Introduction to EMR for New Suppliers
Wednesday 22 July 2015
Health & Safety
Introduction to EMR for New Suppliers – 22 July 2015 2
Welcome
What we will cover?
Agenda Time
Welcome 9.30
Overview of EMR 9.40
Key dates in the CM Calendar for Suppliers 10.10
The LCCC Forecasting Team 10.15
Break 10.45
Suppliers Charges and Calculations 11.00
Lunch 12.00
What you will receive from EMRS? 13.00
What should you be aware of for the future? 13.20
Stakeholder Engagement Session 13.30
What’s coming up? 14.00
Plenary and Close 14.05
Electricity Market Reform – introduction for electricity suppliers
Ruth Herbert
22 July 2015
Agenda
1. Electricity Market Reform
2. EMR Companies
3. CFD Overview
4. Timeline
5. Further information
6
7
Security of supply Decarbonisation
Affordability
Electricity
Market
The “trilemma”
Electricity
Market
What is EMR?
The Government’s Electricity Market Reform programme is
aimed at attracting up to £100bn investment needed to
transform the sector.
8
EMR includes:
• Contracts for Difference (CFD)
scheme to support investment in
new low carbon generation
(replacing the existing
Renewables Obligation) and
• Capacity Market scheme to
facilitate security of supply.
DECC created two companies to
help deliver these schemes:
• Low Carbon Contracts
Company Ltd (LCCC)
and
• Electricity Settlements
Company Ltd (ESC)
Agenda
1. Electricity Market Reform
2. EMR Companies
3. CFD Overview
4. Timeline
5. Further information
9
About LCCC
Low Carbon Contracts Company is a government-
owned company established to be the independent
counterparty to private law contracts known as “EMR
CFDs”.
LCCC is also committed to working in partnership with
EMR delivery partners and industry to oversee the
delivery of the end-to-end CFD scheme, facilitating:
- Delivery Partner Cooperation and
- Industry Readiness
LCCC also runs Capacity Market settlement operations
on behalf of the Electricity Settlements Company.
10
CFD Counterparty
CFD Implementation
Coordinator
Service provider to
ESC
Who we are
“Our non-executive directors bring a wide range of expertise covering energy markets,
finance, law, construction, settlement systems, regulatory oversight and government
policy.” Martin Read, Chair
11
Board
Martin Read (Chair)
Jim Keohane (Senior Independent Director)
Neil McDermott
Helen Turner
Non-executive directors:
Anne Baldock
Tony Bickerstaff
Marion King
Jonathan Mills
Anthony Odgers
Dr Simon Orebi Gann
Tony White
Senior Team
Agenda
1. Electricity Market Reform
2. EMR Companies
3. CFD Overview
4. Timeline
5. Further information
12
CFDs designed to provide long-term
price certainty for low-carbon technologies
13 Introduction to EMR for New Suppliers – 22 July 2015
Source: DECC
CFDs pay a variable ‘top-up’ to developers, based on:
• Strike Price: Estimate of the cost of investing in each technology
• Reference Price: Measure of the average price of electricity
Stages of CFD process
Key feature of a CFD is that it is allocated early in the project
development life-cycle CFD process reflects this.
14
Source: DECC
Roles and Responsibilities under the CFD scheme
15
DECC
sets policy, auction rules, terms, key parameters (e.g. budget, qualification criteria etc) and the operational costs levy rate for the Low Carbon Contracts Company
Low Carbon Contracts Company
is the CFD Counterparty, managing contracts and the Supplier Obligation that funds CFD payments
EMR Settlement Ltd
manages settlement operations on LCCC’s behalf.
Other Outsourced Delivery
e.g. meter verification and fuel monitoring.
Ofgem
Ensures Delivery Body activities
are efficient, cost effectively and
timely, and determines eligibility disputes
National Grid (EMR Delivery Body)
runs application and allocation
processes, and provides analysis to support the setting of
strike prices
CFD Counterparty role
Established as an independent
counterparty to increase investor
confidence in CFDs
Forecasting CFD payments, and
setting Supplier Obligation interim rate and reserve
Signing and managing the life-cycle of CFDs and
Investment Contracts
Managing settlement process including
collecting payments from Suppliers to
pass on to Generators and vice-versa when required.
LCCC’s Guiding Principle is to maintain investor confidence in the CFD scheme and minimise costs to consumers
16
Agenda
1. Electricity Market Reform
2. EMR Companies
3. CFD Overview
4. Timeline
5. Further information
17
Timeline
18
Now
• CFD and Capacity Market operational costs being collected
• CFD SO levy set to zero (as no CFD generation payments required yet)
• No Capacity Market supplier charge prior to first delivery year
30 June
• CFD SO levy set for Q4 2015
• 15-month forecast published (by end July)
30 Sept
• CFD SO levy set for Q1 2016 and 15-month forecast updated
• LCCC approval of “relevant arrangements” for suppliers to implement EIIs exemption
31 Dec
• CFD SO levy set for Q2 2016 and 15-month forecast updated
Q1 2016
• First biomass payments expected
• Green Excluded Electricity exemption applies once CFD payments start
• CFD SO levy set for Q3 2016 and 15-month forecast updated (by 31 March)
Q2 2016
• Negative pricing provisions apply
• Implementation of Northern Ireland settlement system begins (if required)
• First solar PV payments expected
• CFD SO levy set for Q4 2016 and 15-month forecast updated (by 30 June)
Q3 2016
• SO Forecasting Model changes to accommodate Northern Ireland (if required)
• CFD SO levy set for Q1 2017 and 15-month forecast updated (by 30 Sept)
Q4 2016
• First Capacity Payments expected to be made to successful Transitional Auction participants (from 1 October to 31 March)
• CFD SO levy set for Q2 2017 and 15-month forecast updated (by 31 Dec)
Q1 2017
• First onshore and offshore wind payments expected
• CFD SO levy set for Q3 2017 and 15-month forecast updated (by 31 March)
CFD Round 2 Milestones
19
Milestone / Activity Indicative date Responsible
Lay Negative Amendment Regulations (-ve pricing) In force from
20/07/2015
DECC
Lay Affirmative Amendment Regulations deemed necessary following
the CFD consultation (double subsidy, UJVs etc.)
06/07/2015 but
not yet laid due to
Parly time
DECC
Publish Non Delivery Disincentive Guidance
July 2015 DECC
Publish 2015 CFD Allocation Round Notice, Amended CFD, Standard
Terms Notice & CFD Counterparty Costs Notice
tbc DECC
Publication of 2015 Indicative CFD Budget and Strike Prices for Pot 2
Technologies for 2019-21
tbc DECC
Publication of 2015 Supply Chain guidance
tbc DECC
Publication of draft 2015 Allocation Framework Allocation rules
tbc DECC
Please note that timings are subject to Government and Parliamentary process. Low Carbon Contracts Company
will endeavour to provide any updates to milestones in a timely manner.
Agenda
1. Electricity Market Reform
2. EMR Companies
3. CFD Overview
4. Timeline
5. Further information
20
New website is coming soon…
Introduction to EMR for New Suppliers – 22 July 2015
Engage with Us
Photos and info on CFD
Projects
Event Booking Online
22
Key Dates in the CM Calendar
22 July 2015
CM 2015/16 & Transitional Arrangements
Supplier Overview Milestone / Activity Indicative date Impacts
CM Settlement Cost Levy invoicing – ESC costs Started
Apr 2015
Suppliers
Demand Side Response TA auction prequalification process Begins
20 July 2015
National Grid &
Capacity Providers
Demand Side Response TA auction Begins
26 Jan 2016
National Grid &
Capacity Providers
Auction Results Published
10 Feb 2016 National Grid &
Capacity Providers
Suppliers to provide forecast volumes of demand for winter
peak periods
Before 1 June 2016 Suppliers
Suppliers to lodge Credit Cover for TA Supplier Charge Sep 2016 Suppliers
First CM TA Supplier Charge 1 Oct 2016 Suppliers
First Payment to 1st Round TA agreements
Dec 2016 Capacity Providers
24
CM Beyond 2016
Supplier Overview Milestone / Activity Indicative date Impacts
CM Settlement Cost Levy invoicing – ESC costs Continues Suppliers
Annual demand forecast Continues Suppliers
Credit Cover process to cover CM Supplier Charges Continues
Suppliers
CM Supplier Charge Continues driven by
below dates
Suppliers
CM Supplier Charge for 2nd round TA agreements Oct 2017
CM Supplier Charge for 2017 T-1 auction and 2014 T-4
auction (49.26GW at £19.40 per KW circa £1bn)
Oct 2018
CM Supplier Charge for 2018 T-1 auction and 2015 T-4
auction
(plus any 2014 T-4 agreements that are still effective)
Oct 2019
CM Supplier Charge continues based on level of purchased
capacity
2020 and Beyond
25
Forecasting the Supplier Levy
Supplier Stakeholder event 22 July 15
Andrew Miller and Harold Anuta, LCCC Forecasting Team
Agenda
22/07/2015
1. Introduction
Meet the team
Overview of Supplier Obligations
Overview of LCCC Forecasting Team
2. More about the Supplier Obligation
3. The Transparency Tool
4. Key dates
5. Longer Term Outlook
27
Introduction: Meet the team
Andrew Miller Head of Forecasting
• 20+ years in electricity industry
• MSc Renewables & PhD plasma physics
Harold Anuta, Forecasting Analyst
• PhD candidate in energy storage
• Industry consultancy background
Emily Lewis, Forecasting Analyst
• MSc in finance
• Previously at Centrica mid and downstream roles
22/07/2015 28
Introduction: Overview of Supplier Obligations
Contracts for Differences key part of Electricity Market Reform designed to support
low carbon generators
Paid for by a levy on suppliers
Based on initial payments (reserve and interim rate) and later reconciliations
Rate set quarterly, 3 months in advance, with ability for LCCC to raise in period
adjustments if required
Credit requirements (cash or letter of credit)
22/07/2015 29
LCCC
Supplier payments:
Interim levy rate &
Reserve payments Payments to generators with CFDs
Supplier levy
reconciliation Note in some cases
generators pay us
Introduction: Role of forecasting
1. Regulations require we set an Interim Levy Rate
and Total Reserve Amount each quarter, at a level
giving a 19 in 20 confidence that LCCC will have
sufficient money to pay
2. Regulations therefore imply we must make
probabilistic forecasts taking into account the
uncertainties regarding CFD payments
3. Also need to take into account the flow of cash
considering the payment timing
4. We need to continually re-forecast within period to
check we are still likely to be able to pay
5. We also plan to produce longer term forecasts to
give suppliers a longer term view of likely
obligations in future quarters
22/07/2015 30
Levy setting
Cash monitoring
Advanced warning
Agenda
22/07/2015
1. Introduction
2. Supplier obligation (SO)
Main drivers of uncertainty
How we deal with uncertainty
Process
Forecasting
The reserve
3. Transparency tool
4. Key dates
5. Longer term outlook
31
SO: What are the main drivers of uncertainty?
22/07/2015 32
𝑆𝑂 𝐿𝑒𝑣𝑦(£/𝑀𝑊ℎ) = (𝑆𝑡𝑟𝑖𝑘𝑒𝑃𝑟𝑖𝑐𝑒(£/𝑀𝑊ℎ)−𝑀𝑎𝑟𝑘𝑒𝑡𝑅𝑒𝑓𝑒𝑟𝑒𝑛𝑐𝑒𝑃𝑟𝑖𝑐𝑒 £/𝑀𝑊ℎ ) ∗ 𝐺𝑒𝑛𝑒𝑟𝑎𝑡𝑖𝑜𝑛(𝑀𝑊ℎ)
𝑇𝑜𝑡𝑎𝑙 𝐸𝑙𝑖𝑔𝑖𝑏𝑙𝑒 𝐷𝑒𝑚𝑎𝑛𝑑(𝑀𝑊ℎ)
Market reference prices:
1. Baseload (eg biomass)
2. Intermittent (eg wind or solar)
both dependent on market prices
Generation
1. Wind – very uncertain day to day
2. Solar – uncertain hour to hour
3. Biomass – reasonably certain unless there is
an unplanned outage
SO: Dealing with uncertainty
22/07/2015 33
Market reference prices
• Spectron* power prices
• Industry standard volatility model
Wind generation
• Sampled from historic wind speeds
• Use NASA MERRA** data set for UK
Solar data
• Sampled from historic sunshine hours
• Use met office data from across UK
All input into
Supplier
Obligation
Forecasting
Model (SOFM)
Montecarlo***
Simulation
Model
Typically run
with 5000-
10000
simulations
*Spectron is a leading commodities broker and has a leading
position in GB power market
** The MERRA data includes worldwide wind
speeds at defined longitude latitude and height
and is made available free of charge by NASA
*** Montecarlo simulation is a
standard industry approach to
assessing the impact of uncertainty
SO Process Explained
22/07/2015 34
Forecast for ILR
and TRA
Start of 3rd month in quarter
(Dec/Mar/June/Sept)
Board approves ILR and TRA recommends
EMRS calculates
Reserve share
ILR and TRA sent
to EMRS
Notices to suppliers
By end of Dec/Mar/June/Sept
ILR and supplier reserve
LCCC will updated the
transparency tool and may
well also issue a supplier
briefing at this time
An overview of the levy rate/reserve setting process
Agenda
22/07/2015
1. Introduction
2. More about the supplier obligation
3. The Transparency Tool
Purpose of the tool
View of current tool
Intended development
4. Key dates
5. Longer Term Outlook
35
Transparency Tool Remit
1. We have developed this Transparency Tool, consulting closely with
experts from our Working Groups, in order to provide our stakeholders
with insight into our assumptions and calculations.
Requires access via LCCC Site
2. Purpose is to give visibility of the calculations supporting the Interim Levy
Rate and Total Reserve Amount
Confidence for suppliers that the calculations are correct
Understanding of the generation assumptions in the model
Understanding of the uncertainty
3. We intend to add additional functionality further to the aims of
transparency in the near future
22/07/2015 36
Agenda
22/07/2015
1. Introduction
2. More about the supplier obligation
3. The transparency tool
4. Key dates
5. Longer Term Outlook
38
Key dates in 2015
Date Event
Next 2-3 weeks Forecasts of ILR and TRA for Jan-Mar 2016, Apr-June 2016 and July-Sept 2016 and
reconciled (zero) rates for Apr-June 15 published (anticipated)
By 30 September Set ILR and TRA for Jan-Mar 2016
Forecasts of ILR and TRA for Apr-June 2016, July-Sept 2016 and Oct-Dec 2016
(anticipated)
7 October Suppliers receive reconciliation payment from Apr-June 2015 (return of reserve
amount);
9 October Reconciliation statement from July-Sept 15 (zero anticipated)
Reconciled (zero) rates for Apr-June 15 published
By 31 December Set ILR and TRA for Apr-June 2016
Forecasts of ILR and TRA for July-Sept 2016 and Oct-Dec 2016, Jan-Mar 2017
(anticipated)
22/07/2015 39
Agenda
22/07/2015
1. Introduction
2. More about the Supplier Obligation
3. The Transparency Tool
4. Key dates
5. Longer term outlook
Why forecast?
Principles of forecasting
Way forward
40
Longer term outlook: way forward
1. Forecasting refresh
intend to refresh forecasts quarterly in line with setting the rate and
reserve for a new quarterly obligation period
Look at appropriate base case and sensitivities on a case-by-case
basis
2. Looking for feedback on how we present the forecasts
Transparency expert group 10 September
3. Welcome feedback on whether suppliers would appreciate a webinar
once we start to get more certainty around CFD start dates for some
generators
4. Also looking for feedback on other transparency issues
5. Feedback! Please email us at [email protected]
22/07/2015 41
Break
Supplier Charges and Calculations
22 July 2015
What will we cover?
■ Before lunch
–Metered data used in EMR settlement
–The first payment you will be required to make
–What are the Supplier CFD calculations?
–What are the Supplier CM calculations?
■ After lunch
–What you will receive from EMRS?
–What should you be aware of for the future?
Introduction to EMR for New Suppliers – 22 July 2015 44
What does our role involve?
For Suppliers, CFD Generators and Capacity Providers
Receive metered data
Calculate payments and charges
Invoice and monitoring payments
Manage reconciliations of payments
Hold and manage reserve amounts and credit cover
Introduction to EMR for New Suppliers – 22 July 2015 45
Introduction to EMR for New Suppliers – 22 July 2015
■ From the BSCCo
■ Settlement Period level metered
volumes
■ Received on a daily basis
■ 7 Settlement Run Types from II to DF
■ Later run types contain more actual
data
What metered data are we using?
Run Type When is it run
II 5 WDs
SF ~16 WDs
R1 ~35 WDs
R2 ~85 WDs
R3 ~ 150 WDs
RF ~15 months
DF Up to 28 months
46
Gross Demand vs Net Demand?
■ Gross Demand does not include embedded generation
■ Net Demand does include embedded generation
Introduction to EMR for New Suppliers – 22 July 2015
Scheme Net or Gross Losses Applied File
CM Net Distribution SAA-I0142
CFD Gross Distribution and
Transmission SAA-I042
47
What is the first payment I need to make?
Supplier Payment Timeline
2015 2016 2017 2018 2014
Operational Cost Payment
Interim Rate Payment
Reserve Payment & Reconciliation
CFD Payments
Daily
Quarterly
Settlement Costs Levy Payment
Capacity Market Supplier Charge
Penalty Residual Supplier Amount
CM Payments
Monthly
Annually
Introduction to EMR for New Suppliers – 22 July 2015 49
Introduction to EMR for New Suppliers – 22 July 2015
■ CFD Operational Cost Payment
–Invoiced daily
–Calculated based using Gross
Demand and the Operational
Levy Rate
Operational Cost Payment
■ CM Settlement Costs Levy Payment
–Invoiced monthly
–Calculated using market share
based on Net Demand and the
Total Settlement Costs
£ £
50
CFD: Operational Cost Payment
■ The Operational Levy Rate is determined by the LCCC and consulted
upon
■ The Operational Levy Rate for valid from 1 April 15 – 31 March 16 and
is £0.0397/MWh
Supplier’s Operational
Cost Payment
Supplier’s daily Gross
Demand
Operational Levy Rate
Introduction to EMR for New Suppliers – 22 July 2015 51
CFD: When’s my first Operational Cost Payment?
■ Based on SF data only
~18 WD 24 Aug 2015
Billing period Invoice sent Payment due Calculation period
22 Jul 2015 5 WD
Introduction to EMR for New Suppliers – 22 July 2015
17 Aug 2015
52
CFD: How is my refund calculated?
■ LCCC determines if there is are any excess Operational Cost Payment
■ Credit Note would be issued as soon as reasonably practicable after the
end of the financial year
Introduction to EMR for New Suppliers – 22 July 2015
Supplier’s Operational
Cost Repayment
Supplier’s proportion of Total Gross
Demand over financial year
Excess Operational
Cost Payment collected
53
■ The Total Settlement Costs is determined by the ESC and consulted upon
– Net Demand for periods of high demand in the previous financial year
– Periods of high demand are 4 to 7pm during workings days, from 1
November to last day of February
– Total Settlement Costs for the financial year 2015/16 is £3,891,000
Total Settlement
Costs
Suppliers Net Demand
Net Demand of all
Suppliers 1/12
Monthly Settlement Cost Levy
for Supplier
Introduction to EMR for New Suppliers – 22 July 2015
CM: Settlement Costs Levy Payment
54
■ Supplier payment timeline
–Notice of amounts for every month sent 25 March 2015
–Invoices issued each month of the financial year
Billing period - enduring 1 Apr to 30 Apr 15
Invoice issued 1 Apr 15
Payment due 6 Apr 15
CM: When is my first Settlement Costs Levy Payment?
Suppliers notified of monthly amounts
[25 March 15]
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Introduction to EMR for New Suppliers – 22 July 2015
Data period 1 Nov 14 to 28 Feb 15
55
CM: What is the Settlement Costs Levy revision?
■ Settlement Costs Levy undergoes a process similar to reconciliation
–Total costs are calculated with respect to the financial year
–Net demand for periods of high demand within the financial year
■ The revised amount for each month is compared to the initial amount
and Suppliers are either invoiced or credited the difference
Total Costs
Revised Suppliers
Net Demand
Revised Net
Demand of all
Suppliers
Revised Settlement Cost Levy
for Supplier
Introduction to EMR for New Suppliers – 22 July 2015 56
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
■ Timeline for revised calculation for the financial year 2015/2016
–The data periods are used to calculate market share
Initial data period 1 Nov 14 to 28 Feb 15
Invoices issued 1 WD each month 1 Apr 15 to 31 Mar 16
Revised data period 1 Nov 15 to 29 Feb 16
First invoice issued 1 Apr 15
Last invoice issued 1 Mar 16
Revised amounts issued as invoices or Credit Note
[24 Mar 16]
Introduction to EMR for New Suppliers – 22 July 2015
CM: When is the revision calculated?
Suppliers notified of monthly amounts
[25 March 15]
Payment due and payment date [30 Mar 16]
57
CM: How is my Settlement Costs Refund calculated?
■ Refund calculation performed after the end of the financial year (if any excess)
– Calculated using a payment share based on the amount of paid Settlement
Costs Levy Payments
Introduction to EMR for New Suppliers – 22 July 2015
Excess Settlement Costs Levy
Settlement Costs Levy received
from Supplier
Settlement Costs Levy received from all
Suppliers
Settlement Cost Levy Refund for Supplier
58
CFD Calculations
Payment Types
CFD Payments
Operational Cost Payment
Interim Rate Payment
Reserve Payment and Reconciliation
CM Payments
Settlement Costs Levy Payment
Capacity Market Supplier Charge
Penalty Residual Supplier Amount
What do I need to pay?
Introduction to EMR for New Suppliers – 22 July 2015 60
CFD: Generator Payments
■ CFD Generator Payments are calculated based on the difference
between the Strike Price and the Market Reference Price
24hrs
Ele
ctr
icit
y P
ric
e
(£
/M
Wh
)
Generator topped-up to strike price
Strike price
Generator pays back
Market Revenue (£/MWh)
CFD Payment (£/MWh)
Market reference price (£/MWh)
Introduction to EMR for New Suppliers – 22 July 2015 61
CFD: How are CFD Generator Payments funded?
■ Daily CFD Interim Rate Payment is invoiced 7WD after the relevant
date
Introduction to EMR for New Suppliers – 22 July 2015
£ £
62
CFD: How is my Interim Rate Payment calculated?
■ Interim Levy Rate – is a £/MWh rate
–LCCC forecasts the expected CFD Generator Payments and demand
over the quarterly obligation period
■ Adjusted Interim Levy Rate – LCCC has the discretion to perform an
in-period adjustment to the Interim Levy Rate
Daily Interim
Rate Payment
Supplier’s Gross
Demand
Interim Levy Rate
Introduction to EMR for New Suppliers – 22 July 2015 63
CFD: When will I first pay my Interim Rate Payment?
■ The LCCC determined the Interim Levy Rate for Q3 2015 (Oct to Dec)
at £0.000/MWh
22 Jul 2015 ~7 WD 5 WD
Billing period Calculation period Payment due
31 Jul 2015
Invoice sent
07 Aug 15
Introduction to EMR for New Suppliers – 22 July 2015 64
CFD: What if Interim Rate Payments aren’t enough?
■ Reserve Payments are used to cover shortfalls in Interim Rate Payments
■ The LCCC determined the Total Reserve Amount for Q3 2015 (Oct to
Dec) at £0.00
Supplier’s Reserve Payment
Total Reserve Amount
Supplier’s Gross
Demand
Total Demand
Introduction to EMR for New Suppliers – 22 July 2015 65
CFD: When is my first Reserve Payment due?
New Supplier’s
Reserve Payment due
for Q5
Reserve Payment
Notice for Q5
90 days
Q3 Q4 Q5
Oct Nov Dec Jan Feb Mar Apr May Jun
New Supplier’s 1st
Reserve Payment
Invoice
New Supplier
enters the market
Data Reference Period for Q5
Introduction to EMR for New Suppliers – 22 July 2015 66
Introduction to EMR for New Suppliers – 22 July 2015
CFD: What if I do not pay?
CFD
Credit Cover =
21 days of
metered volume
Interim Levy
Rate
Credit Cover is used for:
■ Operational Cost Payment
■ Interim Rate Payment
■ Reserve Payment
■ Mutualisation
■ Accrued interest
67
CFD: When would I first lodge Credit Cover?
■ A new Supplier is required to lodge credit in an obligation period if they supplied
electricity in that period
Introduction to EMR for New Suppliers – 22 July 2015
Every WD calculate
minimum credit required
Find most recent Settlement Day
for which we have metered
volumes
Sum the most recent Gross Demand for each day in the 21 day period and multiply by the
Interim Levy Rate
~7WD 21 calendar days
1 2 3
Wed: 22 Jul 15 Mon: 13 Jul 15 Tue: 23 Jun 15
68
Capacity Market Calculations
Payment Types
CFD Payments
Operational Cost Payment
Interim Rate Payment
Reserve Payment and Reconciliation
CM Payments
Settlement Costs Levy Payment
Capacity Market Supplier Charge
Penalty Residual Supplier Amount
What do I Need To Pay?
Introduction to EMR for New Suppliers – 22 July 2015 70
CM: How are Capacity Providers funded?
■ Monthly CM Supplier Charge will be invoiced on the first working day
of the month
–Calculated using market share based on Net Demand applied to the
Total Capacity payments that are to be paid
£ £
Introduction to EMR for New Suppliers – 22 July 2015 71
CM: Capacity Provider Payments
■ Capacity Providers are paid monthly 29WD after the end of each
month in the Capacity Year (October to September)
–Payments based on the capacity obligation and the relevant
auction clearing price
Weig
hti
ng
(%
)
Capacity Year
Introduction to EMR for New Suppliers – 22 July 2015 72
■ Supplier Charge initial and revised calculation
– Total Annual Capacity Payments are determined post Auction Results
– Net Demand for periods of high demand in the Delivery Year
– Net Demand is initially forecasted data and then replaced once actual data is
available
– The monthly weighting factor profiles payment during the year
Introduction to EMR for New Suppliers – 22 July 2015
CM: Capacity Market Supplier Charge - Calculation
Total Annual
capacity Provider
Payments
Monthly weighting
factor
Suppliers Net
Demand
Net Demand
of all Suppliers
Monthly CM
Supplier Charge for Supplier
73
CM: When will I first pay a Supplier Charge?
■ Supplier payment timeline for Delivery Year 2016/2017
Introduction to EMR for New Suppliers – 22 July 2015
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Jun Jul Aug Sep
Forecast of Net Demand provided [1 Jun 16]
Supplier charge based on forecasted market share
Oct 16 to Apr 17
Supplier charge based on actual market share
May 17 to Sep 17
Data Period for market share 1 Nov 16 to 28 Feb 17
First invoice for supplier charge [3 Oct 16]
74
CM: When will I first pay a Supplier Charge?
If you become an active Supplier after 1 June before a Delivery Year
Introduction to EMR for New Suppliers – 22 July 2015
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Jun Jul Aug Sep
Supplier Charge based on forecasted market share
Oct 16 to Apr 17
Supplier Charge based on actual market share
May 17 to Sep 17
Data Period for market share 1 Nov 16 to 28 Feb 17
First invoice for Supplier Charge May 2016 First day of supply
75
CM: What if I do not pay?
Credit Cover is used for:
■ Settlement Costs Levy
■ Capacity Market Supplier Charge
■ Penalty Residual Supplier Amount
■ Mutualisation
■ Reconciliation Amounts
Introduction to EMR for New Suppliers – 22 July 2015
CM Credit Cover =
Monthly Capacity Market Supplier
Charge
110%
76
CM: When will I Need to Lodge Credit Cover?
■ Example for the 2016/2017 Delivery Year
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Jun Jul Aug Sep
Forecast of Net Demand provided
[1 Jun 16]
Schedule of Credit Cover issued [29 Jul 16]
Revised Schedule of Credit Cover issued
[24 Mar 17]
Credit Cover based on forecasted market share
Oct 16 to Apr 17
Credit Cover based on actual market share May 17 to Sep 17
Data Period for market share 1 Nov 16 to 28 Feb 17
First Credit Cover lodged [15 Sept 16]
First revised Credit Cover lodged [14 April 17]
Introduction to EMR for New Suppliers – 22 July 2015 77
Introduction to EMR for New Suppliers – 22 July 2015
■ During times of system stress
Capacity Providers need to meet
their obligations
■ If they fail they will be penalised
■ If they over deliver they will receive
an additional payment
■ Penalty payments are used to fund
the over delivery payments
CM: What is the Penalty Residual Supplier Amount?
System Capacity
Capacity obligations triggered
Demand less than Capacity
System Demand (GWh)
Syste
m D
em
and
12 am 5 pm
Sufficient Capacity
■ Any remainder is shared amongst those Supplier
who have paid the monthly CM Supplier Charge
78
What is Reconciled?
■ CFD
–Interim Rate Payments
–Reserve Payments
–Follows BSC Settlement Calendar
■ CM
–Supplier Charge
–Settlement Costs Levy
–Fixed timeline
What is reconciled?
When is it reconciled?
Introduction to EMR for New Suppliers – 22 July 2015 79
Any questions?
Lunch
What will you receive from EMRS?
What will you receive from EMRS?
■ Invoices and Credit Notes
■ Backing Data
■ Operational Notices
■ Guidance and Working Practices
■ Circulars
Introduction to EMR for New Suppliers – 22 July 2015 83
Introduction to EMR for New Suppliers – 22 July 2015
■ Supplier Registration Form is
issued once Ofgem have
granted a supply licence
■ Form includes:
–Company details
–Interface Method
–Bank Account Details
–Contact details
■ Working Practice 21- Supplier
Registration
Supplier Registration
84
Invoices and Credit Notes
■ Invoices and Credit Notes will be issued as PDF files (attached to
emails)
■ Invoices will contain:
–Contact Details
–Invoice number
–Invoice date
–Due date
–Payment Type/s
–LCCC or ESC Bank Account details (associated to the Payment Type)
–Total Invoice Amount
Introduction to EMR for New Suppliers – 22 July 2015 85
Sample Invoices
EMR Interface Methods – Backing Data
87
Information Current Method Future Method
Notices • PDF attachment via email • No change
Invoices • PDF attachment via email • In addition - Portal
Credit Cover Report • N/A • DTN • Portal • Email
Backing Data • TXT / CSV attachment
via email
• Email (CSV attachment) • In addition - DTN and
Portal
Introduction to EMR for New Suppliers – 22 July 2015
Formats for Backing Data
■ Three reporting channels for backing data (and daily CFD credit cover
report).
■ Data Transfer Service (DTS):
– Data files will comply with Data Transfer Catalogue (DTC)
– Pipe-separated records (not easily human-readable)
– One file per invoice
– DTC - http://dtc.mrasco.com/ListDataFlows.aspx
■ Portal:
– CSV format (loadable as table of data in Excel)
– Normally one file per invoice, but in some cases different payment types in different files
■ Email attachment:
– CSV format (loadable as table of data in Excel)
– Normally one file per invoice, but in some cases different payment types in different files
88 Introduction to EMR for New Suppliers – 22 July 2015
CFD Backing Data
■ Backing data will contain the same data items, regardless of which
route is used:
Introduction to EMR for New Suppliers – 22 July 2015
Invoice Item DTC File CSV File
Interim Rate Payments Operational cost payments
D0362 file (groups 55I, 56I, 57I)
T001 file
Reserve payments D0362 file (groups 55I, 58I, 59I)
T002 file (or T003 for additional payments)
Reconciliation payments D0362 file (groups 55I, 60I-64I)
T004 file
Mutualisation payment D0362 file (groups 55I, 65I)
T005 file
CFD Supplier Credit Cover Report
D0363 file T018 file
89
CSV Format
■ T003 CSV file (as it might look if loaded into Excel)
Introduction to EMR for New Suppliers – 22 July 2015
/BIC/N1_J1950 /BIC/N1_J1973 /BIC/N1_J0073 /BIC/N1_J0146 … /BIC/N1_J1904 /BIC/N1_J2023 /BIC/N1_J1905 /BIC/N1_J2026
38121592 201507 20150702 SF … 41944.3 622010.199 0 0
38121592 201507 20150701 SF … 57569.812 764813.006 0 0
38121592 201507 20150630 SF … 20440.69 682467.514 0 0
38121592 201507 20150629 SF … 573.52 763206.846 0 0
38121592 201507 20150628 SF … 43956.276 601208.923 0 0
… … … … … … … … …
Column headers identify fields from the
DTC definition e.g. J1973 is the
Obligation Period
Fields from different DTC groups combined
into a tabular structure
90
CM: Backing Data
■ As for CFD, backing data will contain the same data items, regardless
of which route is used:
Introduction to EMR for New Suppliers – 22 July 2015
Invoice Item DTC File CSV File
Settlement Cost Levy (Monthly Invoice)
D0364 file (groups 71I-74I)
T045 file
Settlement Cost Levy (Revision Invoice)
D0364 file (groups 71I-74I)
T044 file
Settlement Cost Levy (2014/15 invoice)
D0364 file (groups 71I-74I)
T078 file
91
Introduction to EMR for New Suppliers – 22 July 2015
■ CFD
–Interim Levy Rate Notice
–Reserve Payment Notice
–Minimum Credit Report
–Late Payment Advice
–Formal Non Payment Notice
–Credit Default Notice
Suppliers Notices, Schedules, Advices and Reports
■ CM
–Settlement Costs Levy Notice
–Schedule of Credit Cover
–Late Payment Advice
–Formal Non Payment Notice
–Credit Default Notice
92
Guidance & Working Practices
Introduction to EMR for New Suppliers – 22 July 2015
■ Guidance Documents
–EMR Settlement Authorisations
–CFD Reserve Payments
https://emrsettlement.co.uk/publications/guidance/
■ Working Practices
–Overview of EMR
–Supplier Registration
–Aggregation Rules
–Amending EMR Party Details
–Late Payment Procedure
https://emrsettlement.co.uk/publications/working-practices
Further EMRS Publications
■ Settlement Data
–Key figures for Supplier payments in 2015/16
–EMR Settlement Calendar
https://emrsettlement.co.uk/publications/settlement-data/
■ EMR Circulars
https://emrsettlement.co.uk/publications/emrs-circulars-2/
Introduction to EMR for New Suppliers – 22 July 2015 94
EMR Settlement website
■ EMR Settlement website
–http://emrsettlement.co.uk/
–Keep updated via our website
by checking our News and
our Calendar for key dates
–Sign up to our EMR Circular
–Sign up to our ELEXON
Newscast (ELEXON website)
■ All queries
–020 7380 4333
Introduction to EMR for New Suppliers – 22 July 2015 95
What should you be aware of for the future?
96
Application window for Green
Imported Electricity
Energy Intensive Industries 1 Oct 2015
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Green Imported Electricity volume taken into account in the next
quarterly reconciliation Apr 2016
Operational Cost Payment revised for the Financial
Year 2016-17 1 Apr 2016
Interim Rate Payment, Reserve Payment, Credit
Cover and Reconciliation to commence during 2016
* LCCC determine the Interim Levy Rate and Total Reserve Amount
September 2015 confirms Q4 – Jan-Mar 2016 December 2015 confirms Q5 – Apr-Jun 2016 March 2016 confirms Q6 – Jul-Sept 2016 June 2016 confirms Q7 – Oct-Dec 2016 September 2016 confirms Q8 – Jan-Mar 2017 December 2016 confirms Q9 – Apr-Jun 2017
* * * * * *
What should you be aware of for the future? (2)
Introduction to EMR for New Suppliers – 22 July 2015 97
Submit forecast of Net Demand for Capacity
Market Supplier Charge 1 Jun 2016
Prequalification Results Day for TA
and T-4 2019 25 Sep 2016
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
First TA Delivery Year Capacity Market Supplier
Charge commences 1 Oct 2016
Settlement Costs Levy revised for the 2016-17
1 Apr 2016
Lodge Credit Cover Sep 2016
Auction Results Day for TA and T-4 2019
Settlement Costs Levy schedule for 2016-17
Late Mar 2016
Schedule of Credit Cover
issued 29 Jul 2016
Any questions?
Stakeholder Engagement Session
22 July 2015
Introduction to EMR for New Suppliers – 22 July 2015
Perception Study for the Low Carbon Contracts Company
Key Statistics • LCCC conducted a snapshot stakeholder analysis in the Spring of 2015
• We surveyed a wide range of stakeholder groups
• Positive feedback but we are on a learning curve
• Strong need for Delivery Bodies to identify who is responsible for what..
• Employees seen as ‘excellent’, ‘knowledgeable’ and ‘great to work with’
NB The above table draws together a number of similar opinions within and across stakeholder groups.
100
Working Together
Collaborate
Engage
Feedback
101
What’s coming up?
22 July 2015
Current website
103
New website is coming soon…
Introduction to EMR for New Suppliers – 22 July 2015
Engage with Us
Photos of CFD Projects
Event Booking Online
104
Plenary
22 July 2015
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22 July 2015