A British Electricity Market 29 June 2004 29/06/04 A British - - PowerPoint PPT Presentation

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A British Electricity Market

A British Electricity Market 29 June 2004

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Ofgem & DTI introductions Opportunities for GB trading Implications of BETTA Overview of Transition Transition activities

– NGT – ELEXON

Next steps and closing remarks

AGENDA

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A British Electricity Market 29 June 2004 Alistair Buchanan Chief Executive Ofgem

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Joint Ofgem/DTI initiative Will apply to the whole of Great Britain comprising:

– GB trading based on England & Wales arrangements – GB transmission access for all parties – Split of transmission functions between system operation and transmission ownership

The BETTA Proposals

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Scottish wholesale arrangements set up at privatisation Different to England & Wales

– no competitive market – reliance on administered arrangements – vertically integrated companies remained in being

Restriction of trade through interconnector arrangements No significant change in Scotland since privatisation

Background

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Scottish Electricity Industry

Belfas t

NIE

Coylton

2 2 M W 500 MW

NGC

Plant margin 66%

Generation 10,000 MW Max Demand 6,000 MW Excess Capacity 4,000 MW

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Consultation responses show strong support including Scottish companies Design phase nearing completion Implementation phase under way

The BETTA Proposals

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The BETTA Proposals

Energy Bill

– enables legal environment in which BETTA proposals will be implemented

Assuming Royal Assent end July

– Legal framework for implementation in place 1 September 2004 – target date for introduction 1 April 2005

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The BETTA Proposals

It’s real It’s happening Purpose of today to outline opportunities, and tell parties what they need to do to prepare

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BETTA – are you ready? Maria Bazell Head of BETTA & Electricity Market Team

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Promote competitive markets Reduce carbon dioxide emissions Maintain reliability of energy supplies Adequate and affordable heating for all

Government Energy Objectives

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BETTA – Energy Bill

Completed passage through the House of Lords Just completed Committee in Commons Third Reading/Report expected around 12 July Still on track for Royal Assent before summer recess

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Go Active

Bill powers to be commenced in August Go-active 1 September By then

– Enduring Codes and licences – Transitional text in Codes and licences – Detailed transition plan – 3 months ahead – High-level plan for remainder of transition period

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Countdown begins!

September – only two months away April 2005 – less than a year to go Objective of today – to ensure everyone here knows what will happen during transition to BETTA

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A British Electricity Market 29 June 2004 Opportunities

Steve Smith Managing Director Markets Ofgem

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Key Expected Outcomes

More competition in Scotland – in generation and supply More efficient GB traded markets More co-ordinated investment in GB transmission networks

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Opportunities (Customers)

Domestic customers in Scotland benefit:

– DTI RIA estimated £13 per customer in Scotland, – help to fuel poor and those on lower incomes, – competition and choice for all GB consumers

Renewables benefit through better access to market and spreading of the necessary transmission investment across GB Industry benefits through competitive prices Market participants benefit through minimum change approach, which minimises costs

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GB market will enable:

– One set of rules supplying customers across GB – Barriers to entry in Scotland removed e.g. removal of administered interconnector arrangements – Real opportunities for Suppliers – Change in risk profile

Opportunities (Suppliers)

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Opportunities (Generators)

Open and fair access to GB transmission system

– common arrangements for access to transmission system – unified pricing methodology – recovery of GB transmission costs from GB charging base – provision of visible non-discriminatory access through creation of independent GB system operator

Interconnector becomes another part of the transmission system Transmission prices will change, but:

– Scottish generators will no longer have to pay separate charges for use

• f interconnector

– Access to GB market

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Opportunities (Renewables)

• Current arrangements stifle development in Scotland
• GB market will enable

– Essential investment in transmission networks – Access to liquid GB market – Competition for output of renewable generation

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Opportunities (Summary)

Good for all classes of customers Co-ordination of investment in transmission Greater access to GB market So how do parties become involved and how do we transfer to the new arrangements?

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A British Electricity Market 29 June 2004 Implications of BETTA

Simon Street BETTA Project Ofgem

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Supply Generation Distribution Transmission

Framework Agreement

BSC

Framework Agreement

CUSC

NGT’s Grid Code

Bilateral Contracts

Settlement Agreement for Scotland

Trading Code

Licences England & Wales Scotland

Electricity Act

(as amended)

Current Legal Framework

Scottish Grid Code

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Supply Generation Distribution Transmission

Framework Agreement

BSC

Framework Agreement

CUSC Grid Code

Bilateral Contracts

Licences

Electricity Act

(further amended)

Enduring Legal Framework

Framework Agreement

New SO- TO Code

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Balancing and Settlement Code

– Trading of wholesale electricity – Enforced contractually by Framework Agreement

• Connection and Use of System Code

– Terms for access to and use of the transmission system – Enforced contractually by a Framework Agreement – Requires compliance with the Grid Code

• Grid Code

– Specifies technical parameters by connectees – Specifies data communication requirements

User Facing Codes

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Implications of BETTA (CUSC)

England & Wales CUSC used as basis for GB document Near final version published 30 April 2004 Differences from England & Wales only where necessary Establishment of GB Amendments Panel Secretary of State will designate changes to existing agreement to give GB effect

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Implications of BETTA (CUSC)

England & Wales CUSC becomes the GB CUSC

– this is the same agreement – only it’s scope will have changed

All generation, distribution and supply licensees obliged to accede to framework agreement (if not already done so) All generation, distribution and supply licensees obliged to comply with the GB CUSC

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Implications of BETTA (Connections)

All parties connected to the transmission system will have agreements with the GB system operator:

– connection agreement – mandatory services agreements

Parties may require Interface Agreements with their local transmission licensee Based on “CUSC form” agreements

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Implications of BETTA (Connections)

Access to GB Transmission System

– removal of constraint of access to interconnector – increase in demand for renewables connection in Scotland

NGT published consultation on 21 May 2004 NGT will publish a technical report at the end of June Further information NGT

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Implications of BETTA (BSC)

England & Wales BSC used as the basis for GB document Near final version published 30 April 2004 Key differences:

– recognise metering registered under SAS – recognise two Scottish GSP Groups – recognise Scottish non-half-hourly metering arrangements – ELEXON as GB BSC company

Establishment of GB BSC Panel

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Implications of BETTA (BSC)

All generation, distribution and supply licensees obliged to accede to BSC framework agreement (if not already done so) All generation, distribution and supply licensees obliged to comply with the GB BSC Changes to the existing BSC to be designated by the Secretary of State The BSC continues; its scope becomes GB

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Implications of BETTA (BSC)

BSC parties obliged to undertake registration activities in respect of metering in Scotland All transactions settled under GB BSC Scottish GSP groups to be added to settlement Further information from ELEXON

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Implications of BETTA (Grid Code)

England & Wales used as the basis for GB document, with some regional differences Second consultation published 7 May Near final version end of July Key differences:

– regional differences where necessary – prudent retention of definitions of large, medium & small generation – review Panel membership – Derogations – Balancing mechanism not scheduling and despatch

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Secretary of State will designate changes to NGT’s Grid Code to form the GB Grid Code GB Grid Code will come into effect as early as possible to enable GB governance to be put into effect Establishment of GB Grid Code Review Panel All generation, distribution and supply licensees obliged to comply with GB Grid Code

Implications of BETTA (Grid Code)

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Scottish Grid Code remains in effect until BETTA go-live Need for existing arrangements to continue Some provisions may cease before go-live (under consideration) Scottish Grid Code Review Panel already working closely with E&W’s Grid Code Review Panel Later with GB Grid Code Review Panel

Implications of BETTA (Scottish Grid Code)

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England – Scotland interconnector to become part of transmission system

– Access agreement no longer required – Use of system agreements no longer required

Anglo-French (no change) Moyle interconnector

– Balancing & Settlement arrangements apply (IEA, IA) – Connection agreement required with NGT – Operational agreement required with NGT

Implications of BETTA (Interconnectors)

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Implications of BETTA

Existing arrangements – Scotland Settlement Agreement for Scotland Connection agreements in Scotland Trading Code British Grid Systems Agreement

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Implications of BETTA

System Operator Transmission Owner Code (STC) Between Transmission Licensees Interfaces with CUSC/Grid Code No impact for users

– users contract with the GB system operator – GB system operator contracts with transmission owners for services – STC provides “back-off” for user-facing obligations

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Implications of BETTA (Small Generators)

• Ofgem/DTI recognise the small generator issues cut across documents
• Therefore decision to consult additionally on the theme of small

generators

• Ofgem/DTI conclusions

– provide small transmission connected generators in Scotland with a discount against transmission use of system charges:

• interim period of three years
• expected to be in the range £2.5 to £3.5 per kilowatt

– amendment to the GB CUSC to relieve licence exempt transmission connected generators from the obligation to become a party to the BSC:

• a BSC Party registers the generation on their behalf

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A British Electricity Market Refreshments – 30 minutes

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A British Electricity Market 29 June 2004 Transition to the new arrangements

Liz Parminter BETTA Project Ofgem

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Transition to a British Electricity Market

Timetable Energy Bill Legal arrangements to support transition Activities to support transition period

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Planning Assumptions

Royal Assent Commencement of Powers “go-active” Go Live Power(s) in use 21JUL AUGUST SEPTEMBER APRIL

Transition to a British Electricity Market

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Transition to a British Electricity Market

Energy Bill Powers for Secretary of State to: Put in place new transmission licences (and amend code framework agreements) Amend licences and codes

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Transition to a British Electricity Market

Go-Active “Appointment” of GB system operator New transmission licence conditions Changes to generation, distribution and supply licences GB CUSC, Grid Code and GB BSC STC introduced GB governance in place for codes

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Transition to a British Electricity Market

The Transition Model Model is transition obligations within codes and licences No need has been identified for bespoke contractual document ( as per NETA ) Need to look to codes and licences for full suite of transitional obligations Parties will be required to sign code framework agreements (to the extent not already done so)

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Transition to a British Electricity Market

All Licensees at “ go-active” will have obligations to: Take such steps and do such things that are necessary to give full and timely effect to BETTA arrangements Cooperate with licensees and other parties in discharge of above Provide the Authority with information on progress Transitional obligations will fall away at BETTA go live

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Transition to a British Electricity Market

Other possible obligations on transmission licensees Requirement for NGT to enter into (in case of users in Scotland) and amend (in case of users in England & Wales) connection and use of system agreements Requirement for SPT and SHETL to provide information to NGT to support NGT’s offers to users Still finalising such licence conditions

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Transitional obligations applying between NGT, generation, supply and distribution licensees in user facing codes Provision made in relevant code licence condition for Authority to modify CUSC, GC, BSC STC during transition period Still considering what if any obligations need to put in place to facilitate the run-off of existing arrangements

Transition to a British Electricity Market

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Lead role for transmission licensees and ELEXON who will have enduring responsibilities in relation to a number of key BETTA business processes:

– GB Transmission Despatch (NGT) – GB Outage Planning (NGT) – GB Connections Process (NGT) – GB charging arrangements (NGT) – GB Investment Planning (NGT) – GB Settlement and Metering (ELEXON) – Transmission owner user facing activities (SPTL/SHETL) – Run-off of existing arrangements (SPTL/SHETL)

Transition to a British Electricity Market

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Further activities in progress: Development of an approach to testing SO-TO interface Development and refinement of data requirements for the transition to new arrangements Development of go-live criteria and appropriate readiness indicators Further detail on operational cut-over to the new arrangements Detailed planning of the activities to support “go-active” Further refinements to the programme plan to include above

Transition to a British Electricity Market

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Summary: Several important transition documents Legal arrangements for the transition to and implementation of BETTA CUSC /Grid Code (Early July) BSC already out G,S,D Licence changes (Early July) Publish designation text (mid August)

Transition to a British Electricity Market

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NGT - Key Business Processes ELEXON – GB Settlement and Metering

Transition to a British Electricity Market

The Transition to BETTA

Ofgem Seminar 29 June 2004, London 30 June 2004, Glasgow Nigel Williams, BETTA Programme Director

Contents

• Introduction to GBSO function
• Timeline for GBSO Transition Activities
• Activity Detail
• Outage Planning
• Energy Balancing
• Transmission Despatch
• Charging and price Controls
• Connection and Use of System Agreements
• Impact on Users

What Will The GBSO Do??

• Outage Planning
• Energy Balancing
• Transmission Despatch
• Charging and Price Controls
• Connection and Use of System Agreements

Integrated Testing (NGT/SP/SSE, NGT/ELEXON)

Training Cut-over

Transitional Arrangements

Go Live Go Active Royal Assent

Transition of Legal Framework and Industry Codes Start of Transition

• f Connections

Agreements Shadowing Connections Process

Commercial Arrangements

Jul 04 Aug 04 Oct 04 Jan 05

1st April 05

Parallel Running

Timeline

J J A S O N J F M A

Outage Planning

4 weeks ahead: start of enhanced shadow operation

GO-LIVE

12 weeks ahead – GB Zonal Margin reporting 13 week ahead shadowing

D

GBSO Shadows Scottish SOs GBSO Manages OP SP\SSE Manage OP

DNOs\Generators Contact SP\SSE

DNOs\Generators Contact GBSO

Highlights:

Data Obligations

• n TL’s to

provide Data

• 1. GBSO Shadowing SP\SSE from 13 weeks ahead, SP/SSE continue with existing processes

until Go Live. Go Live 1st April 05

• 2. Obligations for all User and TO technical data to be provided from designation to populate models etc
• 3. From 4 weeks ahead GBSO may prohibit actions with respect to GB Security (under review)
• 4. Assess need for commercial Balancing Service contracts

Energy Balancing

J J A S O N D J F M A

GO - LIVE

6 Monthly Reactive Services Market Tender (will be GB wide)

D - 3

Live PN data submission GB Balancing Annual Standing Reserve Market Tender (will be GB wide)

(Inc. Black Start)

Highlights:

All BMUs Registered (from Elexon Plan)

Market Tender Tender Assessment

• 1. Tender for GB Reactive Services (6 Monthly) in October
• 2. Tender for GB Standing Reserve (Annual) in October
• 3. Testing and Trialling activities will be bi-lateral and not involve live generation despatch
• 4. Training assistance provided to Users where required / Requested
• 5. Only limited integration testing with Elexon will be necessary
• 6. Cut-over to GB system commences Tuesday 29 March 2005
• 7. Initial GB Physical Notifications required by 1100hrs on Thurs 31 March 2005

Identify Requirements

Reactive and Reserve

BS \ AS Contracts effective Tender Award

J J A S O N D J F M A

Transmission Despatch

SCADA Data required shadowing

GO LIVE

Highlights:

D - 7

Testing and Trialing (Procedures \Facilities)

Training

• 1. Extensive period of datalink and facilities testing required
• 2. Extensive period of GBSO - TO testing and trialling (including role playing and simulations)
• 3. Will meet all transmission connected users to explain the role of GBSO and TO in the Transmission

Despatch process

• 4. Short period of shadowing and cutover
• 4. Go Live Midnight on 31st March 05
• 5. Use of existing control facilities and staff in Scotland

Installation of Control facilities

J J A S O N D J F M A

Charging and Price Controls

M J J

Publish Charges GB Charges Effective

2 Month Notice Period

GO - LIVE

Form of Price Controls Known

GB Formal Charging Methodology Consultation Charge Calculation

Highlights:

Licence Condition:150 Days notice required for tariff change

Methodology Approved

• 1. Assumes 1st April Go Live.
• 2. Policy with respect to form of Price Control needed prior to charging methodology publication
• 3. Approval of methodology by November 2004 to meet present 150 day licence condition.
• 4. Definitive GB charges published 2 months prior to Go-Live

v Connection and Use of System Agreements

• Category A: Existing Users (Connection and Use of System only)

Users with a Connection Agreement connected or connecting before Go Live

• Category B: New Users (Connection, UoS, and Construction

Agreement)

Users with a Connection Offer connecting after Go Live

• Category C: New Applicants

Any new Connection or Modification application made from 1 Jan. 2005

A M J J A S O N D J F M A

GBSO Receives New Applications

GO - LIVE

GBSO Shadows SP/SSE Transitioning of Existing Agreements SP/SSE Continue to make Offers until Go Live Existing Agreements - Discussion/Prep

GO - ACTIVE A B C

GB SQSS Access Policy Decision Info Provided by TOs. Contact established with users

How this will effect Users

• For Transition:
• Existing Connection Agreements replaced with new CUSC Connection

Agreement and Construction Agreement (where appropriate)

• New Users may have new offers with new dates for connection
• For Enduring:
• All Applications for New Connections and Modification Applications should

be made to the GBSO from Go Live

• No major impact expected for E&W Users

Summary of Key User Activities

• Operational readiness
• procedures
• facilities
• training
• test programs
• Implement Connections process
• site data
• draft agreements
• bilateral requirements

NGT BETTA Contacts

BETTA Issues Nigel Brooks, Issues Manager Tel - 01926 656028, email - nigel.brooks@ngtuk.com Contracts and Agreements Guy Phillips, Senior Commercial Analyst Tel - 01926 656339, email - guy.phillips@ngtuk.com Nigel Williams, Programme Director, BETTA Tel - 01926 656952, email - nigel.williams@ngtuk.com

ELEXON BETTA Project – Transition

John Talbot BETTA Project Manager Ofgem/DTI Seminar 29-30 June 2004

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.

Agenda

• Recent Developments/Present Status
• Transition Timetable
• Transition Activities

– Governance & Legal Framework

(GB BSC in place on 1 September 2004 - Go Active)

– Data Acquisition – Testing & Trialling – Cutover

• Further information/assistance

Recent Developments

• CVA/SVA systems development completed –

released 29 June

• “Transition” has started (voluntarily)

– Data Acquisition & Market Trialling Plans

• Published in early February
• Presented at roadshows in England and Scotland
• Amended in light of consultation and republished

– Data acquisition & market trialling commenced (>½ total data from Licensed Distribution System Operators now acquired)

Transition Timetable

A M J J A S O N D J F M 2005 2004

Data Acquisition Testing & Trialling Cutover Panel Election CSDs for Go Active Go Active

Data Acquisition

A M J J A S O N D J F M 2005 2004

Data Acquisition

All data entities submitted

31 October 2004

All data entities registered (inc BM Units)

30 November 2004 1 April 2004

Voluntary commencement

Go Active

Testing and Trialling

A M J J A S O N D J F M 2005 2004

Testing & Trialling

Level 1 Tests Level 2 Tests Level 3 Tests

CDCA Data Set Complete

Cutover Tests End to End Tests Limited Parallel Running Go Active

GB BSC Panel Election Timetable

TIME 13 July Deadline for nominations 16 July Voting Papers Issued Votes received 9 Aug 13 Aug Results announced Go Active

GB Panel in place

21 June Request for nominations Sent to BSC Parties and Prospective GB Parties

Created to allow evidence obtained under SAS to be used under GB BSC Transitional Code Subsidiary Documents Entry Process, Accreditation and Certification Document BETTA Data Take on Procedures Created to allow effective acquisition of Scottish data Testing Document Optional to include obligations relating to Testing Cutover Document Optional to include obligations relating to Cutover Any other document required for smooth transition to BETTA Optional as required

Transitional Code Subsidiary Documents

Steps in Approval of TCSDs required for Go Active

BETTA Go Active TIME Consultation on TCSDs issued 17 June Responses back 14 July Special GB Panel Meeting 2 Sept Approval of TCSDs Experts review Consultation and document 27 July ISG Members act as “experts”

Panel entitled to rely on Pre-Go Active consultations as if they had been carried

• ut under the GB BSC

Entry Processes and Accreditation/Certification

• Proposed recognition of equivalence

arrangements between Scotland and E&W

• To be handled via

– Existing BSC Procedures – Transitional Code Subsidiary Document (presently under consultation) – GB Performance Assurance Board (to be established shortly after Go Active)

• Invitations now being issued to participants to

discuss requirements

Key Cutover Proposals

• Preparations for Go Live start 1 February 2005
• GB-wide Market Domain Data to be

disseminated on 15 March 2005

• Parties remain responsible for any

adjustments from Go Live to

– Energy Contract Volume and Metered Volume Reallocation Notifications (by first gate closure) – Collateral (cleared funds) lodged with Funds Administration Agent (by first settlement period)

User Interfaces

• ELEXON Website

– www.elexon.co.uk/betta

• ELEXON Circulars

– BETTA Distribution List

• ELEXON Events

– www.elexon.co.uk/AboutElexon/Events

• Trading Operations Forum (TOF)
• Supplier Agent Forum (SAF)
• Software Technical Advisory Group (STAG)

Project Contact Details

• ELEXON Helpdesk

– helpdesk@elexon.co.uk – 020 7380 4222

• BETTA Project

– betta@elexon.co.uk

• User Assurance Co-ordinator

– Duncan Jack – 020 7380 4039

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Questions and Answers Panel

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Closing Remarks and Next Steps David Halldearn Programme Director BETTA Ofgem

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Benefits More competition benefits consumers More co-ordinated investment in GB Transmission System More efficient traded markets Open and fair access to the transmission system

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Key Messages Energy Bill completing passage through Parliament Legal environment will be created to give effect to new arrangements in September Several significant documents to look out for You need to prepare for your transitional and enduring responsibilities You need to prepare if you want to take advantage of the new arrangements

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• Speak to NGT about:

– BETTA Issues Manager Nigel Brooks 01926 656 028 – Contracts and Agreements Guy Phillips 01926 656 339

• SHETL contact: Contracts manager Craig Neill 01738 456463
• SPTL contacts :

– Operational Issues George Spowart 0141 776 2431 – BETTA Programme Director Dave Thornton 01698 413 485

• ELEXON contact the helpdesk 020 7380 4222
• High-level plan of activities will be published in next few weeks
• You will face obligations to get ready
• Embrace the opportunities

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Promoting choice and value for all gas and electricity customers