BSC Panel 204 11 October 2012. Report on Progress of Modification Proposals Adam Lattimore 11 October 2012

BSC Panel 204

11 October 2012

Report on Progress of Modification

Proposals

Adam Lattimore

11 October 2012

3

Modifications Overview

New

Definition -

Assessment P272, P274, P275, P276, P277, P278, Standing Issue 43

Report P272

With Authority

-

Authority Determined

-

Self-Gov Determined

-

204/04

P274: Cessation of Compensatory

Adjustments

Talia Addy

11 October 2012

5

• Data for Settlement periods that have been subject to Final Reconciliation cannot be changed

• If an error is identified in a Settlement Period it can be compensated for in a later period, that has not yet been subject to RF, by using Gross Volume Correction

• P274 contends that the use of GVC can adversely affect Settlement

• P274 seeks to more clearly define and impose restrictions on the use of such compensatory techniques

P274: Issue

6

• The P274 Proposed solution introduces definitions of GVC and Re-initialisation into the BSC

• Re-initialisation formalises existing dummy meter exchange process

• Restricts use of GVC to errors that are not ‘excessive’ and for volumes within 28 months of the date of GVC application

• Mandates the use of Re-initialisation for excessive error volumes

• Introduces requirements for NHHDC audit trail for both Re-initialisation and GVC

• BSC changes are high level, details are in BSCP504 drafting

P274: Proposed Solution

7

• The P274 Alternative solution continues to allow the use of GVC under existing rules but introduces a definition of GVC into the BSC and limits use of GVC to only volumes within a defined period

• Limits would initially be five years prior to the latest RF Run at the date GVC is performed

• Limit can be changed by the SVG following review

• BSC changes are high level, details are in BSCP504 drafting

P274: Alternative Solution

8

• ELEXON costs:

• £1,200 (5 Man Days)

• Industry Impacts:

• Significant impacts and costs for both Suppliers and NHHDCs• One-off impacts and costs associated with system changes• On-going annual costs in additional resource to manage process• Impacts to GVC activities that would require staff training• Amending existing processes• Documentation changes

P274: Proposed Modification Impacts and costs

9

• ELEXON costs:

• £1,200 (5 Man Days)

• Industry Impacts:

• Minor impacts and costs for Suppliers and NHHDCs• One-off costs and impacts associated with system changes• Little on-going annual cost in additional resource to manage

process• Limited impact to GVC activities that would require staff training• Minor amendment of existing processes• Documentation changes

P274: Alternative Modification Impacts and costs

10

• Group Recommends an Implementation Date of:

• Proposed - next BSC Release at least 12 months from approval date

• For example, Implementation Date will be 7 November 2013 (November Release) if approval is received by 7 November 2012

• Alternative - next BSC Release at least 3 months from approval date

• For example, Implementation Date will be 28 February 2013 (February Release) if approval is received by 28 November 2012

P274: Implementation Date

11

• Respondents consisted of 5 Suppliers (1 small, 4 big), 1 Distributor and 2 Party Agents

• No new arguments raised

• Workgroup addressed comments received on solutions and drafting

P274: Consultation Responses

Facilitates Applicable BSC Objectives?

Yes No Neutral

Proposed Modification 2 6 0

Alternative Modification 4 3 1

Impacted by Implementation? Yes No Neutral

Proposed 7 1 0

Alternative 5 3 0

12

• Majority of Workgroup members believe P274 Proposed would not better facilitate Objectives (c) and (d)

• Objective (c)• Creates a barrier to entry as new Suppliers are likely to have

difficulty managing data and addressing issues• Restriction GVC use would decrease the accuracy of Settlement

• Objective (d)• Introduces significant additional complexity and cost• Arrangements excessively onerous on Suppliers and Supplier

Agents• There is no defect in the BSC so changes are unnecessary• The issues identified by P274 arose due to the implementation of

CP1310 and are unlikely to recur

P274: Applicable BSC Objectives (1 of 4)

13

• Minority of Workgroup members believe P274 Proposed would better facilitate Objectives (c) and (d)

• Objective (c)• New entrants less likely to have energy volumes attributed to

them that relate to periods before they began trading• Reduces attribution to Suppliers of energy volumes that relate to

periods with different wholesale energy prices• LDSOs better able to produce suitable forward looking Line Loss

Factors for use in Settlement• Addresses unreasonable GVC usage, i.e. application over

excessive periods

• Objective (d)• Additional incentive to settle the correct volume of energy within

the 14-month reconciliation window• Review of threshold introduces flexibility into the arrangements


14

• Majority of Workgroup members believe P274 Alternative Modification would better facilitate Objectives (c) and (d)

• Objective (c)• Provides additional control around GVC and confidence in GVC

application, which should be generally beneficial for competition• Addresses unreasonable GVC usage

• Objective (d)• Review of threshold introduces flexibility into the arrangements• Retains GVC as a sensible means of correcting errors


15

• Minority of Workgroup members believe P274 Alternative Modification would not better facilitate Objectives (c) and (d)

• Objective (c)• If an error is identified it should be corrected in its entirety, which

GVC currently permits and the Alternative would limit

• Objective (d)• Additional complexity for no benefit• No change is required


16

• Majority of Workgroup therefore believes:

• Only the Alternative better than the existing baseline

• P274 Alternative is better than P274 Proposed

• Workgroup’s majority recommendation is:

• Approve P274 Alternative Modification

• Reject P274 Proposed Modification

P274: Conclusions

17

The Panel is invited to:

• NOTE Assessment Report

• AGREE draft BSC & BSCP504 legal text for Proposed and Alternative

• AGREE Implementation Date:• Proposed Modification - next BSC Release at least 12 months

from the date of approval• Alternative Modification - next BSC Release at least 3 months

from the date of approval

P274: Recommendations (1 of 2)

18

• AGREE views against Applicable BSC Objectives:• Agree Proposed Modification not better than baseline against

Objectives (c) and (d)• Agree Alternative Modification better than the baseline

against Objectives (c) and (d)• Agree Alternative Modification better than Proposed

Modification against Objectives (c) and (d)

• AGREE initial recommendation to:• Approve Alternative Modification (and therefore reject

Proposed)

• AGREE to submit P274 to Report Phase• ELEXON will issue Report Phase Consultation• Draft Modification Report to December Panel meeting


204/05

P282: ‘Allow MVRNs from Production to

Consumption or Vice Versa’

David Kemp

11 October 2012

20

Energy Account

BM Unit• Current arrangements: Production and

Consumption kept separate• Fundamental principle of NETA• Keep level playing field between different types of

Party• Promotes liquidity

• Energy from BM Units allocated to Lead Party’s corresponding Energy Account• P BM Units to P Energy Account• C BM Units to C Energy Account

P282: Issue (1 of 2)

C

CP

P

21

Energy Account

BM Unit• Can use MVRNs to reallocate energy to

corresponding Energy Account of another Party• Can reallocate either a specified volume or a

percentage of the BM Unit’s volume

• Can only use MVRNs from:• P BM Units to P Energy Accounts; or• C BM Units to C Energy Accounts

• Trading between Production and Consumption must be done using ECVNs• ECVNs must be for specified volumes of energy• MVRNs can be for a percentage of the BM Unit’s

volume

P282: Issue (2 of 2)

C

CP

P

22

• Proposal: Allow MVRNs from P BM Unit to C Energy Account or vice versa• Would also allow a Party to MVRN energy from own

P BM Unit to own C Energy Account or vice versa

• Can replace relevant ECVNs with percentage MVRNs

• Proposer considers:• P282 increases flexibility for smaller Parties• Larger Parties have found ways around current

restrictions• Exempt Export BM Units can currently choose P/C

Status

P282: Solution

Energy Account

BM Unit

C

CP

P

23

• Costs:• Central Costs: Approx. £140k• Party Costs: Range from minimal to £130k

• Participant Impacts:• MVRNAs • BSC Trading Parties• ECVAA and SAA

• Document Impacts:• BSC Sections D, P, T, X-1 & X-2• ECVAA & SAA Service Descriptions & URSs • NETA IDD Part 2

P282: Costs and Impacts

24

• Workgroup’s majority view is to Approve P282

• Views based on Applicable BSC Objectives (b), (c), (d) and (e)


25

• ‘Winners’ and ‘Losers’ from P282• Reduction or no change in Parties’ imbalance charges• But reduction in amount of RCRC, disbenefiting Parties paid

RCRC

• Parties worse at balancing seem to benefit the most from P282• Only benefit if long in one Account and short in the other• Net shortfall in one Account with gain in other – avoid

SBP/SSP spread

• Notified Volume Charge also impacted• Calculated on volume of ECVNs and fixed-volume MVRNs• P282 likely to result in ECVNs being replaced with percentage

MVRNs• Materiality much lower than imbalance charge/RCRC impacts


26

• P282 will allow Parties to consolidate all volumes in one Account• Biggest benefit to Parties on both sides of market• May allow smaller Parties to club together, but other

obstacles remain• Interconnector Users could net imports and exports

• SO feels P282 may increase no. of balancing actions required• Reduce incentive to go long, reducing ‘free’ reserve• Constraint actions could become balancing actions – impact

SBP/SSP• But ‘self-balancing’ could help balance system

• Consideration that P282 unlikely to have significant impact on incentive to balance


27

• Unconvinced separation of Production and Consumption has led to intended liquidity• Can currently use ECVNs/MVRNs to ‘self-balance’

• Unconvinced P282 will have material impact on liquidity• Impact confined to short-term intra-day market due to better

self-balancing• Unsure about longer-term – impacted by other factors

• Liquidity about who Parties trade with, not number of Energy Accounts


28


ABO

Yes No

(b) Majority• Self-balance – more efficient• Reduce overall imbalance

Minority• Increase volatility/uncertainty• SO may need more reserve

(c) Majority• More flexibility to manage

imbalance• Reduce complexity and costs• Level playing field• Remove a barrier to Market Entry• Don’t believe current separation

proven valid

Minority• One-sided Parties lose out• Reinforce position of incumbents• Parties worse at balancing benefit

the most

(d) Majority• Remove unnecessary restriction• Reduces admin and complexity• Greater flexibility and efficiency

Minority• Central implementation costs with

no central efficiency benefits

(e) Minority• Harmonisation

Majority (Neutral)• No specific legislation requiring

this

29

• Views of respondents split equally for and against

• Agree with Workgroup’s views for and against



Does P282 Better Facilitate Applicable BSC Objectives?

Yes No

6 6

30

• Workgroup recommends Implementation Date of:• 07 Nov 13 if P282 is approved on or before 07 Feb 13• 27 Feb 14 if P282 is approved after 07 Feb 13 but on or before

27 May 13

• Lead time to make required Central System changes• ECVAA, SAA and Funding Share changes


31

• Workgroup has discharged its Terms of Reference

• Workgroup recommends that P282 is Approved

P282: Conclusions

32

The P282 Workgroup invites the Panel to:

• AGREE an initial recommendation that P282 should be made;

• AGREE an initial Implementation Date of:• 7 November 2013 if an Authority decision is received on or

before 7 February 2013; or • 27 February 2014 if an Authority decision is received after 7

February 2013 but on or before 27 May 2013;

Continues


33

• AGREE the draft legal text;

• AGREE that P282 is submitted to the Report Phase; and

• AGREE that ELEXON will issue the P282 draft Modification Report (including the draft BSC legal text) for a 15 Working Day consultation and will present the results to the Panel at its meeting on 13 December 2012.


204/06

P285: Revised treatment of RCRC for Interconnector

BM UnitsDavid Kemp

11 October 2012

35

• CMP202: Removed BSUoS charges from Interconnector BM Units• Implemented on 30 August 2012

• Proposer considers RCRC to be related to imbalance cost element of BSUoS• Potential to distort cross-border trades• Potential for windfall gains/losses

• Could also be perceived as non-compliant with Third Package• Requires no additional charges levied on cross-border trades

• P285 raised following consideration of relationship by CMP202 Workgroup

P285: Issue

36

• Proposal: Exclude Interconnector BM Units from RCRC• RCRC would be allocated based on Parties’ non-

Interconnector volumes

• Materiality: Approx. 3% of total RCRC• Net redistribution of £700k in 2011

• Materiality of current situation low, but should be resolved as soon as possible

P285: Solution

37

• Costs:• Central Costs: Approx. £70k• Combined central saving of 40% if deployed in parallel with

P286• Party Costs: Range from minimal to £10k

• Participant Impacts:• Interconnector Users and IEAs• All other BSC Trading Parties that are subject to RCRC• SAA and ECVAA

• Document Impacts:• BSC Section T• SAA Service Description & URS


38

• Workgroup’s majority view is to Approve P285

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


39

• Unclear if RCRC is a charge on cross-border flows• Part of imbalance cash-out mechanism, which Third Package

permits

• Not convinced RCRC and BSUoS are related• RCRC part of imbalance charges; BSUoS is a cost-recovery

mechanism• Believe correlation is poor


40


ABO

Yes No

(a) Majority• Takes National Grid’s obligations

into account

Minority (Neutral)• No impact

(c) Majority• Allows cross-border trades to be

based on price-differentials• Prevent Interconnector Users from

receiving windfall gains/losses

Minority• Parties causing imbalance being

excluded from RCRC – reduces incentive to balance; should treat all Parties the same

(e) Majority• Could be perceived as a charge

on cross-border flows

Minority (Neutral)• Unsure if RCRC is a charge• Premature given possible future

changes

41

• Majority of respondents agree with Workgroup’s view





Yes No

6 2

42

• Workgroup recommends Implementation Date of:• 27 Jun 13 if P285 is approved on or before 24 Jan 13• 07 Nov 13 if P285 is approved after 24 Jan 12 but on or before

06 Jun 13

• Lead time to make required Central System changes


43



P285: Conclusions

44



• AGREE an initial Implementation Date of:• 27 June 2013 if an Authority decision is received on or before

24 January 2013; or • 7 November 2013 if an Authority decision is received after 24

January 2013 but on or before 6 June 2013;

Continues


45





204/07

P286: Revised treatment of RCRC for generation BM

UnitsDavid Kemp

11 October 2012

47

• CMP201: Proposes to remove BSUoS charges from generation BM Units• CUSC Panel recommends implementing Original Solution• Currently with Ofgem for decision

• Allows GB generators to compete on equal basis with imports over Interconnectors

• Proposer considers RCRC to be related to imbalance cost element of BSUoS• Potential for windfall gains/losses

• P286 raised following consideration of relationship by CMP201 Workgroup

P286: Issue

48

• Proposal: Exclude BM Units in delivering Trading Units from RCRC• RCRC would be allocated based on Parties’ volumes from BM

Units in offtaking Trading Units

• Materiality: Approx. 35% of total RCRC• Net redistribution of £7.5m in 2011

P286: Solution

49

• Costs:• Central Costs: Approx. £70k• Combined central saving of 40% if deployed in parallel with

P285• Party Costs: Range from minimal to £10k

• Participant Impacts:• Generators• All other BSC Trading Parties that are subject to RCRC• SAA and ECVAA

• Document Impacts:• BSC Section T• SAA Service Description & URS


50

• Workgroup’s majority view is to Approve P286• Conditional on CMP201 being approved – if CMP201 is

rejected, then Workgroup’s unanimous view is to Reject P286

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


51

• Not convinced RCRC and BSUoS are related• RCRC part of imbalance charges; BSUoS is a cost-recovery

mechanism• Believe correlation is poor

• Consideration of whether P286 is appropriate• Majority: P286 should be approved if CMP201 is approved• Minority: Reject P286 and consider under SCR

• Impact on power prices• RCRC factored into power prices• But uncertainty in many pricing elements• Bilateral trades outside of BSC


52


ABO

Yes No

(a) Majority• Takes National Grid’s obligations

into account

Minority• Don’t agree RCRC and BSUoS

linked• Not convinced of link to National

Grid’s obligations

(b) Majority• CMP201 without P286 may

reduce incentives to balance

Minority (Neutral)• Uncertain if there would be an

impact on incentive to balance

(c) Majority• Allows cross-border trades to be

based on price-differentials• Prevent generators from receiving

windfall gains/losses• Allow GB generators to compete

on equal basis with imports over Interconnectors

• Conditional on CMP201, but if CMP201 approved then better to approve P286

Minority• Both generators and Suppliers

cause imbalance, should both be subject to imbalance mechanism, including RCRC

53

• Majority of respondents agree with Workgroup’s view





Yes No

4 2

54

• Workgroup recommends Implementation Date of:• 01 Apr 15 if P286 is approved on or before 31 Mar 13• 01 Apr 16 if P286 is approved after 31 Mar 13 but on or

before 31 Mar 14

• Dates align with CMP201 Original Solution• Workgroup considers that P286 and CMP201 should be

implemented in parallel

• Lead time to allow Parties to amend their contracts


55



P286: Conclusions

56



• AGREE an initial Implementation Date of:• 1 April 2015 if an Authority decision is received on or before

31 March 2013; or • 1 April 2016 if an Authority decision is received after 31

March 2013 but on or before 31 March 2014;

Continues


57





Minutes of Meeting 202 & 203 Actions Arising

Adam Richardson

11 October 2012

Chairman’s ReportBSC Panel

Andrew Pinder

11 October 2012

204/01

ELEXON Report: Smart Update

Peter Haigh/Chris Rowell

11 October 2012

Distribution Report

David Lane

11 October 2012

National Grid Update

Ian Pashley

11 October 2012

National Grid: New Operating Model

Ian Pashley - BSC Panel 204, 11th October 2012

National Grid: New UK Structure

64

Need to print this? It looks best on A3

National Grid: UK Structure Chart

UK Business Change

Pete Massey

Gas Distribution

Jeremy Bending(Interim)

Grain & Metering

Jon Carlton

Gas Transmission

Asset ManagementNeil Pullen

ElectricityTransmission

Asset ManagementDavid Wright

UK RIIO DeliveryChris

Bennett

Capital Delivery

Ian Galloway

Transmission Network Service

Mike Calviou

Market Operation

Chris Train

**Safety, Sustainability & Resilience

Jon Butterworth

UK Regulation

Paul Whittaker

Executive Director, UKNick Winser

UK Chief Operating OfficerJohn Pettigrew

Gas Distribution OperationsEd Syson

Gas Distribution

Network StrategyVivienne Bracken(Interim)

Operate the SystemNicola Pitts

Electricity Market Reform project

Mark Ripley

*UK/EU Business

DevelopmentPeter

Boreham

Emergency Response & Repair

Sara Habib

Network DevelopmentPauline McCracken

MaintainDan Davies

Business Support – HR, IS, Legal, Finance & Shared Services, Corporate Affairs not shown

* Dotted line to Alison Wood

** Dotted line to John Pettigrew

Gas Distribution Functions

and Processes

European Update: Ofgem Report

Dora Ianora

11 October 2012

204/01a

Report from the ISG

11 October 2012

204/01b

Report from the SVG

11 October 2012

204/01c

Report from the PAB

11 October 2012

204/01d

Report from the TDC

11 October 2012

204/01e

Report from the JESG

11 October 2012

204/02

Trading Operations Report

11 October 2012

204/03

Change Report

11 October 2012

204/12

Joint European Standing Group: Feedback on the JESG to the BSC

PanelBarbara Vest

11 October 2012

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line.

Joint European Standing GroupFeedback on the JESG to the BSC Panel

Barbara Vest, JESG Independent Chair

11 October

BSC Panel 204/12a Joint European Standing Group - Terms of Reference Review - Attachment 1

76

Background

» The JESG has been running since August 2011, in this time:9 JESG meetings7 technical workshops (code specific)

» Format and content of meetings has evolved as developments have progressed» At their September 2012 meeting, The JESG reviewed and reflected on:

What has gone well?What could have gone better?What improvements can we make?Updating the Terms of Reference

77

Feedback sought – JESG meetings

1 2 3 4 5

Provision of meeting details

Timeliness of communications

Quality of communications

Headline report

Frequency of meetings

Time keeping in meetings

Representation at meetings

Material covered

Overall impression of meetings

Score: 1 (poor) - 5 (very good)

9 respondees

78

Comments – JESG Meetings

» Provision of meeting detailsAlways provided. Though at one point there was a lot of reorganisation of timetable, it

was to a more logical order.I have no problem with the provision of dates just prior to each meeting. However, I do

find I keep checking the JESG website to see if anything has changed on the longer term dates - do you send out updates when the meetings list changes? I would prefer getting emailed updates rather than having to check the website where the JESG and its list of meetings is quite deeply buried.

» Timeliness of communicationsGenerally good, but occasionally material not received in time for review before meeting

» Headline reportCould do with being more detailed. Sometimes it doesn't give enough detail. E.g. At the meeting the following items were

discussed… and it lists the items without indicating the nature of the discussion.A useful summary for circulating to those not directly involved in the meetings

» Frequency of meetingsMonthly seems to be about the right frequency

» Representation at meetingsGenerally, appropriate representation from those knowledgeable on the specific subject

areas» Overall impression of meetings

A very useful to find out what's going on, particularly when we are not members of a stakeholder organisation

79

Feedback sought – technical workshops

1 2 3 4 5

Provision of meeting details(time, location, agenda)

Timeliness of communications

Quality of communications

Frequency of meetings

Time keeping at meetings

Representation at meetings

Material covered

Overall impression of meetings


9 respondees

80

Comments – Technical Workshops

» Timeliness of communicationsGenerally good, but occasionally material not received in time for review

before meeting» Frequency of meetings

Only seem to do 'during consultation' & 'post-submission‘» Representation at meetings

Generally, appropriate representation from those knowledgeable on the specific subject areas

» Material coveredNeed to avoid being distracted from detailed reviewI have only attended CACM workshop in May - preferred more focused, article

by article discussion on Day 1 to more general discussions on Day 2

» What would you like to see more of? Perhaps workshops for particular stakeholders- "What the Target Model

means for Suppliers" for example. I think the comparison documents are a good idea such as the RfG Full Grid Code & European Code Comparison.

81

Feedback sought - general

1 2 3 4 5

JESG website

Update emails (e.g. ENTSOEinformation)

Organisation of meetings

Facilities


82

Comments - General

» JESG websiteGood that all the documents are in one place. What is missing is an easy-to-find simple overview of what the process of harmonisation entails.Not easy to locate material on specific network codes.Good but JESG is too deeply buried on the National Grid site for me!

» Update emails (e.g. ENTSOE information)Usually unable to determine significance of item without opening link. Inclusion of a summary of contents would be useful. Notification of changes to index structure not required.

» FacilitiesThe normal location is fine. Was not able to attend several meetings due to the change in location.Since most are at ELEXON I couldn't really say anything else!

» Any additional comments?The meetings are useful and the split between technical and high-level meetings is sensible.

83

Ways to improve the JESG

» Technical workshops – continue to focus on article by article review

» Seek improvements to websiteIncluding sections which have material associated with

each individual network code

» Aim for circulation of all meeting material minimum 1 week in advance of meetingCirculate draft agendas with meeting invitation

» Ongoing review of headline report to ensure clarity and relevance

» Circulate a weekly email of JESG and European Issues

84

JESG Terms of Reference

» The JESG Terms of Reference have been revised to reflect:Technical workshopsOngoing review of membershipUse of actions and issues log

» The BSC Panel, CUSC Modifications Panel and GCRP are being asked to agree to the revised Terms of Reference at their October / November Meetings

204/08Creation of a new BSC

Agent Service Description

Adam Richardson

11 October 2012

86

Appointing a BSC Service Manager

Work Stream Responsibility

1. Modification P284: Enables BSCCo to outsource work to a BSC Service Manager.

The Authority makes a determination following a BSC Panel recommendation.

2. BSC Service Description: Defines the services capable of being outsourced.

The BSC Panel is responsible for approving the BSC Service Description for use.

3. Contract: Negotiating and agreeing appropriate Contractual Provisions required for outsourced arrangement with a BSC Service Manager.

The BSCCo Board is responsible for putting in place appropriate commercial and contractual provisions.

87

Background

June 2012: Panel Paper 199/10: Timetable for creation, consultation and

approval of the BSC Service Manager Service Description

Consultation10 WDs

July 2012: Panel Paper 200/07: Revised Service Description incorporating consultation comments – deferred

pending P284

August 2012

September 2012

Contract Principles Consultation

23 WDs

Contract Principles Workshop

P284 Approve

d

88

• Sought advice and input from 2 Panel Members throughout

• 9 Responses:• 6 Yes• 1 No (captured services but wanted more detail)• 2 Requested more time

• Themes:• Important to reference BSC and CSDs• Reference to undocumented services• Request for more information on Service Levels

Consultation

Does the Service Description appropriately capture all of the services currently

provided by BSCCo?

v1.3

89

• 12 Responses• Discussed at Contract Principles Workshop

• Themes:• Professional Services (only where no conflict arises)• BSC Strategy and Business Plan (supporting role only)• Clarity on BSC procurement / service management policies• Removal of erroneous requirement (non-BSC opportunities)• Service Levels (delivery in compliance with BSC)

Contract Principles Consultation

Are there any specific discretions, judgements or services currently provided by ELEXON Ltd

that you feel it would be inappropriate for BSCCo to subcontract to a service

management company?

v1.4

90

• Service Description (v1.4) captures all services that could be outsourced

• To be used to underpin work on outsourcing

• If BSCCo Board determines to outsource less we will reflect the reduction in scope in the Service Description and return to Panel for approval

Next Steps

91

• The BSC Panel is invited to:

• APPROVE: the BSC Services Manager Service Description v1.4 for use in the investigation and development of an outsourcing arrangement; and

• NOTE: that the approved BSC Services Manager Service Description will be used in any subsequent contractual negotiations relating to the appointment of a new BSC Services Manager.

Recommendations

204/09

Market Index Definition Statement Review

2012 :ISG Recommendations

Oliver Xing

11 October 2012

93

• The Market Index Definition Statement (MIDS) is a document that defines how the Market Index Price (MIP) is calculated.

• The MIP reflects the price of wholesale electricity in Great Britain.

• The MIP determines the “reverse” Energy Imbalance Price.

• The MIDS is reviewed annually in accordance with the BSC.

What is the MIDS?

94

• What are the Individual Liquidity Threshold (ILT), product and timeband weightings?

• The current Individual Liquidity Threshold remains suitable at 25 MWh.

• The current timebands and products remain suitable.• Trades made within 12 hours of Gate Closure.• Half Hour, 1 Hour, 2 Hour and 4 Hour products.

• An option to remove timeband 6 was identified in the initial analysis.

Initial Findings

95

• The ISG recommended no change to the current Individual Liquidity Threshold (ILT).

• The ISG recommended that ELEXON consult the industry on the below possible changes:1) Remove timeband 6 or;2) Include the overnight product O or;3) Remove timeband 6 and include the overnight product O.

ISG Discussion

96

• 3 Responses were received.

• Comments on Ofgem’s SCR.• Comments on “within day” auctions.

• Having considered the responses in their September meeting, the ISG has made a final recommendation that no change should be made to the MIDS.

Consultation Responses

Question Yes No No Comment

The ILT should remain at 25 MWh 3 0 0

Remove timeband 6 (8-12 hours to GC) 1 2 0

Include product ‘O’ 0 3 0

Remove timeband 6 and include product ‘O’ 0 3 0

97

The Panel is invited to:

• NOTE the contents of the paper;

• NOTE the ISG’s recommendations;

• AGREE no change to the Market Index Definition Statement (MIDS).

Recommendations

Settlement Review Scoping update

David Jones11 October 2012

99

Timetable

Settlement Reform Scoping- Update

»Progress to Plan!

»2 Group meetings

»Consultation drafted (based on final report)»Group to review

»Consultation notification & Seminar invitation going out 15 Oct

»Consultation issued w/e 19 Oct»Direct contact with ‘non traditional’

stakeholders

204/10

Report on Issue 44 – Balancing

Mechanism Pricing IssueJohn Lucas

11 October 2012

Confidential Closed Session

11 October 2012

204/11

Applications for ISG & SVG Membership

Kathryn Coffin

11 October 2012

104

• A recent resignation created vacancies for an Industry Member on both ISG and SVG

• Have advertised for potential applicants via Newscast and website

• Received one application for ISG and two for SVG

• There is room to appoint all three applicants, bringing numbers to:

• 11 SVG Industry Members out of a possible 12 (and 13 Members in total including Distributor Member and Panel Sponsor)

• 7 ISG Industry Members out of a possible 9 (and 10 Members in total including Transmission Company Member, Distributor Member and Panel Sponsor)

Process followed

105

We invite the Panel to:

• APPOINT Phil Hewitt as an ISG Industry Member;

• APPOINT Harish Mistry as an SVG Industry Member;

• APPOINT Tom Rix as an SVG Industry Member; and/or

• CONTINUE advertising for further applicants for one or both Committees

Recommendations

204/13

Audit & Qualification Procurements

Christian Thrussell/Douglas Alexander/ Helen

Boothman

11 October 2012

Any Other Business

Next Meeting: 8 November 2012

Documents

BSC Panel 204 11 October 2012. Report on Progress of Modification Proposals Adam Lattimore 11 October 2012