introduction to emr for new suppliers...2015/07/22 · •cfd so levy set for q1 2016 and 15-month...

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


2. EMR Companies

3. CFD Overview

4. Timeline


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


2. EMR Companies

3. CFD Overview

4. Timeline


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


2. EMR Companies

3. CFD Overview

4. Timeline


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


2. EMR Companies

3. CFD Overview

4. Timeline


20

Current website

www.lowcarboncontracts.uk

21

http://www.lowcarboncontracts.uk/

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


Purpose of the tool

View of current tool

Intended development

4. Key dates


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

Transparency Tool: current view

22/07/2015 37

https://sofm.lowcarboncontracts.uk/

Agenda

22/07/2015

1. Introduction

2. More about the supplier obligation

3. The transparency tool

4. Key dates


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


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

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?


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



■ 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


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



■ CFD Operational Cost Payment

–Invoiced daily

–Calculated based using Gross

Demand and the Operational

Levy Rate


■ 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


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


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


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


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


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


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]


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


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



Reserve Payment and Reconciliation

CM Payments




What do I need to pay?


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)


CFD: How are CFD Generator Payments funded?

■ Daily CFD Interim Rate Payment is invoiced 7WD after the relevant

date


£ £

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


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


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


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



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


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



Reserve Payment and Reconciliation

CM Payments




What do I Need To Pay?


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

£ £


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


■ 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


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


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



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


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


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

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


First Credit Cover lodged [15 Sept 16]

First revised Credit Cover lodged [14 April 17]



■ 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?


Any questions?

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



■ 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


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


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

http://dtc.mrasco.com/ListDataFlows.aspx

CFD Backing Data

■ Backing data will contain the same data items, regardless of which

route is used:


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)


/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:


Invoice Item DTC File CSV File

Settlement Cost Levy (Monthly Invoice)

D0364 file (groups 71I-74I)

T045 file

Settlement Cost Levy (Revision Invoice)


T044 file

Settlement Cost Levy (2014/15 invoice)


T078 file

91


■ 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


■ 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



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/












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

–[email protected]

–020 7380 4333


http://emrsettlement.co.uk/

http://emrsettlement.co.uk/

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)


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


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…


Engage with Us

Photos of CFD Projects

Event Booking Online

104

Plenary

22 July 2015

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22 July 2015