Attachment A
252/13A - SCOPE OF REVIEW OF MARKET ENTRY, EXIT AND QUALIFICATION
ARRANGEMENTS
1.
Context
1.1
The Panel’s Strategic Work Programme1 sets a requirement ‘to review the current market entry and exit
arrangements. The review should consider whether the current arrangements are fit for purpose, reflective of
working practices and whether they encourage and enable competition within the market, particularly within
the context of non-traditional business models (NTBM)2.’
1.2
It is important that the BSC arrangements remain fit for purpose and do not unduly act as a barrier to entry
and growth for existing Parties and prospective Parties. This includes parties that (may) operate with either
traditional3 or non-traditional business models. Our understanding is that it is this wider context that is
driving the Panel to request a review of Market Entry, Exit and Qualification arrangements.
1.3
ELEXON has lead reviews of Market Entry, Exit and Qualification arrangements on several occasions in the
past. Most recently, the BSC Review in 2008 reviewed Section A ‘Parties and Participation’ which covers
aspects of Market Entry and Exit4. Also, whilst the Panel and PAB have recently reconsidered the case for
making changes to Qualification arrangements between January 2014 and February 2015, they have not
pushed ahead with changes and noted that they ‘were happy they had reasonable powers’ under the current
arrangements.
1.4
As part of its continual improvement work and taking account of the Panel’s requirement to review Market
Entry, Exit and Qualification arrangements, ELEXON has already completed a large amount of work over the
last 12 months aimed at improving its services and the delivery of the BSC arrangements. For example:
●
Developed information packs and standard communications targeted at ‘off the shelf’ suppliers
●
Streamlined the Market Entry page on the ELEXON website
●
Investigated use of submitting Self-Assessment Documentation online
●
Working with Gemserv to update Market Entry Joint Story Boards
●
Worked with Ofgem to prepare for introduction of first Licence Lite Suppliers
1
Please see https://www.elexon.co.uk/wpcontent/uploads/2015/10/33_249_10A_BSC_Panel_Strategic_Work_Programme_PUBLIC.pdf
2
According to Ofgem’s ‘Non-traditional business models: Supporting transformative change in the energy market –
Summary of responses to discussion paper’ NTBM’s are ‘business models offering new products or services, or new
ways of delivering these, that are different to those traditionally provided in the existing energy market. Those
offering such services have diverse motivations (technological, financial, social and environmental) and ownership
arrangements, and operate at various scales.’ They include, but are not limited to, distributed generation, storage,
demand side response, peer-to-peer, prosumers, aggregators, housing associations, ESCOs etc. They are
characterised by providing local or bundled services or facilitating greater customer participation in the energy
market.
3
We have assumed that traditional business models represent the explicit roles already recognised by the Electricity
Act or by the Party and Party Agent Roles under the BSC.
4
ELEXON presented its Final Report (150/08) to the BSC Panel on 13 December 2008.
252/13a Scope of Review of
Market Entry, Exit and
Qualification arrangements
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2.
Objective
2.1
In order to determine that the BSC Market Entry, Market Exit and Qualification arrangements remain fit for
purpose we believe they must achieve the following first principles. That is that they:
●
Facilitate the Applicable BSC Objectives, particularly the promotion of effective competition in the
generation and supply of electricity and (so far as consistent therewith) the promotion of such
competition in the sale and purchase of electricity
●
Provide confidence and assurance to BSC Parties and Party Agents by ensuring
o
all BSC Parties and Party Agents are bound to the requirements of the BSC
o
all Parties and Party Agents are treated consistently when entering, qualifying under and exiting the
BSC arrangements
o
that new entrants are capable of operating under the BSC
o
that failing Parties can be and are removed
o
that Parties are not adversely affected
●
Enable any participant to become a BSC Party or Party Agent efficiently and effectively
●
Enable existing BSC Parties and Party Agents to leave or be removed efficiently and effectively
o
Whilst minimising the effects of exiting Parties on other Parties
2.2
In light of these principles, the current arrangements provide a combination of assurance, timely entry or exit
and support to applicants and Parties. However we recognise that this balance may be perceived as being
overly complex, time consuming and costly.
2.3
Our understanding is that the BSC Panel and BSC Parties are satisfied with the level of assurance provided by
the current arrangements. That is the arrangements ensure that applicants and existing Parties and Party
Agents are able to comply with the BSC so that ELEXON’s calculation and allocation of energy and Trading
Charges is efficient, correct and accurate. Also, that where it is appropriate Parties can exit, that Panel can
expel Parties and the Performance Assurance Board can remove Party Agents’ Qualifications.
2.4
Furthermore, recent consideration by the Panel has not identified specific concerns with the principles that
underpin Market Entry, Exit or Qualification.
2.5
Therefore we propose the objectives of the review should be to:
●
Identify where we can improve the efficiency of the Entry, Exit and Qualification arrangements, i.e.
reduce cost and time;
●
Identify how we can improve the guidance and support we provide applicants entering and Parties
and Party Agents exiting the BSC arrangements; and
●
Identify whether the BSC Entry and Qualification arrangements effectively accommodate new or changes
to (prospective) Parties operating models, i.e. are futureproof.
3.
Scope
3.1
The context for this review means that we must take a broad view of what it means to enter the BSC
arrangements. This is to ensure a complete assessment of how the arrangements apply to all current and
future Parties and Party Agents. This approach is particularly relevant in relation to NTBMs because we
cannot be sure how they might participate in the market and so we must be open minded to how they might
interact with all aspects of entering the Code.
3.2
Consequently we propose to consider all BSC processes (CVA and SVA) from initial enquiry through to the
point at which either the Party or Party Agent is able to actively participate under the Code, i.e. submit
contract notifications and have energy attributed to its energy accounts or, when considering the entry of a
Party Agent, a Party is able to appoint that Party Agent.
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3.3
In relation to Market Exit we propose to consider all processes from the point a Party signals its intention to
withdraw, the Panel decides to expel a Party or the PAB decides to remove a Party Agents’ Qualification,
through to the point at which the BSC no longer recognises the Party or Party Agent.
3.4
We have listed the processes, BSC Sections, Code Subsidiary Documents (CSDs), systems (e.g. the BSC
Websites) and sources of support and guidance that are within the scope of this review in the Appendix to
this paper.
3.5
This review will focus on reviewing how the processes work in practice in order to identify opportunities to
make them more efficient, e.g. less time consuming and costly. Whereas this review will not consider the
underlying principles of the BSC or the specific requirements of Market Entry and Exit to comply with certain
provisions, provide certain information or demonstrate certain capabilities. This is because we believe the
Panel is satisfied with the current level of assurance provided by the arrangements (as demonstrated by the
PAB’s and Panel’s recent consideration of whether to expand its controls in relation to ‘off the shelf
suppliers’),
3.6
We recognise that to an individual participant, entry into the GB energy market is more than simply
becoming a BSC Party. In addition to the BSC, participants must coordinate joining and participating in a
variety of other industry codes and arrangements. Whilst we will not review the specific entry arrangements
for other Core Industry Documents or the licensing framework, we will ensure to take account of their
requirements (to the extent they overlap with or are co-dependent with the BSC). We will make
recommendations to clarify or remove unnecessary overlaps and improve the coordination and execution of
dependent processes. Also, we will make note of whether our recommendations may affect or be dependent
on the arrangements in or changes to other Core Industry Documents.
4.
Workstreams and deliverables
Workstreams
4.1
In order to deliver this review we propose the following workstreams:
●
WS1 - Efficiency - Identify where we can improve the efficiency of the Entry, Exit and Qualification
arrangements, i.e. reduce cost and time.
o
●
●
–
We will capture each process diagrammatically in order to understand the interactions of each
step and highlight inefficiencies.
–
Where BSC processes are dependent on or overlap with those from other Core Industry
Documents, we will consider whether we can clarify, update or remove BSC processes where
they overlap or to enable better coordination and execution of dependent processes.
o
Collect and review feedback from stakeholders – please see below for more detail;
o
Identify opportunities for improving efficiency of processes.
WS2 - Guidance and support - Identify how we can improve the guidance and support we provide
applicants entering and Parties exiting the BSC arrangements.
o
Take stock of all existing guidance and support provided to applicants, Parties and Party Agents
(including material shared with other Code Administrators);
o
Collect and review feedback from stakeholders – please see below;
o
Identify opportunities for improving and increasing visibility of the range of guidance and support
provided.
WS3 – Futureproof - Identify whether the BSC Entry and Qualification arrangements effectively
accommodate new or changes to (prospective) Parties operating models.
o
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Complete a review of entry and exit processes;
Identify business scenarios and NTBMs;
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o
Collect and review feedback from stakeholders (e.g. prospective NTBMs, Ofgem) – please see
below;
o
Complete ‘table-top exercise’ to assess how entry arrangements might apply to different business
scenarios and NTBMs in order to draw out how well they accommodate novel operating models;
o
Identify opportunities for change and highlight issues or constraints that may require further
consideration.
Deliverable
●
Final report – setting out observations and recommendations from WS1, 2 and 3.
o
Where recommendations are to do things that do not require the Panel’s or the Authority’s approval,
e.g. change ELEXON processes or to improve support and guidance provided by ELEXON, we
propose to proceed with implementing these changes without the Panel’s approval.
o
The Panel will have the opportunity to consider how to proceed with all other recommendations,
e.g. whether to raise BSC Modifications, Change Proposals or establish an Issue Group(s).
4.2
ELEXON will provide regular updates to the Panel as part of the Chief Executive Officer’s (CEO’s) monthly
report. Therefore, if the opportunity arises we will fast-track the presentation of recommendations for the
Panel to consider, prior to concluding the full review and submitting our Final Report to the Panel. This
should enable the Panel to consider and approve the implementation of ‘quick wins’.
5.
Stakeholder engagement and communication
5.1
An important aspect of this review will be ensuring that we collect, review and incorporate feedback from
stakeholders, i.e. past, current and prospective applicants (including NTBMs), existing Parties/Party Agents,
(where possible) former Parties/Party Agents and Ofgem.
5.2
In order to achieve this we plan to target specific stakeholders to participate in the review. In particular we
will establish a Stakeholder Review Group whose members, for example, may be invited to meet to discuss
the review and/or individually interviewed (face to face or by telephone).
5.3
Whilst we will take account of the interdependencies between the BSC and other industry codes and
arrangements, we do not plan to invite other Code Administrators to directly participate in this review.
5.4
At this stage we do not plan to publish a consultation document as part of this review, whether to collect
evidence or to assess our recommendations before presenting them to the Panel. Please note that this
doesn’t preclude the Panel from consulting on the recommendations we set out in our Final Report.
6.
Duration
6.1
Bearing in mind the scale of the review (the number of processes and our engagement plan), ELEXON’s other
operational activities and subject to detailed planning and resourcing, we will use our reasonable endeavours
to complete the review within eight months. We aim to present our final report to the Panel in early 2017.
7.
Governance
7.1
ELEXON will deliver the Review. David Osborne, Director of Operations will be the Executive Sponsor.
7.2
At present the Panel’s Strategic Work Programme does not identify a Panel Sponsor responsible for this
review. We invite the Panel to nominate a Panel Sponsor.
Appendices
Appendix 1 – List of market entry and exit processes and associated BSC documents
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For more information, please contact:
Nicholas Rubin, Market Advisor
[email protected] 020 7380 4007
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Appendix 1 - List of market entry and exit processes and associated BSC documents
Market entry
To have fully entered the BSC arrangements we assume that a participant will be in a position to actively participate
in the BSC arrangements. To actively participate in the BSC arrangements a Party must do more than simply accede,
register it’s details in CRS and qualify (where necessary). Depending on its proposed role, a new entrant may have:
●
Acceded to the BSC
●
Ordered and installed Communications Lines
●
Set up Authorised People
●
Qualified for relevant roles
●
Lodged Credit Cover (where necessary)
●
Submitted funds accession details
●
Submitted Credit Contacts
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Registered Party/Party Agent Role
●
Registered BM Units (and Trading Units where necessary)
●
Registered in Market Domain Data
●
Registered Metering System Ids (MSIDs)
●
Setup ECVNA and MVRNA Authorisations
A thorough review would mean the the processes and guidance relating to the following BSC Sections, Code
Subsidiary Documents, Guidance Documents, websites and ELEXON working practices are within the scope of this
review:
●
Section A – Parties and Participation
●
Section J – Party Agents and Qualification under the Code
●
Section O – Communications under the Code
●
BSCP15 – BM Unit Registration
●
BSCP20 – Registration of Metering Systems for Central Volume Allocation
●
BSCP31 – Registration of Trading Units
●
BSCP38 - Authorisations
●
BSCP65 – Registration of Parties and Exit Procedures
●
BSCP70 – CVA Qualification Testing for Parties and Party Agents
●
BSCP71 – Submission of ECVNs and MVRNs
●
BSCP301 – Clearing, Invoicing and Payment
●
BSCP501 – Supplier Meter Registration Service
●
BSCP509 – Changes to Market Domain Data
●
BSCP515 – Licensed Distribution
●
BSCP537 – Qualification Process for SVA Parties, SVA Party Agents and CVA Meter Operators
●
ELEXON.co.uk
●
An Overview of Market Entry: SVA Qualification
●
Market Role Guide
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Market Entry Process Diagrams (Non-Physical Trader, Supplier, Generator, Interconnector User)
●
Menu of Qualification Fees
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Qualification Service Provider’s Approach to Qualification
●
SVA Qualification Approach to Witnessing
●
SVA Qualification Storyboards and Test Guidelines
●
MRA Entry Process and BSC Qualification Storyboards
●
Beginners Guide to the Electricity Arrangements
Market Exit
Depending on their role, processes that Parties or Party Agents may complete in order to exit the BSC include:
●
Submit Withdrawal Notice
●
De-registration of MDD
●
Cessation of Supply
●
De-registration of BM Units and Metering Systems
●
Trading Units de-registration
●
Party de-registration
●
Party Agent de-registration
●
De-register ECVNA/MVRNA
●
Cancel Communication Lines
●
Clear outstanding charges
●
Retrieve Credit Cover
Consequently we propose to review the processes and guidance relating to the following BSC Sections, Code
Subsidiary Documents, Guidance Documents, websites and ELEXON working practices are within the scope of this
review:
●
Section A – Parties and Participation
●
Section D – BSC Cost Recovery and Participation Charges
●
Section H – General
●
Section J – Party Agents and Qualification under the Code
●
BSCP15 – BM Unit Registration
●
BSCP20 – Registration of Metering Systems for Central Volume Allocation
●
BSCP41 – Report Requests and Authorisations
●
BSCP65 – Registration of Parties and Exit Procedures
●
BSCP70 – CVA Qualification Testing for Parties and Party Agents
●
BSCP71 – Submission of ECNVs and MVRNs
●
BSCP301 – Clearing, Invoicing and Payment
●
BSCP507 – Supplier Volume Allocation Standing Data Changes
●
BSCP509 – Changes to Market Domain Data
●
ELEXON.co.uk
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Simple Guide to Market Exit
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Checklist documents (Supplier, Non-Physical Trader, Generator, Interconnector User, ECVNA/MVRNA)
●
Market Exit Flow Diagram
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