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Market Integration: England, Wales and Scotland

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

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Market Integration: England, Wales and Scotland

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  1. 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.

  2. 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

  3. 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 UoS Charges Self Despatch Partial separation of SO/TO coming RPI –x Control 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 Supply Private Fully competitive No “Host Supplier” (legally) Fragmented competitive services No price controls Generation Private Fully competitive Some Vertical Integration of Generation and Supply Diverse mix for now No price controls

  4. ELEXON’s Role in NETA ELEXON &Panel Contracts Trading New Electricity Trading Arrangements (E&W) BSC Risk Management Exchanges

  5. Problems of the Pool • One price • Mechanism • Manipulable • Compulsory Production set the price Demand Took the price • Barrier Also inherently difficult to change

  6. Exchanges • 2 Exchanges – UKPX & APX • Typical Exchange Volumes * Contracts * Volume • Standardise Contract Form – GTMA • Bilateral • Volume in BM – 2% • SO can buy forward

  7. Contract Notifications Meter Readings Cashout Prices - SSP/SBP Accepted Bids & Offers Energy Imbalance Cashout System Operator Charges Spread of Surplus Settlement Accepted Bids and Offers And PX data (Don’t forget competition for 22 million customers) Settlement Process

  8. Transmission & Cross Border • UoS Charging - Slightly zonal - Developing TTR • Interconnectors - Auction for Capacity - Trade at entry • Connection - Shallow

  9. 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!

  10. Imbalance Cash out prices

  11. Wholesale Prices

  12. Wholesale Prices

  13. 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

  14. Flexible?! • 143 Proposed Modifications to the BSC • 114 decisions made, 12 withdrawn • Many already implemented

  15. 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

  16. 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?

  17. 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

  18. 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 TransmissionArrangements

  19. The Big Change • System and Transmission Operation GB System Operator How deep? England and Wales TO Scotland TO Scotland TO Scottish and Southern Scottish Power NGC

  20. GB Settlement? • BSC to GB BSC • Extension of geographic scope • Consequential changes only • Still a significant piece of work for ELEXON

  21. 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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