bsc panel 224 - elexon...compliance to the pab –it does not require a code change –the mec has...
TRANSCRIPT
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BSC Panel 243
13 August 2015
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Health & Safety
2
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Report on Progress of Modification
Proposals
13 August 2015
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BSC Modifications Overview
4
Initial Written Assessment P324, P325
Assessment Procedure P308, P315, P318, P321, P323
Report Phase P320
With Authority -
Authority Determined -
Self-Gov. Determined -
Fast Track Determined -
Open Issues Issue 60
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BSC Modifications Timelines
Aug 15
Sep 15
Oct 15
Nov 15
Dec 15
Jan 16
Feb 16
Mar 16
Apr 16
May 16
Jun 16
Jul 16
…
P308 AR DMR
P315 AR DMR
P318 AR DMR
P320 DMR
P321 AR DMR
P323 AR DMR
P324 IWA AR DMR
P325 IWA AR DMR
Issue 60 IR
5
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P324 ‘Review of BSCCo’s
governance: introducing
improved accountability to
BSC Parties’
13 August 2015 Claire Kerr
243/04
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Place your chosen
image here. The four
corners must just cover
the arrow tips. For
covers, the three
pictures should be the
same size and in a
straight line.
P324 Review of BSCCo’s Governance:
introducing improved accountability to BSC
Parties
BSC Panel – 13th August 2015
Alex Thomason
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8
Background
Discussions in recent years over changes to BSCCo’s
vires
Independent review of BSC governance commissioned
Resulting “Knight Report” from 2013 identified
weaknesses in BSCCo governance
Ofgem issued an open letter encouraging BSC Panel and
BSCCo Board to work with industry to address the
reports’ findings
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9
Defect
Knight Report produced multiple recommendations,
including:
Board members should be appointed for renewable three
year terms
The Chairman should be appointed by the Board on
recommendation of Nomination Committee
Board members should be remunerated
BSC parties should have the right to dismiss Board
members by ordinary resolution
The Board should follow the UK Corporate Governance
Code
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10
Proposed BSC Modification
Accountability
Give BSC Parties ability to vote to remove Directors
Responsibility
Bring appointment process in line with UK Corporate
Governance Code
Allow BSCCo Board Chair and BSC Panel Chair to be
different people
Consider remuneration of Board members
BSSCo Business Strategy
BSSCo becomes solely responsible, but requirement to
consult BSC Panel and BSC Parties continues
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11
Views against Applicable BSC Objectives
(d) Promoting efficiency in the implementation of the
balancing and settlement arrangements
Increase Board accountability to funding Parties
Clarify roles of BSC Panel vs BSCCo Board
Provide consistency with UK Corporate Governance Code
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P324: Proposed solution
12
■ Amend the current BSCCo governance arrangements with the aim of clarifying the
relationship between BSCCo, BSCCo Board and the BSC Panel
■ Will address the weaknesses identified in the Knight Report 2013, to bring the
current arrangements in line with best practice
■ To achieve this, amendments need to be made to three key areas:
– Accountability
– Responsibility
– BSCCo Business Strategy
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P324: Areas to consider (1 of 2)
13
■ What voting mechanism should be put in place?
– How will the voting mechanism work in practice?
– Consideration of allocating votes e.g. one party one vote or funding share etc.?
– Should there be any caps or limitations on the number of votes per Party, per
Party Group or type of Party?
– Can the voting mechanism be used at any time during the year or on an annual
basis only?
■ What are the impacts on the existing Board make up?
– What are the processes and practicalities of removing directors?
■ Consider the impacts of removing the Panel’s involvement in a potential
director’s appointment
– What is the Panel’s current involvement in the appointment process and how would
this be amended?
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P324: Areas to consider (2 of 2)
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■ What are the advantages and disadvantages of separating the roles of
Board Chair and Panel Chair?
– What are the current interactions between the Panel Chair and Board Chair
appointments and how would these be amended?
■ Discuss the issue of remuneration for directors
– Should industry directors have the opportunity to receive remuneration?
■ What are the advantages and disadvantages of removing the requirement
for the BSC Panel to approve the BSCCo Business Strategy?
– Are there any additional mechanisms required to ensure that the views of BSC
Parties are reflected in the formulation of the BSCCo Business Strategy?
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P324: Proposed progression
15
■ Six month Assessment Procedure
– Assessment Report by 11 February 2016
– P324 to be progressed in parallel with P325
■ Workgroup membership to include any interested Parties (joint Workgroup
membership for P324 and P325)
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P324: Recommendations
16
We invite the Panel to:
■ AGREE that P324 progresses to the Assessment Procedure;
■ AGREE the proposed Assessment Procedure timetable;
■ AGREE the proposed membership for the P324 Workgroup; and
■ AGREE the Workgroup’s Terms of Reference.
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P325 ‘Improving the
accountability of BSCCo to
stakeholders & better
aligning BSCCo governance
with best practice’
13 August 2015 Claire Kerr
243/05
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P325 - Improving the accountability of BSCCo to stakeholders and better aligning BSCCo governance with best practice
Garth Graham, BSC Panel, Thursday 13th August 2015
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Agenda
• What’s the Issue
• What’s the Solution
• What’s the Justification Against the Applicable BSC Objectives
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What’s the Issue (1)
The Board has identified four key problem areas in its information paper to the June 2014 BSC Panel (Paper 225/20 – Moving Towards A New Governance Model For ELEXON):-
1. Non-compliance with UK Corporate Governance Code;
2. Lack of clarity in the relationship between the BSCCo Board and the Panel;
3. Inefficient decision making;
4. Lack of accountability.
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What’s the Issue (2)
P325 directly addresses two of the four problems the Board identified:-
(1) Non-compliance with UK Corporate Governance Code; and
(4) Lack of accountability.
P325 indirectly addresses the other two problems the Board identified (2) and (3)
P325 also addresses a number of the Knight Report recommendations
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What’s the Solution (1)
Issue Shares in BSCCo (Elexon)
* Based on Funding Share Payment(s)
Class of
Share
Holder(s) of the Shares Number of
Shares
A The Authority 1
B BSC Parties* 10,000
C The Company (National Grid) 1
D DNOs and IDNOs 1,000
E New Entrants 1,000
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What’s the Solution (2)
Each Class of Share has certain attributes
• Those attributes for Classes B, D and E are identical (same as shareholders in other UK Companies, as per UK Corporate Governance Code)
• Those attributes for Classes A and C are similar (veto over changes to Company governance, plus Class A has veto over Chairman)
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What’s the Solution (3)
Any Class B, D and E Shares not allocated are held in Nominee Account
Class B shares allocated once a year based on one Share per 0.01% share of BSC Funding Share
All Classes of Shares have same nominal value (£1) and only divisible as whole shares
Class B, D and E Shares come with the obligation to pay corresponding share of BSCCo costs for the year
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What’s the Solution (4)
Class B Shares can be reallocated via the Nominee Account
• Largest six BSC Funding Parties required to release minimum of 25% of their Class B initial allocation annually (creates liquidity in Class B shares plus dilutes largest six parties)
• All holders of Class B shares able to release as many shares as they wish
• Any Class B shareholder (except largest six) can apply to receive (if they wish) more Class B shares over and above their initial allocation up to average of largest six initial holdings
• No party beholden to any other party to release or receive Class B Shares
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What’s the Solution (5)
DNOs, IDNOs, New Entrants and non BSC Funding Share parties may obtain shares in BSCCo but are not compelled to hold shares
• Limits on holdings for Class D and Class E shares – every party who wishes gets a single share, then any other requests allocated by pro-rata up to a maximum of 200 shares
• Limits on holdings for Class E shares – must divest if becomes Class B holder or merges / taken over by Class B holder
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What’s the Justification against the Applicable BSC Objectives (1)
Neutral against Applicable BSC Objective (a), (b), (c), (e) and (f)
Better against Applicable BSC Objective (d) as the introduction of new governance arrangements will improve the accountability of BSCCo to stakeholders, and better align BSCCo governance with best practice
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What’s the Justification against the Applicable BSC Objectives (2) Current governance model does not allow the Board to function with optimum efficiency and restricts BSCCo’s ability to comply with good corporate governance practice, as set out in the UK Corporate Governance Code
Some initial costs / complexity for the new governance model, long-term, Applicable BSC Objective (d) will be better facilitated through the introduction of new governance arrangements, as the Board is made more accountable to BSC Parties (through BSC Parties’ rights as shareholders) and the BSCCo is able to govern itself more in line with good corporate governance practice
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Thank you for your attention
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P325: Areas to consider (1 of 2)
30
■ What is the most appropriate mechanism for allocating and issuing
shares?
– How many shares should be created?
– Who will be responsible for issuing the shares?
– How long will the shares be valid?
– How will Parties be able to release or receive additional shares?
– Should there be a process for reallocating shares during the year?
■ What voting rights should BSC Parties have in accordance with their
annual funding shares?
– What voting mechanism should be put in place?
– How will the voting mechanism work in practice?
– Can the voting mechanism be used at any time during the year or on an annual
basis only?
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P325: Areas to consider (2 of 2)
31
■ What are the impacts and practicalities on the existing BSCCo model?
– Consider the impact on the existing Board and Panel make up
– Consider the impact on the existing Board and Panel interactions
– Consider the changes to ELEXON as an organisation
– Consider any potential license implications
– Consider the impact on National Grid as the existing license holder/shareholder
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P325: Proposed progression
32
■ Six month Assessment Procedure
– Assessment Report by 11 February 2016
– P325 to be progressed in parallel with P324
■ Workgroup membership to include any interested Parties (joint Workgroup
membership for P324 and P325)
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P325: Recommendations
33
We invite the Panel to:
■ AGREE that P325 progresses to the Assessment Procedure;
■ AGREE the proposed Assessment Procedure timetable;
■ AGREE the proposed membership for the P325 Workgroup; and
■ AGREE the Workgroup’s Terms of Reference.
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P320 ‘Reporting on Profile
Classes 5-8 Metering
Systems after the
implementation of P272’
13 August 2015 Oliver Xing
243/06
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P320: Background
35
■ P272 requires Profile Class 5-8 Metering Systems with Advance Meters be HH settled
■ As part of its implementation, P272 requires changes to PARMS and Supplier
Charges to report any non-compliance
■ P320 proposes to remove these reporting requirement, because the same can be
achieved in a more cost efficient way
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P320: Solution
36
■ P320 will back out the relevant paragraphs that require PARMS and Supplier Charge
changes introduced by P272
■ A Committee report should be created using ECOES data to report on P272 non-
compliance to the PAB
– It does not require a Code change
– The MEC has approved the data licence
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P320: Updated impacts and costs
37
■ Central costs:
– System cost £17,100 (£4,600 increase from the initial quote)
– Ongoing cost £11,400 per annum (£4,800 increase per annum from the initial
quote) to produce the monthly Committee report using ECOES data, for the
duration of P272 monitoring
■ No cost to market participants to implement P320
■ Cost saving
– ELEXON and Suppliers will also achieve a combined cost saving of at least
£250,000 from not changing PARMS as required by P272
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P320: Implementation approach
38
■ P320 should be implemented on the same Implementation Date of P272:
– 1 April 2017, if the Authority decision is received on or before 1 October 2015
■ We recommend an revised cut off date of 1 October 2015, as Parties and ELEXON
will benefit from an early decision on whether PARMS changes should be made
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P320: Panel’s initial views
39
■ Unanimous: better facilitates Applicable BSC Objective (d)
– Cost saving from not making PARMS changes
– EFR is a more effective driver for compliance
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P320: Report Phase Consultation Responses
40
■ Six out of the seven respondents agreed to approve the proposed solution
■ One respondent was unsure on whether P320 meets Applicable BSC Objective (d),
as additional costs will arise for ELEXON to produce the Committee Report, which
would be shared by all BSC Parties, including those Parties with good performance
■ Six out of the seven respondent agreed with the recommended Implementation Date
■ One respondent believed that the cut-off date should be earlier to give Parties
sufficient time to prepare for the change
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P320: Recommendations
41
We invite you to:
■ AGREE that P320 DOES better facilitate Applicable BSC Objective (d);
■ AGREE a recommendation that P320 should be approved;
■ APPROVE an Implementation Date of 1 April 2017 if an Authority decision is
received on or before 1 October 2015;
■ APPROVE the draft legal text; and
■ Either:
– APPROVE the P320 Modification Report; or
– INSTRUCT the Modification Secretary to make such changes to the report as the
Panel may specify.
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P315 ‘Publication of Gross Market Share
Data’
13 August 2015 Oliver Xing
243/07
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P315: background
43
■ Aims to increase transparency in the retail market by publishing Suppliers’ market
share summary data and making market level consumption data more widely
available
■ It will ensure that all parties have equal access to the basic market share data
■ The Panel returned P315 to Assessment Procedure on 9 April 2015 to consult on the
updated solutions
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P315: further Assessment
44
■ The Workgroup has:
– issued a second consultation seeking views on the updated Modification solutions
– further developed the solutions
– issued a third consultation seeking views on the finalised Modification solutions
■ Solution changes :
– in the summary report, anonymise and aggregate data for Suppliers with market
shares below thresholds equivalent to approximately 1% in both domestic and
non-domestic markets (both Proposed and Alternative Modifications)
– make two years’ historical P0276 ‘GSP Group Consumption Totals Report’ available
upon implementation (Alternative Modification only)
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P315: Proposed Modification
45
■ Publish quarterly Suppliers’ market share summary (based on R1 data) on the
ELEXON website
– market share by volume and MPAN count across newly defined characteristics
– national level data
– publish at least two months after each Quarter
– user friendly format and accessible by all parties
– anonymise and aggregate small Suppliers’ data for those who have market shares
under the thresholds equivalent to approximately 1%
■ Publish daily P0276 ‘GSP Group Consumption Totals Report’ data flow for SF, RF
and/or DF Settlement Runs on the ELEXON Portal
– make the data available to all BSC Parties (currently only available to Suppliers)
– non-BSC Parties can access the data through a licence agreement
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P315: Alternative Modification
46
Same as Proposed Modification except for:
■ two years’ historical P0276 data available upon implementation
■ publish a new daily report ‘GSP Group Market Matrix Report’ containing market level
D0082 ‘Supplier Purchase Matrix Report’ for all Settlement Runs
– data aggregated by all Suppliers
– make the data available to all BSC Parties
– non-BSC Parties can access the data through a licence agreement
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P315: impacts and costs
47
■ Proposed Modification
– approximately costs £80k and 29 weeks to implement for central systems
■ Alternative Modification
– approximately costs £104k and 36 weeks to implement for central systems
■ No mandatory impacts and costs for Parties
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P315: implementation approach
48
■ For both Proposed and Alternative Modifications the recommended Implementation
Date for P315 is:
– 30 June 2016, if the Authority decision is received on or before 22 October 2015;
or
– 3 November 2016, if the Authority decision is received after 22 October 2015 but
on or before 25 February 2016
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P315: addressing industry concerns
49
Concerns of some respondents
Workgroup view/action
Would reveal commercially sensitive information • GSP Group level of information • Profile Class level of information • Monthly publication being too frequent
Amended solutions to reduce data granularity • Report on national level • Group Profile Class into customer types • Quarterly publication with two months delay
Even following amendment, P315 could be used in conjunction with other data to reveal commercially sensitive information
Do not believe data could be used in this way; no evidence provided to explain how such information could be revealed
Would expose small Suppliers’ market shares to competitors
Amended solutions to anonymise and aggregate data of small Suppliers (<1% market share)
Data publication might breach CMA’s guidance on transparency
Legal view that publication does not breach the guidance
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P315: industry views from latest consultation
50
Does P315 better facilitate Applicable BSC Objectives?
Yes – 7 respondents
No – 5 respondents
• Transparency is good for competition and anonymity threshold is appropriate to protect small Suppliers
• Promote competition and allow Parties to better understand the market
• Help Parties and NGC to improve forecasting
• Do not agree with the justification for change
• Non-level playing field for Suppliers exceeding the anonymity threshold
• Large Suppliers have more resources to make use of the data
• Current information is sufficient • Still believe the data is confidential
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P315: Workgroup views
51
■ Competition benefits
– promote competition by providing all parties, including new entrants, with equal
access to basic market share information
– help market participants to identify opportunities and react to competition, which
ultimately benefits customers
– encourage new entrants due to better visibility of the market
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P315: Workgroup views
52
■ Other justifications to publish P315 data
– help parties and NGC to better understand the effect of embedded generation and
improve their demand forecasting
– the market share report would be more accurate than the existing reports as it
would be created from a full set of Settlement data
– address information asymmetry – currently non-Supplier Parties are not able to
access P0276 GSP Group consumption data
– greater transparency around SVA embedded generation could improve efficiency of
pricing in forward markets
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P315: Workgroup’s views against Applicable BSC Objectives
53
Proposed Modification
Applicable BSC Objective (b)
Beneficial (unanimous) • Greater visibility of SVA embedded generations would enable
Transmission Company to improve demand forecast and charging activities
• If BSC Parties can improve forecasting, this could result in less imbalance volume for the Transmission Company to manage
Applicable BSC Objective (c)
Beneficial (unanimous) • Better understanding of market share information would:
• promote competition by providing all parties, including new entrants, with equal access to basic market share information
• encourage new entrants due to better visibility of the market
■ Views identical for Alternative, but benefits increased due to more data being
available under the Alternative
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P315: Workgroup’s conclusion
54
■ Both P315 Proposed and Alternative Modifications are better than Baseline
(unanimous view)
■ Alternative Modification is better than Proposed Modification (unanimous view
except for the Proposer)
■ P315 recommendation: Approve Alternative
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P315: Panel initial views
55
We invite each Panel Member to give their views on:
The P315 Proposed Modification against the Baseline
■ Is the P315 Proposed Modification:
– Beneficial;
– Detrimental; or
– Neutral
against each Applicable BSC Objective and why when compared to the current
Baseline?
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P315: Panel initial views
56
We invite each Panel Member to give their views on:
The P315 Alternative Modification against the Baseline
■ Is the P315 Alternative Modification:
– Beneficial;
– Detrimental; or
– Neutral
against each Applicable BSC Objective and why when compared to the current
Baseline?
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P315: Panel initial views
57
We invite each Panel Member to give their views on:
The P315 Alternative Modification against the P315 Proposed Modification
■ Is the P315 Alternative Modification:
– Beneficial;
– Detrimental; or
– Neutral
against each Applicable BSC Objective and why when compared to the P315
Proposed Modification?
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P315 recommendation
58
The P315 Workgroup invites the Panel to:
■ AGREE an Implementation Date for the P315 Proposed Modification of 30 June
2016;
■ AGREE an Implementation Date for the P315 Alternative Modification of 30 June
2016;
■ AGREE the draft legal text for the Proposed Modification;
■ AGREE the draft legal text for the Alternative Modification;
■ AGREE that P315 is submitted to the Report Phase; and
■ NOTE that ELEXON will issue the P315 draft Modification Report (including the draft
BSC legal text) for a 12 Working Day consultation and will present the results to the
Panel at its meeting on 10 September 2015
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Minutes of Meetings 242 and
Actions arising
13 August 2015 Victoria Moxham
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Chairman’s Report
13 August 2015 Michael Gibbons
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ELEXON Report
13 August 2015 Mark Bygraves
243/01
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Distribution Report
13 August 2015 David Lane
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National Grid Report
13 August 2015 Ian Pashley
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Ofgem Report
13 August 2015 Rory Edwards
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Reports from the
ISG, SVG, PAB,TDC,
SRAG
13 August 2015
243/01a-e
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Trading Operations: BSC
Operations Headline Report
13 August 2015
243/02
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Change Report
13 August 2015
243/03
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CMA Energy market
investigation: Summary of
provisional Findings and
Recommendations
13 August 2015
243/08
Justin Andrews
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For today
69
Consider and comment on:
■ The CMA’s provisional findings and proposed remedies
Note:
■ Ofgem’s proposed 3rd Code Governance Review ahead of consultation in late
summer
■ DECC’s response, 31 July,
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/4506
05/CMA_response.pdf
■ Ofgem’s response, 5 August,
https://www.ofgem.gov.uk/sites/default/files/docs/2015/08/ofgem_response_to_the
_pfs_and_notice_of_remedies_0.pdf
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Summary of CMA Report
70
■ CMA investigation started in summer 2014
■ Final report due by end of 2015
■ Provisional findings and notice of potential remedies published on 7 July 2015:
– competition in wholesale gas and electricity generation markets works well
– no strong case for returning to the old ‘pool’ system
– minor concerns on EMR (DECC awarding CfDs outside the CfD auction & CfD budget
allocation)
– critical of large gas and electricity suppliers use of unilateral market power
– concern that Ofgem’s interventions have been to the detriment of competition
■ CMA found that adverse effects on competition arise in:
– wholesale market rules; retail competition and customer engagement; settlement design;
Ofgem’s duties, objectives and independence; and the governance of industry codes
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CMA Consultation
71
■ The CMA sought views by 5 August 2015 on 24 proposed remedies
■ ELEXON provided a response on 31 July 2015
■ We have notified the CMA that the BSC Panel may wish to provide comments
following this meeting
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CMA Remedies relevant to the BSC (1 of 6)
72
■ Market Rules - Absence of locational prices for transmission losses
– Remedy 1: Introduce a standard licence condition requiring locational
prices for transmission losses in order to achieve technical efficiency
– Controversial topic surfaces every few years
– 9 BSC Mods on locational transmission charging since 2002 (last was P229 in 2011)
– Encourages future generation plant to be built closer to areas of demand
– Will lead to a BSC Mod if taken forward
– Interactions with European legislation
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CMA Remedies relevant to the BSC (2 of 6)
73
■ Electricity Settlement Design – no firm plan for moving to half-hourly settlement
– Remedy 13: Require industry to agree a binding plan for the introduction
of a cost-effective HH settlement of domestic electricity meters
– Not clear how this requirement would be created or enforced
– Proposal has implications for other work, e.g. Ofgem’s proposed Code Governance Review, regarding
the co-ordination of industry change
– We believe ELEXON can and should play a key role in taking this forward
– Delivery might build on work of PSRG and Settlement Reform Advisory Group (SRAG)
– SRAG’s first meeting 15 July, focus:
development of proposals to enable the HH Settlement of PC1-4 customers on an elective basis
the promotion of cross-code co-operation to remove identified barriers
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CMA Remedies relevant to the BSC (3 of 6)
74
■ Industry Codes - conflicting interests and limited incentives to deliver policy changes
■ Industry Codes - Ofgem’s insufficient ability to influence code modification processes
Remedy 18a: Make code administration a licensable activity
i. Ofgem oversight of code administrator performance: Not clear on material benefits compared to
the status quo under the BSC or compatibility of BSC funding with the application of penalties
applied under a licence
ii. More powers for code administrators: make the initiation and development of modification
proposals more efficient. This appears to align with ELEXON/Panel (and Ofgem’s) views on more
strategic and proactive code panels and code administrators
iii. Selection of code administrators: CMA preference for impartial code administrators and implies non-
profit is good for independence? CMA raises question of competitive procurement of code
administrators.
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CMA Remedies relevant to the BSC (4 of 6)
75
■ Industry Codes - conflicting interests and limited incentives to deliver policy changes
■ Industry Codes - Ofgem’s insufficient ability to influence code modification processes
Remedy 18b: Give Ofgem more powers to project-manage and control the
process of developing and/or implementing code changes
– Supports Ofgem’s approach on Significant Code Review (SCR) on next day customer switching
– The BSC already affords Ofgem extensive powers to direct the pace of change
– We encourage Ofgem’s early and consistent involvement in modifications
– We believe:
Only assess once in the SCR process (to avoid duplication of effort)
Industry code panels must have a role in voting on Modifications arising from SCRs
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CMA Remedies relevant to the BSC (5 of 6)
76
■ Industry Codes - conflicting interests and limited incentives to deliver policy changes
■ Industry Codes - Ofgem’s insufficient ability to influence code modification processes
Remedy 18c: An independent code adjudicator to determine which code
changes should be adopted in the case of dispute
– Aims to resolve disagreements between parties over code changes more quickly
Not clear how this is better than determinations of Ofgem/Authority
The CMA is currently the appeal body if Ofgem/Authority approves a change recommended for
rejection by BSC Panel
Not clear how/why a new body would resolve disagreements more quickly than now
An additional body may adversely impact coordination between industry code change governance,
licence modifications and legislation
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CMA Remedies relevant to the BSC (6 of 6)
77
■ Ofgem’s duties and objectives and independence
Remedy 16: A Revision of Ofgem’s statutory objectives and duties in order
to increase its ability to promote effective competition
– The CMA queries what change may be required to Ofgem’s statutory objectives and duties
Implications for weighing the balance of arguments with respect to the trilemma?
Implications for Applicable BSC Objectives?
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A 3rd Code Governance Review?
78
■ Progress:
– Ofgem open letter, 15 May
– Noted by Panel in June
– Workshop, 22 July
■ Issues:
– Delivery, analysis, co-ordination, smaller parties, barriers
■ Ofgem thinking about changes:
– Significant Code Reviews
– Code administration requirements
– Self-Governance processes
– Charging methodologies
■ Focus on incremental change
■ Further consultation in late summer
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DECC’s response, 31 July
79
■ ‘impressive amount of analysis’
■ ‘intricate workings of the energy markets have escaped detailed scrutiny over recent
years’
■ ‘all suppliers maintain their focus on delivering the roll-out of smart meters by the
end of 2020’
■ ‘importance of half hourly settlement in facilitating greater innovation in time of use
tariffs and will shortly be bringing forward proposals for pre-legislative scrutiny that
will seek to give Ofgem greater powers in order to deliver settlement reform more
quickly’
■ ‘Government is committed to acting on the final recommendations from the CMA’
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Ofgem’s response, 5 August
80
■ ‘thorough analysis the CMA has conducted on the market’
■ ‘strongly agree with the CMA’s conclusion on the current code governance regime’
■ ‘reformed set of institutions would be central to ensuring that the regulatory regime
is able to respond to the innovation and change the industry is going to see in the
coming years’
■ ‘agree in principle that locational losses could improve price signals and the
efficiency of investment in generation’
■ ‘work with DECC in the coming months to develop a plan for the implementation of
half-hourly settlement’
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ELEXON’s response
81
■ Explanations of BSC, data and our submissions and hearing
■ Licensable activity:
– Ofgem has extensive oversight and powers on change (approval, prioritisation,
timescales, National Grid step-in)
– Implement BSC approach across all codes (and Consumer representation)
– Not for profit
– Competitive process and remove existing BSC restrictions
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Recommendations
82
We invite the Panel to:
■ COMMENT on the CMA’s provisional findings and its notice of possible remedies of
its energy market investigation
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Panel Meeting Dates for
2016
13 August 2015
243/09
Victoria Moxham
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Recommendations
84
We invite you to:
APPROVE the proposed dates for 2016 as set out in table 1; and
APPROVE their publication on the ELEXON website.
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Next Meeting: 10 September 2015