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 UoS 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
• UoS Charging
• Interconnectors
• Connection
-
Slightly zonal
-
Developing TTR
-
Auction for Capacity
-
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!
27/05/2003
27/04/2003
27/03/2003
27/02/2003
27/01/2003
27/12/2002
27/11/2002
27/10/2002
27/09/2002
27/08/2002
27/07/2002
27/06/2002
27/05/2002
27/04/2002
27/03/2002
27/02/2002
27/01/2002
27/12/2001
27/11/2001
27/10/2001
27/09/2001
27/08/2001
27/07/2001
27/06/2001
27/05/2001
27/04/2001
27/03/2001
Imbalance Cash out prices
Daily Average Sysem Prices Since NETA Go Live
£200
£150
£100
SSP
SBP
£50
£0
-£50
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 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
How deep?
GB System Operator
England and
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!