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Panel Meeting 196 12 April 2012

Panel Meeting 196 12 April 2012. Apologies Andrew Pinder 12 April 2012

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Page 1: Panel Meeting 196 12 April 2012. Apologies Andrew Pinder 12 April 2012

Panel Meeting 196

12 April 2012

Page 2: Panel Meeting 196 12 April 2012. Apologies Andrew Pinder 12 April 2012

Apologies

Andrew Pinder

12 April 2012

Page 3: Panel Meeting 196 12 April 2012. Apologies Andrew Pinder 12 April 2012

Report on Progress of Modification

Proposals

Adam Lattimore

12 April 2012

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4

Modifications Overview

New P282, P283

Assessment P272, P274, P276, P280, P281

Report P275, P277, P278

With Authority

-

Authority Determined

-

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Modifications Overview

Mod. Title IWA Assessment ReportPanel

Recommendation

Ofgem Decision

Decision By

Impl. Date

Decision By

Fall Back Impl. date

P272

Mandatory Half Hourly Settlement for Profile Classes

5-8

09-Jun-11 13-Sep-12 11-Oct-12     14-Feb-1306-April-

1413-Feb-14 06-Apr-15

P274Cessation of

Compensatory Adjustments

13-Oct-11 12-Jul-12 09-Aug-12            

P275Extending BSC Performance Assurance

13-Oct-11 08-Mar-12 12-Apr-12 Approve    - 10 WDs - -

P276

Introduce an additional trigger

for suspending the market in the

event of a Partial Shutdown

13-Oct-11 04-May-12 14-Jun-12      28-Feb-13

  

27-Jun-13

 

P277

Allow Interconnector BM

Units to choose their P/C Status

13-Oct-11 08-Mar-12 12-Apr-12 Reject   28-May-

1228-Feb-13

27-Sep-12

27-Jun-13

P278

Treatment of Transmission

Losses for Interconnector

Users

13-Oct-11 08-Mar-12 12-Apr-12  Approve  01-May-

1201-Nov-12

28-Aug-12

28-Feb-13

P280Introduction of

new Measurement Classes

08-Dec-11

14-Jun-12 12-July-12            

P281Change of BSCCo Board of Directors

& Chairman12-Jan-12 04-May-12 14-Jun-12            

Page 6: Panel Meeting 196 12 April 2012. Apologies Andrew Pinder 12 April 2012

196/04November Release

Date

Colin Berry

12 April 2012

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• BSC Release dates:• Last Thursday in February• Last Thursday in June• First Thursday in November

• November 12 Release date would be 1 November 2012

• Seeking to change Release date to allow technology upgrade

Introduction

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• BSC Systems Technology upgrade:

• Initially developed and tested in 2011• Significant Oracle defects found – delayed

implementation• Oracle has fixed defects now• Cannot restart technology upgrade before June 12

Release work completes• Technology upgrade complete in September 2012• Required to ensure BSC Systems fully supported

Technology Upgrade

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• Scope of Release:• No Approved Modifications to date• No approved Change Proposals to date• P278 targeted at Release • Four Change Requests

• P278• Impacts SAA software• Requires 10 week project• Earliest implementation date 29 November

• November 12 Release date – propose change to 29 November

November 12 Release

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The BSC Panel is invited to:

• NOTE the rationale to change the November 12 Release implementation date

• AGREE that the November 12 Release implementation date be changed to 29 November 2012

November Release: Recommendations

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196/05P275: ‘Extending

Performance Assurance’

Melinda Anderson

12 April 2012

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Issue:• P275 argues that the Code implies the PAB acts only for Trading

Parties

• This would mean that PAB would not resolve issues for BSC Parties that are not Trading Parties (e.g. LDSOs) even though they rely on Settlement data and processes for a number of business purposes

• This is not the case

Solution:• P275 solution is to add a paragraph to Section Z to clarify the

relationship between the PAB and all PAPs with respect to Z1.6.1

• Code-only change; scope of Performance Assurance unaffected

P275: Issue and solution

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• No impact on Applicable Objectives (a), (b), (c) and (e)

• The Panel unanimously agreed with the Workgroup’s majority view that P275 would better facilitate Objective (d) because increased BSC clarity promotes efficiency in the BSC arrangements

• Unanimously agreed legal text

• Unanimously agreed Self Governance

• Unanimously supported implementation dates• 16WD if Self Governance or• 10WD following Authority decision

P275: Panel’s initial views

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• No new arguments were presented

• Majority support for Panel’s initial recommendation

• Unanimous support for Implementation Date

• Unanimous support for Self Governance

• One comment on legal drafting• It does not deliver the original intent of Modification but delivers the

eventual intention

P275: Report Phase Responses

Agree? Yes No

Approve P275 5 1

Implementation Date 6 0

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The BSC Panel is invited:

• NOTE Draft Modification Report

• CONFIRM views on Applicable BSC Objectives

• CONFIRM that P275 meets Self-Governance Criteria

• APPROVE P275

P275: Recommendations (1 of 2)

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• APPROVE Implementation Date:• 16 WD after approval or• 10WD after Authority decision

• APPROVE BSC legal text

• APPROVE Self-Governance Modification Report

• NOTE appeal window closes 15WD after ELEXON’s notification of the Panel’s decision (3 May 2012)

P275: Recommendations (2 of 2)

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196/06P277: ‘Allow Interconnector

BM Units to choose their P/C Status’

David Kemp

12 April 2012

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• Energy entering GB over Interconnector assigned to different Account to energy leaving GB

• Applicable to both transit flows and flows starting/ending in GB

• Without ECVN, in net imbalance even though net volume is zero

P277: Issue

IFA

Moyle

100MW into GBAllocated to P

AccountPaid SSP

100MW out of GBAllocated to C

AccountCharged SBP

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• Single BM Unit per Interconnector per User• Lead Party can elect P/C Status of these BM Units

• Allows Party to net import over one Interconnector and export over another• Volumes would not net to zero, due to transmission losses

• Solution would be mandatory

P277: Solution

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• Relevant Objectives are (c) and (d) – no impact on (a), (b) and (e)

• Majority – does not better facilitate (c) and (d):• Unduly discriminatory (c)• Current arrangements not barrier to entry (c)• Wouldn’t improve efficiency (d)

• Minority – does better facilitate (c) and (d):• Interconnectors already treated differently (c)• Precedent for different treatment (c)

P277: Panel’s initial views on:Applicable Objectives

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• Legal text consulted on during Assessment• One minor comment made – amendment made accordingly

• Drafting for BSCPs 15, 31 & 65 and CRA SD prepared during Assessment• Not consulted on during Assessment

• Panel unanimously agreed drafting for Report consultation

P277: Panel’s initial views on:legal drafting

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• Unanimous Panel support for proposed Implementation Dates:• February 2013 Release• Fall-back June 2013 Release

• Driven by East-West Interconnector

P277: Panel’s initial views on:Implementation Date

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• No new respondents• No new arguments raised• Majority support for Panel’s initial recommendation• Unanimous support for Implementation Date• No comments on legal drafting

P277: Report Phase Responses

Agree? Yes No

Reject P277 6 2

Implementation Date 8 0

Changes to Code and CSDs 6 0

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The BSC Panel is invited to:

• NOTE the P277 Draft Modification Report and the Report Phase Consultation responses;

• CONFIRM the recommendation to the Authority contained in the P277 draft Modification Report that P277 should not be made;

P277: Recommendations (1 of 2)

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• APPROVE an Implementation Date for P277 of:• 28 February 2013 if an Authority decision is received on or

before 28 May 2012; or• 27 June 2013 if an Authority decision is received after 28 May

2012 but on or before 27 September 2012;

• APPROVE the BSC legal text for P277;

• APPROVE the changes to BSCP15, BSCP31, BSCP65 and the CRA Service Description for P277; and

• APPROVE the P277 Modification Report.

P277: Recommendations (2 of 2)

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196/07P278: ‘Treatment of

Transmission Losses for Interconnector Users’

David Kemp

12 April 2012

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• BSC allocates transmission losses to Interconnector BM Units

• Anomalous in light of ITC scheme• Compensates TSOs for National losses caused by cross-border

flows• National Grid passes through compensation to generators and

Suppliers through TNUoS• Compensation can be positive or negative

• Interconnectors should not be subject to additional network charges

• GB arrangements need to comply with European legislation

P278: Issue

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• Set TLM to 1 for Interconnector BM Units• BSC to no longer adjust Interconnector BM Unit Metered

Volumes for any GB transmission losses• BSC would still allocate total GB transmission losses

proportionally across all other types of BM Unit

• Interconnector BM Units account for 2% of losses• Low materiality – volatility of losses can exceed this amount

P278: Solution

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• Relevant Objectives are (a), (c) and (e) – no impact on (b) and (d)

• Majority – better facilitates (a), (c) and (e):• P278 most proportionate solution to demonstrate compliance

• Minority – does not better facilitate (a), (c), and (e):• Undue discrimination (c)• May not be needed

P278: Panel’s initial views on:Applicable Objectives

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• Legal text consulted on during Assessment• No comments received

• Panel unanimously agreed drafting for Report consultation

P278: Panel’s initial views on: legal drafting

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• Unanimous Panel support for proposed Implementation Dates:• November 2012 Release• Fall-back February 2013 Release

• Driven by lead time for changes to central systems

P278: Panel’s initial views on:Implementation Date

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• No new respondents• No new arguments raised• Majority support for Panel’s initial recommendation

• One respondent was unsure

• Unanimous support for Implementation Date• No comments on legal drafting

P278: Report Phase Responses

Agree? Yes No

Approve P278 6 0

Implementation Date 7 0

Changes to Code 6 0

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The BSC Panel is invited to:

• NOTE the P278 Draft Modification Report and the Report Phase Consultation responses;

• CONFIRM the recommendation to the Authority contained in the P278 draft Modification Report that P278 should be made;

P278: Recommendations (1 of 2)

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• APPROVE an Implementation Date for P278 of:• November 2012 if an Authority decision is received on or

before 1 May 2012; or• 28 February 2013 if an Authority decision is received after 1

May 2012 but on or before 28 August 2012;

• APPROVE the BSC legal text for P278; and

• APPROVE the P278 Modification Report.

P278: Recommendations (2 of 2)

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196/08P282: ‘Allow MVRNs from

Production to Consumption or Vice

Versa’David Kemp

12 April 2012

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P282 Allow MVRNs from Production to Consumption or

Vice Versa Nigel Cornwall

For Statkraft

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Metered Volume Reallocation Notifications

Dual trading accounts are key feature of Neta market template– designed to ensure larger, vertically integrated players

could not enjoy netting benefit MVRNs have from outset provided valuable

flexibility for licensed parties to– consolidate generation or consumption volumes

horizontally– in effect avoid active day-to-day participation in central

trading arrangements An unnecessary restriction exists, which P282

seeks to remove – this prevents energy from Production BM Units being

transferred to Consumption Energy Accounts and vice versa

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MVRN restriction

% volume or MWh

Trading charges

Consumption Consumption

Production Production

Lead Party

BM Unit

Subsidiary partyEnergy Account

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Defects

The current restriction:– is ineffective in its original assumed aim

• competitive restrictions should be matter for regulation– e.g. mandatory auctions

– inappropriately restricts participants’ ability in managing imbalance risk

• denies organic commercial choices• imposes cost

– unnecessarily complicates the trading arrangements– creates an inequity with embedded generation

• can consolidate against demand • also sits uncomfortably with trading unit concept

– treats trading parties differently from system operator– may not be in line with European practice

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Key benefits of P282

Additional flexibility to manage imbalance risk, particularly for smaller participants to consolidate positions– increases efficiency

• reveals true imbalance– competitive benefits

• benefits relative to off-take market

Levels playing field with embedded generation– P100 de facto acknowledged desire to stimulate

competition and permit consolidation Reduces complexity of trading arrangements and

costs of compliance– especially with regard to contract notification process– credit?

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Against BSC relevant objectives

c) (facilitating competition) - significantly, through additional flexibility to manage imbalance exposure to own circumstances and strategies. Risk reduction increases competition and encourages new entrants

d) (efficiency in arrangements) – removing an unnecessary restriction and helping trading parties manage their own costs

e) (European compliance) - may harmonise arrangements with those in Europe (P277 workgroup)

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Issues

Working group invited to consider:– if restriction should remain for participants over a

certain size e.g. 20TWh annual production or consumption

– single energy account alternative?– allow flag switching?

Targetted and proportionate relative to alternatives

42

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• Allow MVRNs from Production BM Units to Consumption Energy Account or vice versa• Would also allow a Party to MVRN energy from their

Production BM Units to their own Consumption Energy Account or vice versa

P282: Modification Proposal

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• What changes are needed to support the proposed solution?

• What wider impacts would the proposed solution have?

• How would GB’s two-Account arrangements be affected?

• What benefits would Parties gain from P282?

• What meaning would ‘Production’ and ‘Consumption’ hold?

• What are the benefits to the Applicable BSC Objectives?

P282: Things to consider

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• Recommend: 6-month Assessment Procedure (11 October 2012)

• Workgroup membership should include:• Members of Settlement Standing Modification Group (SSMG)• Any other relevant experts and interested Parties

• 6 months needed to allow:• Full assessment of wider impacts, including detailed analysis • Full consideration of wider implications• 20WD Industry IA and 15WD consultation• Avoiding Workgroup meetings during London 2012 Olympics

P282: Proposed progression (1 of 2)

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• Proposer believes no link with any current SCRs• Possible interactions with Cash-Out SCR

• Proposer is not requesting Self-Governance• Material impact on existing arrangements

P282: Proposed progression (2 of 2)

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The BSC Panel is invited to:

• DETERMINE that Modification Proposal P282 progresses to the Assessment Procedure;

• AGREE the Assessment Procedure timetable such that an Assessment Report should be completed and submitted to the Panel at its meeting on 11 October 2012;

P282: Recommendations (1 of 2)

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• DETERMINE that the P282 Workgroup should be formed from members of the Settlement Standing Modification Group (SSMG), supplemented with any other relevant experts and interested Parties;

• AGREE the Workgroup’s Terms of Reference;

• AGREE that P282 has no interaction with any on-going SCRs; and

• AGREE that P282 does not meet the Self-Governance Criteria.

P282: Recommendations (2 of 2)

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196/09Recommendation to raise a

Modification Proposal: ‘Reinforcing the

Commission of Metering Equipment Process

Dean Riddell

12 April 2012

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• Metering Equipment subject to commissioning process (CoP4)• Metering System Registrant responsible• Typically discharged via appointed Meter Operator Agent

(MOA)• Intended to prove accuracy of metering and detect problems• Failure may mask significant issues (unlikely to be detected

later)

• Technical Assurance of Metering Expert Group (TAMEG) and ELEXON concerns• Certain Metering Equipment usually not within

Registrant/MOA control when commissioning required• Issues prevent proper commissioning and lead to incomplete

records

Background

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• Solution principles agreed by TAMEG• Make relevant System Operator responsible for

• Commissioning Current Transformers and Voltage Transformers• Providing relevant certificates and commissioning records

• Require MOA to assess performance and notify Registrant of potential issues (Registrant retains overall responsibility)

• Require Registrant to consult relevant System Operator and agree steps to minimise risk of issues

• Workgroup to develop and confirm solution detail and outstanding areas based on TAMEG work

Proposed Solution

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• Solution developed by the TAMEG is basis of Proposed Solution

• Develop Proposed Modification (some specific areas identified)

• Treatment of test certificates and results• Materiality of issue and potential benefit• Retrospection/legacy issues are out of scope• Standard areas

• Assess Proposed Modification (and develop any Alternative) against Applicable BSC Objectives

• Establish impacts and costs• Develop BSC legal text• Consult BSC Parties and other participants and• Recommend Implementation Date and approach

Areas to consider

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• Recommend five month Assessment Procedure (12 September Panel)• Three Workgroup meetings• Develop and assess Proposed Solution• If Alternative Solution raised, develop and assess• 15WD industry impact assessment and 15WD consultation• We will submit to Panel earlier if possible

• Workgroup membership• Members of the TAMEG• Members of the Volume Allocation Standing Modification Group

(VASMG)• Any interested parties

Proposed progression (1 of 2)

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• No links with any current Significant Code Review

• Self-Governance not requested

• Believe Modification does not meet Self-Governance Criteria• Implementation would materially affect participants’ activities

(Metering System Registrants, System Operators and MOAs)

Proposed progression (2 of 2)

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The BSC Panel is invited to:

• RAISE requested Modification Proposal (Attachment A)• NOTE IWA• SUBMIT the Modification to Assessment Procedure• AGREE five month Assessment Procedure timetable• AGREE basis for Workgroup membership• AGREE Workgroup’s Terms of Reference• AGREE the Modification has no SCR interaction• AGREE the Modification does not meet Self-Governance

Criteria

Recommendations

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Minutes of Meeting 195 & Actions Arising

Adam Richardson

12 April 2012

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Chairman’s ReportBSC Panel

Andrew Pinder

12 April 2012

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ELEXON ReportBSC Panel

Victoria Moxham

12 April 2012

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Verbal update on issues loading LLF

data into SVAA

Caroline Wright

12 April 2012

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• SVAA load of 2012/13 LLF data for the 2012-13 BSC Year system produced exceptions:• SVA LLFCs that were not registered in MDD • LLFCs registered in MDD with no associated LLFs

• 8 LDSOs out of 19 impacted

• Issue 1: 4 LDSOs had not submitted required MDD change requests

• Issue 2: 4 LDSO had re-submitted SVA LLF files which were not processed by ELEXON

What was the issue ?

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• Impacted LDSOs contacted: • Instructed to provide MDD change request for May MDD

release; or• Notified that we still needed to process their SVA files

• Impacted HHDAs advised not to download outdated files from 4 LDSOs until latest version on the Portal• Files loaded on 4 April 2012• All HHDAs confirmed that they have downloaded the correct

files

• Informed the SVG and the ELEXON Board

• Default LLFs used for impacted MSIDs in II credit calculations 1 April – 3 April 2012 • No discernible impact on levels of Energy Indebtedness and

required Credit Cover

What did we do and what is the impact?

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• Internal investigation to understand process failure

• Report back to the SVG, Board and Panel with outcome report and recommendations as appropriate

Next steps

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Smart Update

Chris Rowell

12 April 2012

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&

Smart Metering: Consultations & Conclusions

DCC Licence P116+ Q14

DCC Licence Application Regulations P116+ Q4

Data Access & Privacy P97 Q30

Consumer Engagement Strategy P92 Q36

Smart Energy Code P160 Q63

1 Jun

1 Jun

1 Jun

Updated Impact Assessments

15 Ma

y

1 Jun

Programme Update (P13)http://www.decc.gov.uk/assets/decc/11/consultation/smart-metering-imp-prog/4938-smart-metering-imp-prog-update-apr2012.pdf

DECC response to 2011 consultations on Licence Conditions & Installation CoP

EC notification of SMETS v1.0

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Decisions!

Rollout (domestic & smaller non domestic)

• to complete by 31 December 2019• no exemptions for early (non compliant) meter installations

Technical Specifications

• SMETS v1.0 – European Commission ‘shortly’• Communications technology not specified (HAN & WAN) v1.0

compliant meters will count to rollout target• Suppliers responsible for v1.0 equipment assurance

Consumer Protections

• Licence obligation for compliance with Installation CoP• No sales during installation• Data collection: monthly (any purpose) – daily (regulated

purposes – consumer opt out) – HH or marketing (consumer opt in)

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SEC Content

 Section Activity

Participation • Party types• Accession rules

Using DCC Services• Enrolment/withdrawal of meters• DCC’s Comms Services• DCC Charges

Governance & Change

• SEC Relevant Objectives• SEC Panel• Code Administrator & Secretariat• Mods Process• Reporting

Assurance & Enforcement

• Compliance & Assurance• Liabilities• Disputes• Suspension & Expulsion

Other Matters• Intellectual Property Rights• Confidentiality• Transfer of DCC Licence• Force Majeure/Business Continuity

1 Jun

Voting Members 4 x large Suppliers 1 x small Supplier 1 x gas transporter 1 x electricity distributor 2 x other DCC comms users up to 2 consumer reps 1 SEC Panel chair appointee 1 SEC Panel chair

Non Voting Members 1 x DCC appointee

Non Voting Attendees 1 x Authority appointee 1 x Government appointee

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Privacy & Data Access Proposals

User Access

Consumer • Access via HAN• Access via Supplier

Suppliers• Monthly Data capture for all uses• Daily Data capture for all uses except marketing (with

opt-out)• > Daily or for marketing needs consumer opt-in

NetworksOptions• As per Supplier• HH access subject to networks developing plans for

approval that demonstrate protection of privacy

Third Parties • Data via consumer consent• Can be via DCC, subject to meeting SEC rules

Non Domestic premises • DECC will consider if any proposals are required

Settlement • No specific provisions for Settlement but will consider

how privacy framework could change if Settlement changes

1 Jun

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Consumer Engagement Strategy & Tools

Indirect Feedback

Direct/ Real Time Feedback

Motivational

Campaigns

Advice & Guidance

Central Delivery Body?

1 Jun

Help consumers make energy savings

Ensure vulnerable / low

income get benefits

Build support & address

concerns

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Licence Application Regulations

4 stage tender exercise• Qualification• Proposal• Best and Final Offer• Preferred Applicant

DCC Licence & Licence Application Regulations

15 Ma

y

Draft Licence

Copious detail as per other licences…

1 Jun

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Smart BudgetFull Year 2011/12

  Released Funds

£ ,000

Spend this month

£ ,000

Full Year

£ ,000

Smart Support 464 39 256

Smart Opportunities 36 0 19

TOTAL 500 39 275

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Distribution Report

David Lane

12 April 2012

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National Grid Report

Ian Pashley

12 April 2012

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Ofgem Report

Jon Dixon

12 April 2012

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Accepting Modification Proposals

Adam Richardson

12 April 2012

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If there’s no Defect in the BSC the

Modification is invalid and should be

rejected?

Should the cost of assessing Modifications

be a factor when determining if or how

they should be progressed?

Recent Modifications: Concerns Arising

Complex Modifications

with many potential

solutions should be considered as Standing Issues

instead?

Does proposer ownership mean the

proposer should dictate the process

and progression timescales for Modifications?

Can ELEXON or the BSC Panel

reject a Modification or force it to be withdrawn?

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Obligations & Governance

The BSC Panel

Panel Objectives (B1.2.1)

• Require Panel to give full and prompt effect to the BSC consistent with achieving the BSC objectives and in a transparent, economic, efficient and non-discriminatory way

Panel Modification Responsibilities (F1.2.1 & F1.2.2)

• Operate Mods in efficient, economical and expeditious manner

• Take account of complexity and urgency

• Ensure Code facilitates achievement of the Applicable BSC Objective(s)

• No undue discrimination between BSC Parties or classes of Party

• Consistent with Code Administration Code of Practice

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Obligations & Governance

The Code Administrator

Code Administration Code of Practice

• Twelve Principles…

• Principle 1: Code Administrators shall be critical friends

• Principle 5: Code Administrators shall support processes which enable users to access a ‘pre-Modification’ process to discuss and develop Modifications

The BSC Panel

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Obligations & Governance

The Code Administrator

Modification

Discuss Issue

Modification

SecretaryTo

Authority

Modification Workgroup(Issue Group)

The BSC Panel

Standing Issue

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Obligations & Governance

The Code Administrator

Modification

SecretaryModification

Standing Issue

Discuss Issue

To Authorit

yModification Workgroup(Issue Group)

The BSC Panel

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• The BSC and BSCP40

• Help Desk Queries

• Direct Contact

• Web-pages:

• Guidance Notes

• Process Diagrams

• Groups and Forums – E.g.

• Panel Committees (ISG, SVG)

• Expert Groups (PSRG, TAMEG)

• Cross Codes Forum etc.

Help and Support Available

Discuss Issue

F1.2.4A requires BSCCo to provide assistance in relation to Modifications including assistance with drafting a Modification Proposal

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• To be accepted by the Modification Secretary a Modification Proposal must contain (F2.1.2):

• Name of Proposer & Proposers Rep

• Description of issue or defect

• Description of nature / purpose of Mod

• Indication of Code Sections to be amended (& nature of amendment)

• Rationale why Proposer believes Mod would better facilitate achievement of the Applicable BSC Objective(s)

• Indication of impact on Core Industry Documents

• Indication of impact on BSC Systems / Party’s systems & processes

• Rationale for urgency/self governance/exemption from SCR

What is a “Valid” Modification?

• Description of issue or defect

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• The scope of the BSC is defined in Condition C3.2 of NGET's Transmission Licence, which defines the 'balancing and settlement arrangements'

• Definition is short & unspecific and may be construed widely

• It must be taken to encompass everything currently in the BSC

What is a valid “Issue” or “Defect”?

Unless a proposed Modification is wholly unrelated to balancing, imbalance determination or settlement it is likely to be difficult to conclude with certainty that it falls outside the scope in C3.2.

New things can be introduced into the BSC so long as they fall within the scope of C3.2.

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• Issues may arise when it is unclear if all of the Modification Proposal falls within C3.2, but part of it does

• In this case it is arguable that the Modification Proposal would change the BSC into something of which at least part was still contemplated by C3.2, and therefore the BSC Panel must progress it through the Modifications Process in Section F of the BSC

Previous Legal Advice on C3.2

C3.2 The balancing and settlement arrangements encompass matters relating to:

a) bids or offers to adjust quantities of electricity on the total system

b) assisting licensee in coordinating & directing the flow of electricity onto & over the national electricity transmission system

c) aiding licensee balancing national electricity transmission system

d) the allocation of the quantities of electricity to BSC Parties

e) the settlement of financial obligations between BSC parties

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• Two Considerations:

1. Valid Mod: Over-rule acceptance / rejection of Modification Proposal by the Modification Secretary (based on compliance with F2.1.2)

2. Related Mods: Refuse to accept the Modification Proposal if it has substantially the same effect as a Pending Modification or a Modification that has been rejected within the past two months (F2.1.4). (The Authority can overrule this BSC Panel decision.)

Acceptance of Modification Proposals by the BSC Panel

The BSC Panel is not entitled to decline to process a Modification Proposal on any of the grounds for which the Authority might not

approve a Modification Proposal.

These are matters for the Authority. The BSC Panel may express a view on such issues but it cannot exclude a proposal from being processed on these grounds.

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• Proposers Own their Modification & can amend Proposed Solution

• Proposers may withdraw their Modification prior to the Workgroup reporting its recommendations to the Panel

• Modification Workgroups can derive an Alternative Solution

BUT THE PANEL OWNS THE PROCESS

• The Panel may require a Modification Proposal to be withdrawn at any time if the Proposer of that Modification is deliberately and persistently disrupting or frustrating the work of the Workgroup and that Modification Proposal shall be deemed to have been so withdrawn (F2.1.12A).

A Word on Proposer Ownership

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• Pre-Mod advice

• Concern over governance issues it might create

• Shaping of mod

• Ultimately rejected

Case Studies

P264 Two-thirds majority requirement for Panel recommendations on licence originated Modifications

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• Pre-Mod advice

• Explanation of how issue currently addressed

• Proposer seeking clarification

• We would have recommended rejection

• Ultimately withdrawn

Case Studies

P264 Two-thirds majority requirement for Panel recommendations on licence originated Modifications

P267 Consideration of wider industry developments & duration of changes when agreeing progression timetables

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• Pre Mod advice

• Consideration of implications

• Shaping of mod

• Advice it should be taken forward as an issue

Case Studies

P264 Two-thirds majority requirement for Panel recommendations on licence originated Modifications

P267 Consideration of wider industry developments & duration of changes when agreeing progression timetables

P274 Cessation of Compensatory Adjustments

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• Pre-Mod advice

• Explanation of custom and practice

• Proposer seeking clarification

• We agreed that the BSC was not clear

• Ultimately a simpler change than proposer anticipated to cement existing custom and practice

Case Studies

P264 Two-thirds majority requirement for Panel recommendations on licence originated Modifications

P267 Consideration of wider industry developments & duration of changes when agreeing progression timetables

P274 Cessation of Compensatory Adjustments

P275 Extending the Performance Assurance Framework

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If there’s no Defect in the BSC the

Modification is invalid and should be

rejected?

Recent Modifications: Concerns Arising

»It should be rejected if the defect or issue is wholly outside the scope of balancing and imbalance settlement (but this may be difficult to demonstrate).

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Should the cost of assessing Modifications

be a factor when determining if or how

they should be progressed?

Recent Modifications: Concerns Arising

»No. The Panel must progress all Modification Proposals brought before it on an equitable basis without undue discrimination, taking account of the complexity and urgency of the proposal.

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Recent Modifications: Concerns Arising

Complex Modifications

with many potential

solutions should be considered as Standing Issues

instead?

»ELEXON encourages this when discussing issues and ideas regarding prospective Modification Proposals with Parties. But it is ultimately up to the Proposer whether to raise a Modification or Standing Issue.

»The BSC Panel may send Modifications with ill-defined solutions into a “Definition” phase.

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Recent Modifications: Concerns Arising

Does proposer ownership mean the

proposer should dictate the process

and progression timescales for Modifications?

»No. The Proposer can only dictate the Proposed Solution. The Panel is the guardian of the Process.

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The changing landscape: the

impact of the European Union

Steve Wilkin

12 April 2012

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Bid-Offer Acceptances

& BMRS?

Bid-Offer Acceptances

&Settlement

Payments

The Future: EU Initiatives

REMIT(Regulation on Energy

Market Integrity & Transparency)

MiFID II Exemption

(Markets in Financial Instruments Directive)Balancing,

Settlement, Market

Coupling, &Data

Exchange

Network Codes(particularly Balancing)

Third Package(Single European Market)

Comitology Guidelines

(Data Transparency)

EMIR, MAD, etc(European Market

Infrastructure Regulation, Market Abuse Directive,

etc)

Single Energy Market by 2014 Fallout from financial crash in 2008

Key players with formal roles:

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• Commission decides what areas need to be covered and drives process:• Framework Guidelines

drafted by ACER (and approved by Commission)

• Network Codes drafted by ENTSO-E (and approved by Commission)

• Commission presents to Ministers for approval (‘comitology’)

• Then legally binding

Process Followed to develop Network Codes

3 year plan for electricity Network Codes: http://ec.europa.eu/energy/gas_electricity/codes/codes_en.htm

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The European Electricity Target Model

(diagram from ENTSO-E)

Congestion Management and Capacity Allocation (CACM)Network Code

Balancing Network Code

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CACM Network Code:

•ENTSO-E live consultation on draft Network Code – closes 23 May: https://www.entsoe.eu/resources/network-codes/capacity-allocation-and-congestion-management

•Potential BSC impacts: timing of Gate Closure; market splitting

•Plan to have legal Network Code finalised by end 2013

Potential BSC impacts & some current events (1)

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Balancing Framework Guidelines:•ACER Consultation from end April? (ACER Home page: http://www.acer.europa.eu/portal/page/portal/ACER_HOME)

•Potential BSC impacts: Balancing Mechanism and payments; imbalance settlement and pricing

•Plan to have legal Network Code finalised by end 2014

Ofgem consultation on implementing the EU Target Model in GB:

•http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?file=EU%20Target%20Model%20open%20letter.pdf&refer=Europe

•Workshop 30 April and consultation closes 22 May

Potential BSC impacts & some current events (2)

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Industry and UK Influence(also trade associations, stakeholder events,

consultations)

JESG

NGET, Ofgem,

industry and ELEXON

Network Code Drafting Comitology(political agreement)

DECC/OfgemStakeholder

Group

DECC, Ofgem, NGET, industry

and ELEXON

Framework Guidelines

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Any Other Business

12 April 2012

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Next Meeting:10 May 2012