306-April-1413-Feb-1406-Apr-15P274Cessation of Compensatory Adjustments13-Oct-1112-Apr-1210-May-12P275Extending BSC Performance Assurance13-Oct-1108-Mar-1212-Apr-12-10 WDs--P276Introduce an additional trigger/threshold for suspending the market in the event of a Partial Shutdown13-Oct-1104-May-1214-Jun-12P277Allow Interconnector BM Units to choose their P/C Status13-Oct-1108-Mar-1212-Apr-1228-May-1228-Feb-1327-Sep-1227-Jun-13P278Treatment of Transmission Losses for Interconnector Users13-Oct-1108-Mar-1212-Apr-1201-May-1201-Nov-1228-Aug-1228-Feb-13P280Introduction of new Measurement Classes08-Dec-1112-Apr-1210-May-12P281Change of BSCCo Board of Directors & Chairman12-Jan-1204-May-1214-Jun-12#P272 ProgressionJonny Amos - Ofgem8 March 20124Progress to dateContextOn 12 January 2012, the Panel:rejected the modification workgroups recommendation to progress P272 to Report Phaseagreed that P272 should stay in the Assessment Processnoted that Ofgem undertook to report to Panel at the March 2012 meeting to:detail any additional information and analysis that should be taken into accountdetail a timetable that takes account of related workagreed that the Panel will determine the revised timetable and Terms of ReferenceQ1 2012Q3 2011Q4 20114 month workgroup assessment2 month extension=P272 raised=BSC Panel meeting=workgroup meeting#Timetable of related industry workRelated workQ2 2012Q3 2012Q4 2012BeyondBSC P280DCP 103MIG Issue 22Apr 2012Oct 2012Apr 2012 Apr 2013July 2012 Apr 2013BSC P272Aug 2012 Apr 2014Workgroup report to BSC PanelWorkgroup report to BSC Panel (proposed)Workgroup report to DUCSA PanelProposed implementation date#Promoting smarter energy marketsOfgem is scoping a strategy to shape market development from the platform of smart meteringWe have identified electricity settlement as one area where changes may be requiredWe welcome the work that industry is taking forward, including through P272 and Elexons Profiling and Settlement Review GroupIntention is to respond to consultation in summer 2012Related work#Better understanding the impacts of P272Ofgem, Panel and industry need better analysis on the potential impacts of P272Our view is that the workgroup should be the vehicle for further analysis, supported by ElexonThe objectives of this analysis are to:better understand and where possible quantify the benefits under a range of scenariosbetter understand and where possible quantify costs to the industry of P272 under a range of scenariosbetter understand the impact on Profile Classes 1-4help Ofgem understand practical implications for consumers

Additional analysis#How Ofgem can helpWe can provide a steer to help guide the workgroups analysis, covering for example:potential scenarios for modelling purposestechniques for managing uncertaintya potential framework for assessing the costs and benefitsWe can also facilitate discussions on consumer issuesAdditional analysis#Draft timetable of workNext stepsMarchBSC Panel meetingAprilWorkgroup meetings scenarios and assumptionsMayIssue consultation 6 weeksJune/ JulyWorkgroup meeting discuss responses and confirm analysisAugustWorkgroup finalise reportSeptemberAssessment report presented to PanelOctoberFinal report sent to OfgemOfgem decision by February 2013 to allow industry time to implement if approved#195/04P275 Extending Performance Assurance Assessment ReportMelinda Anderson8 March 201211Section Z1.6.1 of the Code states the responsibilities of the Performance Assurance Board (PAB) are owed exclusively to Trading Parties

P275 argues that this implies the PAB acts only for Trading Parties

This would mean that PAB would not resolve issues for BSC Parties that are not Trading Parties (e.g. LDSOs) even though they rely on Settlement data and processes for a number of business purposes

This is not the caseP275: Issue#P275 Group concluded that:Z1.6.1 relates to the ultimate responsibility and liability of the PAB, not the scope of PAB activities

In practice the scope of PAB activities is not limited to Trading Parties, but encompasses all Performance Assurance Parties (PAPs)

P275 argues it is unclear that non-Trading Parties can try to resolve issues that do not directly impact Trading Parties via the PAB

Scope of issue much smaller than set out in proposal

P275: Issue#13P275 solution:P275 solution is to add a paragraph to Section Z to clarify the relationship between the PAB and all PAPs with respect to Z1.6.1

Code-only change; scope of Performance Assurance unaffected

P275: Solution#14The proposed change is a Code only clarification and therefore implementation does not impact BSC Parties

No system or process changes

Minimal ELEXON implementation cost (1 man day of effort which equates to 240)

Implementation Date: 10 Working Days after approvalP275: Impacts, costs and implementation#Groups majority view is P275 would better facilitate Objective (d) because increased BSC clarity promotes efficiency in the BSC arrangements

One Group member did not agree that P275 would better facilitate Objective (d) because the clarification is unnecessary and therefore doesnt increase efficiency

The Group unanimously agreed P275 is neutral with respect to Objectives (a), (b), (c) and (e)

P275: Applicable BSC Objectives#Assessment Consultation responses aligned with Groups views

Objective (d) only relevant Applicable BSC Objective

Majority believed P275 better facilitates Objective (d) because increased BSC clarity promotes efficiency in BSC arrangements

Minority did not believe P275 better facilitates Objective (d) because the clarification is unnecessary

All respondents agreed the legal text delivers the intent of P275P275: Consultation responsesFacilitates Applicable BSC Objectives?YesNo43#Group has discharged its Terms of Reference

Group recommends that:P275 is approved

ELEXON believes that as the change is now a Code only clarification it meets the Self Governance CriteriaP275: Conclusions#A Modification Proposal that, if implemented:Is unlikely to have a material effect on:Existing or future electricity consumers;Competition in the generation, distribution or supply of electricity or any commercial activities connected with the generation, distribution, or supply of electricity;The operation of the national electricity transmission system;Matters relating to sustainable development, safety or security of supply, or the management of market or network emergencies; andThe Codes governance procedures or modification procedures, andIs unlikely to discriminate between different classes of Parties

Self Governance Criteria#NOTE Assessment Report;SUBMIT P275 to Report Phase;AGREE views on Applicable BSC Objectives (d):Solution is better than baseline;AGREE provisional recommendation to:Approve P275; AGREE P275 is Self GovernanceAGREE Implementation Date:10WD after approvalAGREE draft BSC legal text;AGREE that ELEXON issue Report Phase Consultation and Self Governance Statement; andAGREE Draft Modification Report to April Panel meeting

P275: Recommendations#195/05P277 Allow Interconnector BM Units to choose the P/CDavid Kemp8 March 201221

Energy that is transited across GBEnergy entering GB over one Interconnector assigned to different Account to energy leaving GB over another

Not just applicable to transit flowsP277: Issue (1 of 2)IFAMoyle100MW into GBAllocated to P AccountPaid SSP100MW out of GBAllocated to C AccountCharged SBP#Highlight this is a transit ahead of P27822

P277: Issue (2 of 2)Moyle100MW generatedAllocated to P AccountPaid SSP100MW out of GBAllocated to C AccountCharged SBP

Energy generated in GB that is exportedEnergy generated assigned to different Account to energy leaving GB over Interconnector

Without ECVN, in net imbalance even though net volume is zero#Single BM Unit per Interconnector per UserLead Party can elect P/C Status of these BM Units

Allows Party to net import over one Interconnector and export over anotherVolumes would not net to zero, due to transmission losses

Solution would be mandatoryP277: Solution#Spell out P/C status verbally; highlight wouldnt net to zero due to tlms24Costs:Central costs: approx. 67kParty costs:IAs/IEAs: up to 100kInterconnector Users: up to 35k

Impacts:Interconnector Users, IAs, IEAs and TCCRA and SAABSC Sections K, Q, R, T and Annex X-1BSCPs 15, 31 & 65 and CRA SD

P277: Impacts and Costs#Workgroups majority view is to reject P277

Views based on Applicable BSC Objectives (c), (d) and (e)P277: Applicable BSC Objectives (1 of 5)#Workgroup discussed potential advantages Interconnector Users could gain

Removal of notification riskOther Parties are exposed to this riskUnduly discriminatory wouldnt apply to all

Creation of netting benefitCan be done through ECVNsOnly benefit if volatile I/C volumes generally firm

P277: Applicable BSC Objectives (2 of 5)#Creation of consolidation benefitOffset unpredictable volatilityOriginal intent of two-Accounts to avoid this advantageI/C volumes not usually volatileExtent of benefit is uncertain, but likely to be small

Workgroup believes P277 is unduly discriminatory due to removal of notification risk for some Parties and not othersBelieves this regardless of whether potential consolidation benefits are materialP277: Applicable BSC Objectives (3 of 5)#Workgroup considered wider European pictureInterconnectors seen as Transmission

Trading between countriesTrade across intervening Interconnectors physical position each sideTransiting through GB no overall position?

Third PackageIntent to remove barriers to cross-border flowsP277 could aid European harmonisation spirit of Third PackageNo specific requirements around single AccountsWorkgroup believes GB arrangements not a barrier to Market Entry

P277: Applicable BSC Objectives (4 of 5)#P277: Applicable BSC Objectives (5 of 5)ABOYesNo(c)Minority: Reduces notification riskPotentially lowers Market Entry barriersNo potential for consolidation benefitsMajority: Undue discrimination/preferential treatmentNegatively affect GB competitionDont believe issue is barrier to Market EntryPossible consolidation benefits in wider portfolio(d)Minority: Reduce complexity and admin effortWider benefits for one-off implementation costsMajority: Implementation costs for little benefitIssue can be resolved through ECVNs(e)Minority: Help facilitate European harmonisationCould help promote intent of Third PackageMajority: Neutral still too early to measure#Respondents views mixedReasons for and against are broadly in line with those cited by WorkgroupNo new arguments raised

Good number and variety of respondents no clear pattern of views by Party typeP277: Consultation ResponsesDoes P277 Better Facilitates Applicable BSC Objectives?YesNo68#31Workgroup recommends Implementation Date of:28 Feb 13 if P277 is approved on or before 28 May 1227 Jun 13 if P277 is approved after 28 May 12 but on or before 27 Sep 12

Date driven by commissioning of East-West Interconnector

Workgroup consulted on Implementation Date during AssessmentSupported by respondents

Implementation Date will form part of Report consultationP277: Implementation Date#Workgroup consulted on legal text during AssessmentOne comment received the suggested amendment was made

Workgroup prepared drafting for BSCPs 15, 31 & 65 and CRA SD during AssessmentNot consulted on during Assessment

Draft Code and CSD changes will form part of Report consultationP277: Legal Drafting#Verbally explain why done CSDs33Workgroup has discharged its Terms of Reference

Workgroup recommends that:P277 is rejectedP277: Conclusions#NOTE Assessment Report;

SUBMIT P277 to Report Phase;

AGREE views on Applicable BSC Objectives (c), (d) and (e);

AGREE provisional recommendation to:Reject P277;

P277: Recommendations (1 of 2)#AGREE Implementation Date:28 Feb 13 or 27 Jun 13;

AGREE draft BSC legal text;

AGREE draft changes to BSCPs 15, 31 & 65 and CRA SD;

NOTE that ELEXON will issue Report Phase Consultation; and

AGREE Draft Modification Report to April Panel meeting.

P277: Recommendations (2 of 2)#195/06P278 Treatment of Transmission Losses for Interconnector UsersDavid Kemp8 March 201237BSC allocates transmission losses to Interconnector BM Units

Anomalous in light of ITC SchemeCompensates TSOs for National losses caused by cross-border flowsNational Grid passes through compensation to generators and Suppliers through TNUoSCompensation can be positive or negative

Interconnectors should not be subject to additional network charges

GB arrangements need to comply with European legislationP278: Issue#Set TLM to 1 for Interconnector BM UnitsBSC to no longer adjust Interconnector BM Unit Metered Volumes for any GB transmission lossesBSC would still allocate total GB transmission losses proportionally across all other types of BM Unit

Interconnector BM Units account for 2% of lossesLow materiality volatility of losses can exceed this amountP278: Solution#Costs:Central costs: approx. 91kParty costs:IAs/IEAs: noneOther Parties: up to 20kOngoing impact on charges

Impacts:Direct Impact: Interconnector Users and IEAsIndirect Impact: Other BSC Trading PartiesSAA and BMRABSC Section TSAA & BMRA SDs

P278: Impacts and Costs#Workgroups majority view is to approve P278

Views based on Applicable BSC Objectives (a), (c) and (e)

P278: Applicable BSC Objectives (1 of 4)#Concerns around transparency of the ITCLack of publicly available information on the detailed ITC mechanism/calculation

Intent of ITC seems inconsistent with actual mechanismIntent is to compensate for all cross-border flowsMechanism appears to only considers transit flows

Is the solution cost-reflective?Is this the right solution?Some alternatives discussedWorkgroup considered these more complex, and possibly non-compliant

P278: Applicable BSC Objectives (2 of 4)#P278 is discriminatory, but due discrimination as required for compliance with European legislation

Concluded that P278 most proportionate and appropriate solutionMembers have concerns about the ITC Scheme, but accept that it is legally binding

P278: Applicable BSC Objectives (3 of 4)#P278: Applicable BSC Objectives (4 of 4)ABOYesNo(a)Majority: GB charges for Interconnector Users more transparently aligned with EC regulationsMinority: Neutral ITC regulations are ambiguous(c)Majority: Treats GB BMUs consistently with equivalent European arrangementsDue discrimination to comply with wider regulationsMinority: Not cost-reflective in pure-GB contextITC regulations ambiguous could be viewed as undue discrimination(d)Majority: No ImpactMinority: Not convinced change is required implementing would add unnecessary complexity(e)Majority: Aligns arrangements with ITC and thus with Third PackageMinority: Not convinced ITC wording requires this change#Majority of respondents agree with WorkgroupOne respondent unsure, cited reasons discussed by Workgroup

P278: Consultation ResponsesDoes P278 Better Facilitates Applicable BSC Objectives?YesNoOther901#Workgroup recommends Implementation Date of:1 Nov 12 if P278 is approved on or before 1 May 1228 Feb 13 if P278 is approved after 1 May 12 but on or before 28 Aug 12

Date driven by lead time for changes to central BSC SystemsMateriality of losses is low not necessary to align with Contract Round

Workgroup consulted on Implementation Date during AssessmentSupported by respondents

Implementation Date will form part of Report consultationP278: Implementation Date#Workgroup consulted on legal text during AssessmentNo comments received

Draft Code changes will form part of Report consultationP278: Legal Drafting#Workgroup has discharged its Terms of Reference

Workgroup recommends that:P278 is approvedP278: Conclusions#NOTE Assessment Report;

SUBMIT P278 to Report Phase;

AGREE views on Applicable BSC Objectives (a), (c), (d) and (e);

AGREE provisional recommendation to:Approve P278;

P278: Recommendations (1 of 2)#AGREE Implementation Date:1 Nov 12 or 28 Feb 13;

AGREE draft BSC legal text;

NOTE that ELEXON will issue Report Phase Consultation; and

AGREE Draft Modification Report to April Panel meeting.

P278: Recommendations (2 of 2)#Minutes of Meeting 194 & Actions ArisingBSC PanelAdam Richardson8 March 2012Chairmans ReportBSC PanelAndrew Pinder8 March 2012ELEXON ReportVictoria Moxham8 March 2012Smart UpdateBSC PanelChris Rowell09 February 2012Smart Metering: ConsultationsDCC Prohibition OrderDCC LicenceDCC Licence Application RegulationsChanges to existing LicencesConsequential changes to existing CodesSmart Energy Code23 Mar

?????Minded to&Alternatives____

Publicise the Consultation____

Review BSC overlaps & gaps____

Publish Response#Smarter Markets: Strategy Consultation7 Mar

Improving Market processesSettlement Arrangements Change of Supplier process Data Processing & aggregation Code ConsolidationEnabling Retail Market DevelopmentTime of use tariffs Demand-side response Energy Services Payment Methods Source: Ofgem Consultation - Promoting Smarter Energy Markets (15 Dec 2011)

http://www.elexon.co.uk/pages/smartmetering.aspxWorkshop

SettlementWorkload

Scope in Summer14 Feb

#Smarter Markets:Key themes in ELEXONs responseBroad SupportKeen to address settlement mattersNeed to integrate with existing settlement initiativesNeed to prioritise propositionsNeed to group propositionsNeed a clear vision & timetableOpportunity for Code consolidationDependency on Smart Metering?#Smart BudgetReleased FundsSpend this month(February)Committed Spend (to end March 2012)Smart Support464k 84k281kSmart Opportunities36k019kTOTAL500k84k300k#Smart Metering: ConsultationsDCC Prohibition OrderDCC LicenceDCC Licence Application RegulationsChanges to existing LicencesConsequential changes to existing CodesSmart Energy Code23 Mar

?????Minded to&Alternatives____

Publicise the Consultation____

Review BSC overlaps & gaps____

Publish Response#Smarter Markets: Strategy Consultation7 Mar

Improving Market processesSettlement Arrangements Change of Supplier process Data Processing & aggregation Code ConsolidationEnabling Retail Market DevelopmentTime of use tariffs Demand-side response Energy Services Payment Methods Source: Ofgem Consultation - Promoting Smarter Energy Markets (15 Dec 2011)

http://www.elexon.co.uk/pages/smartmetering.aspxWorkshop

SettlementWorkload

Scope in Summer14 Feb

#Smarter Markets:Key themes in ELEXONs responseBroad SupportKeen to address settlement mattersNeed to integrate with existing settlement initiativesNeed to prioritise propositionsNeed to group propositionsNeed to a clear vision & timetableOpportunity for Code consolidationDependency on Smart Metering?#Smart BudgetReleased FundsSpend this month(February)Committed Spend (to end March 2012)Smart Support464k 84k281kSmart Opportunities36k019kTOTAL500k84k300k#Distribution ReportDavid Lane8 March 2012National Grid UpdateIan Pashley8 March 2012European Update: OfgemJon Dixon8 March 201265195/07Appointment of Panel Committee Chairman by the BSC PanelAdam Richardson8 March 201266The Panel is invited to:

APPROVE the appointment of Roger Harris as the new ISG chairman with immediate effect; and

APPROVE the appointment of Jonathan Priestley as the new Warm Homes Disputes Committee (WHDC) with immediate effect.Recommendations#195/08BSC Audit Scope for the period 1 April 2012 to 31 March 2013David Barber8 March 201268Only change: Re-introduce UMSOs, MAs and CVA MOAs to the scope

No change to Materiality Threshold (1.5TWh)

Panel are asked to delegate authority to PAB for any future changes to this scope, e.g.:

Findings from the BSC AuditPublication of the Annual Performance Assurance Report (APAR)

195/08Audit Scope ContentsLast month we brought back most of the results on the consultation on erroneously large EACs / AAs

Consultation asked for comments on the root causes of EAC/AAs and this paper presents these responses 69Section H5 Panel sets the scope of BSC Audit

Panel is asked to approve the scope following endorsement by the PAB

Following approval the scope document will be published on the ELEXON website

This scope is for 2012/13 BSC Auditor will perform its work in accordance with it in Spring 2013

195/08BackgroundLast month we brought back most of the results on the consultation on erroneously large EACs / AAs

Consultation asked for comments on the root causes of EAC/AAs and this paper presents these responses 70The Panel is invited to:

NOTE that the PAB has endorsed the BSC Audit Scope;

APPROVE the BSC Audit Scope for 2012/2013; and

AGREE to delegate responsibility for any future amendments to the BSC Audit Scope 2012/2013 to the PAB.

195/08Recommendations71195/09Approval to provide support to a BSC Partys participation in an Ofgem Low Carbon Network Fund trialChris Allen8 March 201272LCNF ReminderLCNF: Low Carbon Network Fund

First Tier: small projects - partial recovery of funding up to 16million per year

Running from 2010 to 2015 - up to 500m - support to DNO sponsored projects - addressing new technology, operating & commercial arrangementsSecond Tier: flagship projects - annual competition for up to 64m per year(2010 4 projects 63m, 2011 6 projects 57m)

Discretionary Award: successful completion & exceptional projects (up to 100m over the 5 years)

http://www.ofgem.gov.uk/Media/FactSheets/Documents1/LCNF%20brochure%202011.pdf

#Falcon Reminder

#Modified application run by WPD or partnerModified DSO script run by NHHDAsProposal

Proposition:Can profiled annualised data for consumers be used for planning purposes as opposed to installing substation metering?

EAC / AA dataModified NHHDA ApplicationModified SVAA ApplicationRequires LicenceOutside of BSC SystemsBSC costs coveredM?

#The Panel is invited to:

AGREE that ELEXON grant a limited non-exclusive licence to use and/or modify the NHHDA and or SVAA software for the purposes of Project Falcon only.

NOTE that development of any software amendments will be funded by WPD.Recommendation#195/10Continuous Acceptance Duration Limit and De-Minimis Acceptance Threshold ReviewsIan Scougal8 March 201277Last reviewed in 2010

ISG recommended no need for review at present

Await possible Ofgem Significant Code Review Do we need CADL & DMAT Reviews#The Panel is invited to:

AGREE that reviews of CADL and DMAT are not required at this time.Recommendations#195/11Annual Credit Assessment Price (CAP) Process ReviewIan Scougal8 March 201280The Panel is invited to:

NOTE that the Credit Committee is not currently recommending any changes to the CAP review process;

NOTE that ELEXON will carry a review of the reference price calculation;

NOTE that the Credit Committee will recommend changes to the BSC Panel should it believe changes are appropriate in future; and

NOTE the potential changes identified in this paper that could be made to the CAP review process.Recommendations#Any Other BusinessNext Scheduled Meeting

12 April 2012