BSC Panel 210

14 February 2013

Report on Progress of Modification

Proposals

Adam Lattimore14 February 2013

3

Modifications Overview

New P291Definition -Assessment P283, P290 Report -With Authority P272, P286

Authority Determined

P274, P282, P285, P289

Self-Gov Determined P288

210/04P291 ‘REMIT Inside

Information Reporting Platform

for GB Electricity’David Kemp

14 February 2013

P291 Modification Proposal

REMIT Inside Information Reporting Platform for GB Electricity

History at Panel

• Initial paper 193/08 to Panel (Jan 2012), asking whether the Panel felt that a quickly developed bulletin board solution would assist participants in meeting their obligations– Not considered a robust solution by Panel, in addition insufficient guidance

was available from ACER at that time to recommend progression of a change. • Subsequent paper 205/06 to Panel (Nov 2012), highlighting that

2nd revision of ACER Guidance had been published that provided further clarity on some issues, and advocating development of the BMRS as the GB reporting platform– Panel generally supportive in principle of development of BMRS as a central

reporting tool for insider information, whilst being mindful of potential costs and liability issues.

REMIT Regulations

REMIT’s aim is to improve the functioning of energy marketsthrough prohibiting market abuse on wholesale energy markets.

REMIT introduces, for the first time, a consistent EU-wide framework:

• Defining market abuse, in the form of market manipulation, attempted market manipulation and insider trading, in wholesale energy markets

• Introducing explicit prohibitions of market manipulation, attempted market manipulation and insider trading in wholesale energy markets

• Establishing a new framework for the monitoring of wholesale energy markets to detect and deter market manipulation and insider trading

• Providing that national regulatory authorities should be given enforcement and investigatory powers and that member states establish a penalties regime for sanctioning of breaches at a national level by 29 June 2013.

Article 2: Definitions

(1) “‘Inside information’ means information of a precise nature which has not been made public, which relates, directly or indirectly, to one or more wholesale energy products and which, if it were made public, would be likely to significantly affect the prices of those wholesale energy products.”

... information means ...

(d) “other information that a reasonable market participant would be likely to use as part of the basis of its decision to enter into a transaction relating to, or to issue an order to trade in, a wholesale energy product.”

…Art 4.1 goes on to say...

Article 4: Obligation to Publish “inside information”

REMIT Art 4.1: “Market participants shall publicly disclose in an effective and timely manner inside information which they possess in respect of business or facilities ... Such disclosure shall include information relevant to the capacity and use of facilities for production, storage, consumption or transmission of electricity or natural gas ... including planned and unplanned outages.”

…the (non-legally binding) Guidance Notes go on to say…From the Guidance Note (2nd Ed. 28/09/12): 4.6.1 “As regards wholesale electricity products ... The Agency believes that

the following examples may constitute inside information ... - Any planned outage, limitation, expansion or dismantling of capacity

of one generation unit, consumption or transmission facility that equals or exceeds 100MW, including changes of such plans;

- Any unplanned outage or failure of capacity that equals or exceeds 100MW for one generation unit, consumption or transmission facility, including updates on such outages or failures.“

Guidance Note: Effective public disclosure

From the Guidance Note (2nd Ed. 28/09/12): 6.2 “... inside information should be disclosed in a manner ensuring that it

is capable of being disseminated to as wide a public as possible...Agency believes that the disclosure of inside information through platforms has its merits and why…this disclosure mechanism is considered as the most effective.”

- Agency considers a dual approach to effective disclosure:- “If platforms for the disclosure of inside information exist…market

participants…should use such disclosure mechanisms, if not otherwise specified…”

“…such publication…constitutes simultaneous, complete and effective public disclosure.”

“if adequate transparency platforms do not yet exist…market participants may be allowed, at least for an interim period or unless otherwise specified, to publish…on their own website.”

Proposal and AimsP291 proposes to utilise the BMRS as a central platform for disclosure

of inside information, with the following aims in mind :-• To leverage an existing platform that has evolved as a key

reporting and transparency tool within the GB electricity industry• Align UK practice with the most recent ACER guidance in providing

the preferred central platform as the most effective means of disclosing inside information

• Establish agreed GB standards of reporting of inside information, allowing an on-going regulatory oversight and scrutiny through BSC governance

• Provide traders with a single platform to view information, increasing efficiency and reducing risk of inadvertent breach

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• Amend the BSC to allow a REMIT Inside Information Reporting Platform to be introduced to the BMRS website

• Platform would be developed as part of the Modifications process

P291: Modification Proposal

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• What inside information should be reported?

• What are the system requirements for the platform?• How would information be submitted/published?

• Should reporting on this platform be mandatory or voluntary?

• What liability issues could there be?• E.g. liability issues should the BMRS be unavailable

• Is there any relationship with the Transparency Regulation?

P291: Things to Consider

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• Recommend that P291 progresses to an Assessment Procedure

• Recommend a four month Assessment Procedure• Three Workgroup meetings• 15WD Impact Assessment & 15WD Assessment Consultation• Assessment Report presented to Panel in June

• Workgroup membership should include:• SSMG members• Other relevant experts & interested parties

P291: Proposed Progression

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• Panel invited to agree P291 should undergo an Assessment Procedure

• Agree Workgroup’s membership and Terms of Reference

• Panel invited to agree progression timetable• Recommend four-month Assessment Procedure

P291: Panel’s Considerations

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The Panel is invited to:

• DETERMINE that Modification Proposal P291 progresses to the Assessment Procedure;

• AGREE the proposed Assessment Procedure timetable such that an Assessment Report should be completed and submitted to the Panel at its meeting on 13 June 2013;

• DETERMINE that the P291 Workgroup should be formed from members of the Settlement Standing Modification Group and any other interested parties; and

• AGREE the Workgroup’s Terms of Reference.

P291: Recommendations

Minutes of Meetings 207 208 & 209 & Actions

ArisingAdam Richardson

14 February 2013

Chairman’s ReportBSC Panel

Andrew Pinder

14 February 2013

210/01ELEXON Report

Peter Haigh and Chris Rowell

14 February 2013

Distribution Report

David Lane

14 February 2013

National Grid Update

Ian Pashley

14 February 2013

European Update: Ofgem

Lisa Charlesworth

14 February 2013

210/01aReport from the ISG

14 February 2013

210/01bReport from the SVG

14 February 2013

210/01cReport from the PAB

14 February 2013

210/01dReport from the TDC

14 February 2013

210/01eReport from the JESG

14 February 2013

210/02Trading Operations

Report

14 February 2013

210/03Change Report

14 February 2013

210/05‘Responses to the

Draft Business Plan’

Victoria Moxham14 February 2013

31

Recap on process

December 2012: Draft strategy and budget reviewed by Board and Panel

17 December: Draft Business Plan issued for industry comment

23 January: Deadline for submission of comments (extended from 18 January)

February 2013: Comments and revised Business Plan reviewed by Board and Panel. Panel approval of the Strategy

March 2013: Board approval of the Budget

Engagement with BSC Parties pre and post the consultation deadline to discuss the Business Plan, respond to questions and gain a better understanding of views on it.

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• Document downloaded 99 times by 88 unique individuals between 17 December and 23 January (external downloads only – i.e. excluding ELEXON viewings).

• High average view time (8 mins 16 seconds) – indicates it’s being read rather than just being glanced at (average view time per page of the ELEXON website is approx 2 mins).

• We haven’t received the message that Parties didn’t have time to respond.

• Generally - Parties are reverting back to the stance they took before the new mission and vision were introduced in the 2011/12 Business Plan; i.e. not feeling compelled to comment because there’s nothing causing them concern.

Interest in the Business Plan

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• 2 formal written responses from ScottishPower & SSE

• Exchanges with npower and British Gas throughout the period• Confirmed verbally that there’s nothing in the strategy or

budget that causes them concern.

• Feedback (but no formal written response) from EDF• Considered the Business Plan internally, decided not to

formally respond (partly because of other priorities, partly because they are comfortable with the Business Plan).

• Have sought reassurance that Parties will have the opportunity to comment on and influence changes to internal IT systems.

Responses received

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• No specific actions needed in response to industry comments

• But, value in providing additional clarity and reassurance to BSC Parties in 2 areas:

• NB Some additional changes may be made to the Budget to reflect headcount changes – will be highlighted to the Board in March.

Amendments to the Business Plan

• The budget is a request for funds, not a permit to spend• The project will be subject to regular Board scrutiny• All expenditure approved and signed off by the Board, based on a robust

business case• We intend to liaise heavily with the industry and seek their input on the

solutions

Delivery of Application

Strategy (Priority 1)

• Any work ELEXON undertakes will be reported to the BSC Panel and subject to its regular scrutiny

• BSC Panel would oversee the entire piece of work• The BSC Panel would be responsible for the release of funding associated

with the work

Smarter Markets (Priority 4)

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• NB The small number and nature of comments received gives the potential for bringing the Panel’s approval of the strategy forward to February (see timetable on next slide).

• This is in line with the approach adopted last year.

Next steps

14 Feb• Comments and revised Business Plan presented to the Panel• Panel asked to approve the Strategy

6 March

• Final Budget presented to the Board• Board asked to approve the Budget• (Subject to Panel approval of the Strategy)

11 March

• Business Plan published• BSC Parties notified via Newscast

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Timetable

Nov Dec Jan Feb Mar Apr

Board

Parties

Panel

Note Process& Key ThemesReview draft

Strategy

Considercomments

&revisions

Review Budget & Strategy

Consider comments &

revisions

Issue for comment

Workshop

Strategy approval

ConsiderPanel

comments

1

5

108

97

3

2

4

Request to vary

timetable

6

11Approve

Budget

&

&

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• The Panel is invited to:• NOTE the comments received on the draft Business Plan;• NOTE the actions taken by ELEXON to address the comments

received;• NOTE the revised Business Strategy and Budget;• APPROVE the Business Strategy; and• NOTE that the Board will be asked to approve the budget to

deliver this strategy.

Recommendations

Balancing Network Code Update

Steve Wilkin14 February 2013

39

Overview of Electricity Network Codes

Source: National Grid JESG website

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Recent and Future Milestones for the Electricity Balancing Network Code

• September 2012 - final version of Electricity Balancing Framework Guidelines (the scoping document for the Network Code) published by ACER

• Scope extends to balancing mechanism & imbalance settlement, so will directly impact the BSC

• December 2012 – European Commission instructed ENTSO-E to start drafting the Electricity Balancing Network Code and to submit it by 1 January 2014

• January 2013 - Part draft of the Electricity Balancing Network Code published on ENTSO-E website in January

• March 2013 – ENTSO-E plans to publish the draft Network Code for a two-month public consultation. As part of this there is likely to be a public workshop.

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Probable content of the Electricity Balancing Network Code

• From verbal report by National Grid to the Ofgem/DECC stakeholder group:• The imbalance settlement part will include: pricing, rules,

imbalance calculation and Settlement Period Duration, and roles

• The Balancing Mechanisms/Markets will gradually merge so that there are multiple Coordinated Balancing Areas (CBAs) where the majority of BM products and prices are shared between neighbouring TSOs with a common merit order. 

• By 2020 we expect one EU wide Balancing Mechanism (BM).  • Personal view:

• Two tier system with current GB Balancing Market interacting with EU-wide BM is possible

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» Balancing MechanismGate Closure up to 1 hour but perhaps less

Bid/Offers in common format

Common EU merit order (for some or all products)

All Bid/Offer Acceptances to be paid at marginal price (unless there is a better alternative) – initial proposal to be made within one year (according to the part draft Network Code)

Possible impacts on the BSC in more detail (1)

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» Imbalance SettlementHarmonised principles for calculating imbalances and imbalance prices

main features to be harmonised within 3 years of Network Code coming into force (which probably means by January 2018)

Settlement Period should be no longer than 30 minutes & ENTSO-E shall do cost-benefit on harmonising its duration across Europe

Public consultations must last at least 4 weeks (appears at first sight that this would include BSC Modifications)

ENTSO-E to provide annual report on progress towards harmonisation

Possible impacts on the BSC in more detail (2)

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Other European Developments that may impact the BSC

• CACM Network Code• ACER Opinion on CACM drafting issued to ENTSO-E in

December • ACER/ENTSO-E discussions continue• Market splitting is a potential impact on the BSC

• Transparency Regulation about to enter comitology• Data to central European ENTSO-E platform• Probably has to be implemented by end 2014• Data reporting for GB electricity via BMRS has been suggested

• REMIT• Reporting of inside information - P291 has been raised• BOAs reportable to ACER in longer term•

Update on Chairman Appointment Process

Adam Richardson

14 February 2013

Any Other Business

I: Governance Review

14 February 2013

Next Meeting:14 March 2013