The information in this presentation has been collated by ELEXON and while all due care has been taken to ensure the accuracy of this information, ELEXON accepts no responsibility for errors.
Market Integration: England, Wales and Scotland
Brian Saunders
The information in this presentation has been collated by ELEXON and while all due care has been taken to ensure the accuracy of this information, ELEXON accepts no responsibility for errors.
Contents
• ELEXON and NETA
• The BSC is not NETA
• How is it supposed to work?
• How has it worked?
– Prices, volumes, changes
• Impact on/of the market
• Security of Supply
• NETA to BETTA There are two T’s in BETTA
Overview of the E&W Electricity Market Place
Transmission and SOPrivate Monopoly
No generation – open accessCan trade for system balancing
Shallow Connection ChargesMild Zonal UoS Charges
Self DespatchPartial separation of SO/TO coming
RPI –x Control
GenerationPrivate
Fully competitiveSome Vertical Integration of
Generation and Supply
Diverse mix for nowNo price controls
SupplyPrivate
Fully competitiveNo “Host Supplier”
(legally)Fragmented competitive
servicesNo price controls
Distribution12 Private Monopolies
No Supply or Generation (but can be owned by VI
companies)Open access
Facing major change if distributed generation grows
RPI-x Control
BSC
ELEXON’s Role in NETA
New Electricity Trading
Arrangements
(E&W)
ELEXON &Panel
Contracts
Trading
Exchanges
Risk Management
Problems of the Pool
• One price• Mechanism• Manipulable• CompulsoryProduction
set the price DemandTook the price
• Barrier
Also inherently difficult to change
Exchanges
• 2 Exchanges – UKPX & APX
– Typical Exchange Volumes
* Contracts * Volume
• Standardise Contract Form – GTMA
• Bilateral
• Volume in BM – 2%
• SO can buy forward
Settlement
Settlement Process
Contract Notifications
Meter Readings
Accepted Bids and Offers
And PX data
Cashout Prices - SSP/SBP
Accepted Bids & Offers Energy Imbalance Cashout
System Operator Charges Spread of Surplus
(Don’t forget competition for 22 million customers)
Transmission & Cross Border
• UoS Charging - Slightly zonal
- Developing TTR
• Interconnectors - Auction for Capacity
- Trade at entry
• Connection - Shallow
Why? The design intent of the BSC
• Replace the Pool
• Encourage bi-lateral trading
• Enable competition for Balancing Services
• Allocate costs of imbalance
• Responsive governance
• Get out of the way!
Imbalance Cash out prices
Daily Average Sysem Prices Since NETA Go Live
-£50
£0
£50
£100
£150
£200
27/0
3/2
001
27/0
4/2
001
27/0
5/2
001
27/0
6/2
001
27/0
7/2
001
27/0
8/2
001
27/0
9/2
001
27/1
0/2
001
27/1
1/2
001
27/1
2/2
001
27/0
1/2
002
27/0
2/2
002
27/0
3/2
002
27/0
4/2
002
27/0
5/2
002
27/0
6/2
002
27/0
7/2
002
27/0
8/2
002
27/0
9/2
002
27/1
0/2
002
27/1
1/2
002
27/1
2/2
002
27/0
1/2
003
27/0
2/2
003
27/0
3/2
003
27/0
4/2
003
27/0
5/2
003
SSP
SBP
Wholesale Prices
Annual OTC Prices Since NETA Go-Live
0
5
10
15
20
25
30
Annual Baseload Annual Peakload
Wholesale Prices
Day Ahead OTC Prices and System Prices Since NETA Go-Live
-10
10
30
50
70
90
Day Ahead Baseload Day Ahead Peakload SSP SBP
Volumes
• Imbalance volume ~2%
• Total notified contracts 3 times physical consumption
• Number of notifications 4.7 million* since Go live
* As at 09/06/03
Flexible?!
• 143 Proposed Modifications to the BSC
• 114 decisions made, 12 withdrawn
• Many already implemented
Impact on the Market
• Low wholesale generation prices, but rising
(NETA plus )
• Some consolidation
• Vertical integration
• Industrial and commercial customers happy
• Doubts about pass through to domestic customers – more work on change of supplier in hand
Impact of the Market
• BSC and NETA coped well with corporate failures and administration
• Credit arrangements well tested - robust but complex - Cash or LoC only; Credit Rating not accepted
• Security of Supply?
Security of Supply
• This was examined carefully by a report to Government and by a recent White Paper by Government
• Security of Supply (generation) has been left to the market
• Government and Regulator have statutory responsibilities
• Some mothballing – No major permanent closures yet. SO caution
NETA to BETTA
• Working so well it is being rolled out to include Scotland
• There are two T’s in BETTA
British Electricity Trading and Transmission Arrangements
The Big Change
• System and Transmission Operation
England and Wales
TO
GB System Operator
Scotland TO Scotland TO
NGC Scottish PowerScottish and
Southern
How deep?
GB Settlement?
• BSC to GB BSC
• Extension of geographic scope
• Consequential changes only
• Still a significant piece of work for ELEXON
Summary
• NETA has worked and delivered its design intent
• Recent reviews have identified no major changes
• Flexible governance has enabled beneficial change – more to come
• Roll out to GB – transmission issues still outstanding
BUT THE LIGHTS HAD BETTER STAY ON!