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 SO Private Monopoly No generation – open access Can trade for system balancing Shallow Connection Charges Mild Zonal Uo. S Charges Self Despatch Partial separation of SO/TO coming RPI –x Control Supply Private Fully competitive No “Host Supplier” (legally) Fragmented competitive services No price controls Distribution 12 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 Generation Private Fully competitive Some Vertical Integration of Generation and Supply Diverse mix for now No price controls
ELEXON’s Role in NETA ELEXON & Panel Contracts Trading BSC Risk Management New Electricity Trading Arrangements (E&W) Exchanges
Problems of the Pool • • One price Mechanism Manipulable Compulsory Production set the price Demand Took 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 Accepted Bids and Offers Contract Notifications And PX data Meter Readings (Don’t forget competition for 22 million customers) Cashout Prices SSP/SBP Settlement Process Accepted Bids & Offers System Operator Charges Energy Imbalance Cashout Spread of Surplus
Transmission & Cross Border • Uo. S Charging Developing TTR - Auction for Capacity - • Connection Slightly zonal - • Interconnectors - Trade at entry - 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
Wholesale Prices
Wholesale Prices
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 Lo. C 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 How deep? GB System Operator England Wales TO Scotland TO NGC Scottish Power Scotland TO Scottish and Southern
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!
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