BSC Panel 210
14 February 2013
Report on Progress of
Modification Proposals
Adam Lattimore
14 February 2013
Modifications Overview
2
New
P291
Definition
-
Assessment
P283, P290
Report
With
Authority
Authority
Determined
Self-Gov
Determined
P272, P286
P274, P282, P285, P289
P288
210/04
P291 ‘REMIT Inside
Information Reporting
Platform for GB
Electricity’
David Kemp
14 February 2013
P291 Modification Proposal
REMIT Inside Information Reporting
Platform for GB Electricity
History at Panel
•
Initial paper 193/08 to Panel (Jan 2012), asking whether the
Panel felt that a quickly developed bulletin board solution
would assist participants in meeting their obligations
– Not considered a robust solution by Panel, in addition insufficient guidance was
available from ACER at that time to recommend progression of a change.
•
Subsequent paper 205/06 to Panel (Nov 2012), highlighting that
2nd revision of ACER Guidance had been published that
provided further clarity on some issues, and advocating
development of the BMRS as the GB reporting platform
– Panel generally supportive in principle of development of BMRS as a central
reporting tool for insider information, whilst being mindful of potential costs and
liability issues.
REMIT Regulations
REMIT’s aim is to improve the functioning of energy markets
through prohibiting market abuse on wholesale energy markets.
REMIT introduces, for the first time, a consistent EU-wide framework:
•
•
•
•
Defining market abuse, in the form of market manipulation, attempted market
manipulation and insider trading, in wholesale energy markets
Introducing explicit prohibitions of market manipulation, attempted market
manipulation and insider trading in wholesale energy markets
Establishing a new framework for the monitoring of wholesale energy markets to
detect and deter market manipulation and insider trading
Providing that national regulatory authorities should be given enforcement and
investigatory powers and that member states establish a penalties regime for
sanctioning of breaches at a national level by 29 June 2013.
Article 2: Definitions
(1)
“‘Inside information’ means information of a precise nature which has
not been made public, which relates, directly or indirectly, to one or
more wholesale energy products and which, if it were made public,
would be likely to significantly affect the prices of those wholesale
energy products.”
... information means ...
(d) “other information that a reasonable market participant would be likely
to use as part of the basis of its decision to enter into a transaction
relating to, or to issue an order to trade in, a wholesale energy
product.”
…Art 4.1 goes on to say...
Article 4: Obligation to Publish “inside information”
REMIT Art 4.1:
“Market participants shall publicly disclose in an effective and timely
manner inside information which they possess in respect of business
or facilities ... Such disclosure shall include information relevant to the
capacity and use of facilities for production, storage, consumption or
transmission of electricity or natural gas ... including planned and
unplanned outages.”
…the (non-legally binding) Guidance Notes go on to say…
From the Guidance Note (2nd Ed. 28/09/12): 4.6.1
“As regards wholesale electricity products ... The Agency believes that
the following examples may constitute inside information ...
- Any planned outage, limitation, expansion or dismantling of capacity
of one generation unit, consumption or transmission facility that equals
or exceeds 100MW, including changes of such plans;
- Any unplanned outage or failure of capacity that equals or exceeds
100MW for one generation unit, consumption or transmission facility,
including updates on such outages or failures.“
Guidance Note: Effective public disclosure
From the Guidance Note (2nd Ed. 28/09/12): 6.2
“... inside information should be disclosed in a manner ensuring that it
is capable of being disseminated to as wide a public as
possible...Agency believes that the disclosure of inside information
through platforms has its merits and why…this disclosure mechanism
is considered as the most effective.”
- Agency considers a dual approach to effective disclosure: “If platforms for the disclosure of inside information exist…market
participants…should use such disclosure mechanisms, if not otherwise
specified…”
 “…such publication…constitutes simultaneous, complete and effective
public disclosure.”
 “if adequate transparency platforms do not yet exist…market participants
may be allowed, at least for an interim period or unless otherwise specified,
to publish…on their own website.”
Proposal and Aims
P291 proposes to utilise the BMRS as a central platform for disclosure
of inside information, with the following aims in mind :• To leverage an existing platform that has evolved as a key
reporting and transparency tool within the GB electricity industry
• Align UK practice with the most recent ACER guidance in providing
the preferred central platform as the most effective means of
disclosing inside information
• Establish agreed GB standards of reporting of inside information,
allowing an on-going regulatory oversight and scrutiny through
BSC governance
• Provide traders with a single platform to view information,
increasing efficiency and reducing risk of inadvertent breach
P291: Modification Proposal
• Amend the BSC to allow a REMIT Inside Information Reporting
Platform to be introduced to the BMRS website
• Platform would be developed as part of the Modifications process
11
P291: Things to Consider
• What inside information should be reported?
• What are the system requirements for the platform?
• How would information be submitted/published?
• Should reporting on this platform be mandatory or voluntary?
• What liability issues could there be?
• E.g. liability issues should the BMRS be unavailable
• Is there any relationship with the Transparency Regulation?
12
P291: Proposed Progression
• Recommend that P291 progresses to an Assessment
Procedure
• Recommend a four month Assessment Procedure
• Three Workgroup meetings
• 15WD Impact Assessment & 15WD Assessment Consultation
• Assessment Report presented to Panel in June
• Workgroup membership should include:
• SSMG members
• Other relevant experts & interested parties
13
P291: Panel’s Considerations
• Panel invited to agree P291 should undergo an Assessment
Procedure
• Agree Workgroup’s membership and Terms of Reference
• Panel invited to agree progression timetable
• Recommend four-month Assessment Procedure
14
P291: Recommendations
The Panel is invited to:
• DETERMINE that Modification Proposal P291 progresses to the
Assessment Procedure;
• AGREE the proposed Assessment Procedure timetable such
that an Assessment Report should be completed and submitted
to the Panel at its meeting on 13 June 2013;
• DETERMINE that the P291 Workgroup should be formed from
members of the Settlement Standing Modification Group and
any other interested parties; and
• AGREE the Workgroup’s Terms of Reference.
15
Minutes of Meetings 207
208 & 209 & Actions
Arising
Adam Richardson
14 February 2013
Chairman’s Report
BSC Panel
Andrew Pinder
14 February 2013
210/01
ELEXON Report
Peter Haigh and Chris Rowell
14 February 2013
Distribution Report
David Lane
14 February 2013
National Grid Update
Ian Pashley
14 February 2013
European Update:
Ofgem
Lisa Charlesworth
14 February 2013
210/01a
Report from the ISG
14 February 2013
210/01b
Report from the SVG
14 February 2013
210/01c
Report from the PAB
14 February 2013
210/01d
Report from the TDC
14 February 2013
210/01e
Report from the JESG
14 February 2013
210/02
Trading Operations
Report
14 February 2013
210/03
Change Report
14 February 2013
210/05
‘Responses to the Draft
Business Plan’
Victoria Moxham
14 February 2013
Recap on process
17 December:
Draft Business
Plan issued for
industry
comment
December
2012: Draft
strategy and
budget
reviewed by
Board and
Panel
30
23 January:
Deadline for
submission of
comments
(extended from 18
January)
February 2013:
Comments and
revised Business
Plan reviewed by
Board and Panel.
Panel approval of
the Strategy
March 2013:
Board approval of
the Budget
Engagement with BSC Parties pre and post
the consultation deadline to discuss the
Business Plan, respond to questions and
gain a better understanding of views on it.
Interest in the Business Plan
• Document downloaded 99 times by 88 unique individuals between
17 December and 23 January (external downloads only – i.e.
excluding ELEXON viewings).
• High average view time (8 mins 16 seconds) – indicates it’s being
read rather than just being glanced at (average view time per page
of the ELEXON website is approx 2 mins).
• We haven’t received the message that Parties didn’t have time to
respond.
• Generally - Parties are reverting back to the stance they took
before the new mission and vision were introduced in the 2011/12
Business Plan; i.e. not feeling compelled to comment because
there’s nothing causing them concern.
31
Responses received
• 2 formal written responses from ScottishPower & SSE
• Exchanges with npower and British Gas throughout the period
• Confirmed verbally that there’s nothing in the strategy or budget that
causes them concern.
• Feedback (but no formal written response) from EDF
• Considered the Business Plan internally, decided not to formally respond
(partly because of other priorities, partly because they are comfortable
with the Business Plan).
• Have sought reassurance that Parties will have the opportunity to
comment on and influence changes to internal IT systems.
32
Amendments to the Business Plan
• No specific actions needed in response to industry comments
• But, value in providing additional clarity and reassurance to BSC
Parties in 2 areas:
Delivery of Application
Strategy (Priority 1)
• The budget is a request for funds, not a permit to spend
• The project will be subject to regular Board scrutiny
• All expenditure approved and signed off by the Board, based on a robust business
case
• We intend to liaise heavily with the industry and seek their input on the solutions
Smarter Markets
(Priority 4)
• Any work ELEXON undertakes will be reported to the BSC Panel and subject to its
regular scrutiny
• BSC Panel would oversee the entire piece of work
• The BSC Panel would be responsible for the release of funding associated with the
work
• NB Some additional changes may be made to the Budget to reflect
headcount changes – will be highlighted to the Board in March.
33
Next steps
14 Feb
• Comments and revised Business Plan presented to the Panel
• Panel asked to approve the Strategy
• Final Budget presented to the Board
• Board asked to approve the Budget
6 March • (Subject to Panel approval of the Strategy)
11 March
• Business Plan published
• BSC Parties notified via Newscast
• NB The small number and nature of comments received gives the
potential for bringing the Panel’s approval of the strategy forward
to February (see timetable on next slide).
• This is in line with the approach adopted last year.
34
Timetable
Nov
Dec
1
3
Note Process Review draft
Panel & Key Themes
Strategy
Board
Parties
Feb
Mar
6
Request to
vary
timetable
8
Consider &
comments &
revisions
10
Strategy
approval
7
Consider
comments &
revisions
2
Review Budget
& Strategy
5
Workshop
Issue for
comment
4
35
Jan
9
Consider&
Panel
comments
11
Approve
Budget
Apr
Recommendations
• The Panel is invited to:
• NOTE the comments received on the draft Business Plan;
• NOTE the actions taken by ELEXON to address the comments
received;
• NOTE the revised Business Strategy and Budget;
• APPROVE the Business Strategy; and
• NOTE that the Board will be asked to approve the budget to deliver
this strategy.
36
Balancing Network Code
Update
Steve Wilkin
14 February 2013
Overview of Electricity Network Codes
38
Source: National Grid JESG website
Recent and Future Milestones for the Electricity
Balancing Network Code
»
September 2012 - final version of Electricity Balancing
Framework Guidelines (the scoping document for the Network
Code) published by ACER
•
39
Scope extends to balancing mechanism & imbalance settlement, so will directly
impact the BSC
»
December 2012 – European Commission instructed ENTSO-E to
start drafting the Electricity Balancing Network Code and to submit
it by 1 January 2014
»
January 2013 - Part draft of the Electricity Balancing Network
Code published on ENTSO-E website in January
»
March 2013 – ENTSO-E plans to publish the draft Network Code
for a two-month public consultation. As part of this there is likely
to be a public workshop.
Probable content of the Electricity Balancing
Network Code
» From verbal report by National Grid to the Ofgem/DECC
stakeholder group:
• The imbalance settlement part will include: pricing, rules,
imbalance calculation and Settlement Period Duration, and roles
• The Balancing Mechanisms/Markets will gradually merge so that
there are multiple Coordinated Balancing Areas (CBAs) where
the majority of BM products and prices are shared between
neighbouring TSOs with a common merit order.
• By 2020 we expect one EU wide Balancing Mechanism (BM).
» Personal view:
• Two tier system with current GB Balancing Market interacting
with EU-wide BM is possible
40
Possible impacts on the BSC in more detail
(1)
» Balancing Mechanism
Gate Closure up to 1 hour but perhaps less
Bid/Offers in common format
Common EU merit order (for some or all products)
All Bid/Offer Acceptances to be paid at marginal price (unless
there is a better alternative) – initial proposal to be made within
one year (according to the part draft Network Code)
41
Possible impacts on the BSC in more detail
(2)
» Imbalance Settlement
Harmonised principles for calculating imbalances and imbalance
prices
main features to be harmonised within 3 years of Network
Code coming into force (which probably means by January
2018)
Settlement Period should be no longer than 30 minutes & ENTSOE shall do cost-benefit on harmonising its duration across Europe
Public consultations must last at least 4 weeks (appears at first
sight that this would include BSC Modifications)
ENTSO-E to provide annual report on progress towards
harmonisation
42
Other European Developments
that may impact the BSC
» CACM Network Code
• ACER Opinion on CACM drafting issued to ENTSO-E in
December
• ACER/ENTSO-E discussions continue
• Market splitting is a potential impact on the BSC
» Transparency Regulation about to enter comitology
• Data to central European ENTSO-E platform
• Probably has to be implemented by end 2014
• Data reporting for GB electricity via BMRS has been suggested
» REMIT
• Reporting of inside information - P291 has been raised
• BOAs reportable to ACER in longer term
43
Update on Chairman
Appointment Process
Adam Richardson
14 February 2013
Any Other Business
I: Governance Review
14 February 2013
Next Meeting:
14 March 2013