bsc panel 224 - elexon · background & issue modification p226 ‘improving large combustion...

BSC Panel 252

12 May 2016

Health & Safety

Change Report and Progress of

Modification Proposals

12 May 2016 Douglas Alexander

252/03

Request to Raise a

Modification ‘Removal of

LCP Data Submission

Requirements’

12 May 2016 Dean Riddell

252/04

Background & Issue

■ Modification P226 ‘Improving Large Combustion Plant Directive Information

Disclosure’ introduced Large Combustion Plant Directive (LCPD) reporting in 2009

■ LCPD legislation now revoked and replaced

■ Legislation change means LCPD references and reporting requirements in the BSC

are obsolete

Proposed Solution

■ Remove from the BSC all references and requirements relating to:

– Large Combustion Plants (LCPs)

–The LCPD and

–Submission and subsequent processing of LCP Data

■ Delete and remove from the BSC Baseline Statement BSCP33 ‘Large Combustion

Plant Directive Data Submission’

Applicable BSC Objectives

We believe this will promote efficiency in the implementation of the balancing and

settlement arrangements and better facilitate Applicable BSC Objective (d)

■ Removal of requirements relating to obsolete legislation would remove unnecessary

complexity and potentially misleading provisions

■ Removes risk of Parties being potentially in default for non-compliance with obsolete

BSC requirements

Implementation, impact and costs

■ Document-only changes

–Central implementation estimated to be one man day effort (approximately £240)

–No participant impacts

■ Current arrangements involve BMRS reporting, but no BMRS change needed

■ We recommend an Implementation Date for this Modification of five Working Days

following approval

Recommended progression

■ Recommend Panel raises Modification

■ Recommend progressing straight to Report Phase as Self-Governance - no material

impacts and does not discriminate between different classes of Parties

■ Panel may consider progressing as Fast Track Self-Governance Modification

–Arguably meets Fast Track criteria – correcting the Code following a factual change

–But changes larger than usual

–Reflect legislation changes

–Remove requirements (albeit obsolete) from participants

–Remove entire BSCP

–Panel must be unanimous to progress and approve as Fast Track

– If Fast Track, 15WD objection period

Recommendations (1 of 3)

We invite the Panel to:

a) RAISE the Modification Proposal in Attachment A;


If the Panel agrees to raise this Modification, we invite the Panel to

a) DETERMINE whether this Modification should be progressed as a Fast Track Self-

Governance Modification

Panel decision must be unanimous to progress as Fast Track


If the Panel determines not to progress this as a Fast Track Modification, we invite the

Panel to

a) AGREE that this Modification progresses directly to the Report Phase;

b) AGREE that this Modification DOES better facilitate Applicable BSC Objective (d);

c) AGREE an initial recommendation that this Modification should be approved;

d) AGREE an initial Implementation Date of five Working Days following approval;

e) AGREE the draft legal text; and

f) AGREE an initial view that this Modification should be treated as a Self-Governance

Modification;

g) NOTE that ELEXON will issue the draft Modification Report (including the draft BSC

legal text) for an 11 Working Day consultation and will present the results to the

Panel at its meeting on 9 June 2016

Alternative Recommendations

If the Panel decides to progress this as a Fast Track Self-Governance Modification, we

invite the Panel to

a) AGREE that this Modification DOES better facilitate Applicable BSC Objective (d);

b) AGREE that this Modification should be approved;

c) AGREE an Implementation Date of five Working Days following approval;

d) AGREE the proposed legal text; and

e) NOTE that ELEXON will issue the Fast Track Modification Report (including the

approved BSC legal text), which will then be subject to a 15 Working Day objection

period

P330 ‘Allowing

ELEXON to tender for

the Uniform Network

Code Gas PAFA role’

12 May 2016 Dean Riddell

252/06

P330: Background and solution

■ UNC Modification 506 introduced performance assurance arrangements into the gas

market and requires competitive tender for an independent gas PAFA

■ P330 Proposer believes ELEXON has significant experience and understanding of

performance assurance and transferable skills and knowledge that potentially meet

the PAFA criteria

■ P330 seeks to enable ELEXON to bid for the gas PAFA role

–ELEXON Board will decide whether to bid

–BSC changes will ring-fence ELEXON and BSC activities from any costs and risks

associated with performing the gas PAFA role, with resources being shared

–Bid costs funded by BSC Parties are returned only if bid is successful

–Bid costs capped at £100k

P330: Implementation

Impacts and costs

■ No implementation impacts and costs to BSC Parties or Party Agents

■ Estimated cost to deliver P330 is £240 (one man day) to implement document

changes

Recommended Implementation Date

■ Five Working Days following Authority approval

P330: Initial Panel recommendations

■ Majority view P330 would not better facilitate Applicable BSC Objective (d)

■ Initial recommendation to reject P330

■ Unanimously recommended Implementation Date of 5 Working Days following

Authority approval

P330: Report Phase Consultation responses

■ Three respondents agreed P330 should be rejected

–Agreed with Panel

–Governance Modifications P324 and P325 could mitigate concerns and it may be

appropriate to consider industry code governance impact of CMA findings

–Parties potentially funding bid for activity entirely outside scope of their licence

–One respondent felt P330 may detrimentally impact Objective (c) by potentially

adding costs to Suppliers over which they have no control or visibility of recovery

Yes No Other

P330 should be rejected? 3 4 1


■ Four disagreed and believed P330 should be approved

–Did not agree core BSC services would be adversely impacted

–Market moving toward dual fuel solutions; an ELEXON bid could lead to synergies

and efficiencies

–Board would consider whether to bid – informed decision when PAFA scope and

tender details known – and should ensure core BSC services maintained

–£100k bid cap high but more realistic cap could provide insight to other bidders

■ One respondent not conclusive but felt there would be wider benefits

–Difficult to justify against BSC Objectives – potential cost and risk to BSC Parties

–But potential unrecoverable cost of unsuccessful bid relatively small

–Wider benefits for the electricity and gas markets as a whole

–Parties also active in gas market could benefit from increased competition in

performance assurance


■ Seven respondents agreed legal text would deliver P330

■ One respondent supported the legal text but had some comments and suggestions

–We do not recommend any changes to the legal text

■ All respondents agreed with recommended Implementation Date

Yes No Other

Agree BSC changes? 7 - 1

Agree Implementation Date? 8 - -

P330: Recommendations


a) AGREE that P330 DOES NOT better facilitate Applicable BSC Objective (d);

b) AGREE a recommendation that P330 should be rejected;

c) APPROVE an Implementation Date of Five Working Days following Authority

approval;

d) APPROVE the draft legal text; and

e) APPROVE the P330 Modification Report Phase

Issue 60 ‘Interfaces

between the European

Balancing Project TERRE

and the current GB market

arrangements’

12 May 2016 Tabled

252/07

Recommendations


a) NOTE that the Issue Group has been closed because no firm conclusions could be

reached and that National Grid would be raising a Modification for the June 2016

Panel.

November 2016 Release

Update: P321 & CP1460

12 May 2016 David Jones

252/07

Key message

■ April Panel meeting:

–ELEXON notified that the Nov 16 Release scope was at risk and advised that a

workaround for P321 is being developed.

–National Grid confirmed EBS delay and recommended that P297 should be

postponed to June 2017.

–The Panel approved CP1460.

■ Progress since April Panel meeting:

–ELEXON issued detailed requirements for impact assessment (IA) on 18 April.

–Both the incumbent and the new AMD service provider worked jointly on the IA.

–ELEXON received IA on 03 May.

Key message

■ New AMD IA

– Estimated costs ~£426k

– Indicative duration 25 weeks

Costs and timescales are still

indicative. ELEXON is clarifying a

number of queries with the new

AMD.

■ Constraint:

–A Contract Change Notification will

be necessary to cover the work from

30 May until the 01 August 2016 (the

start date of the new AMD contract

term).

■ Risks:

–The delivery of P321 & CP1460 is

highly dependent on:

– the successful delivery of BMRS Phase

3 on 23 June 2016; and

– the completion of knowledge transfer

from the incumbent to the new AMD

service provider.

–The estimated costs and timescales

provided may change due to the

ongoing review of the IA.

–The SBR solution is heavily

dependent on National Grid.

–Archive & Purge functionality.

Next Steps

■ Finalise IA review with the new AMD service provider.

■ Start the work on P321 and CP1460 on 30 May to ensure go live by end-November.

■ Return in June to request extension of P297 and P321 implementation dates.

■ ELEXON is developing the P321 workaround solution for June.

Recommendations


a) NOTE the information provided by the new AMD impact assessment;

b) NOTE the constraints, risks and issues presented;

c) NOTE that a paper will be presented to the Panel at its June 2016 meeting

recommending a new implementation date for both P321 and CP1460; and

d) APPROVE the start of the work on the November 16 Release on the 30 May 2016.

Minutes of Meetings 251 and

Actions arising

12 May 2016 Victoria Moxham

Chairman’s Report

12 May 2016 Michael Gibbons

ELEXON Report

12 May 2016 Mark Bygraves

252/01

Distribution Report

12 May 2016 David Lane

National Grid Report

12 May 2016 Alex Haffner

Ofgem Report

12 May 2016 Rory Edwards

PAB Panel Update

12 May 2016

252/01b

Douglas Alexander

Workload between 1 April 2015 and 31 March 2016

152 papers in total across 12 meetings

116 decision papers

36 information papers

SRR/TPR,

24

CoMC,

21

Party Updates,

19

QSP,

15

Supplier

Charges,

13

BSC Audit/TAA,

13

Performance

Assurance

Procedures, 10

Info papers,

9

Commissioning,

6

EMR,

5

Trading Disputes, 4

KPI Reviews, 4

BSC Releases , 3

Large EAC/AA, 3 Panel Escalation, 2 Off Shelf

Suppliers, 1

Qualification Approvals

Approved Deferred

42 0

■ Suppliers - 32

■ MOA - 9

■ UMSO/SMRA - 1

■ Off the Shelf Supplier

–44% Supplier Ids

–2.8% of Energy

2016/17: Forward look

■ Continued monitoring Change of Measurement Class

– Likely to go beyond Apr 2017

■ Smart roll out

■ Impact on Suppliers ability to maintain/achieve performance targets for top

Settlement Risks with so much industry change

■ There are currently ten Members and three Alternates

■ Resignations from two long-standing Members during the year

■ The BSC Auditor and Panel Sponsor also attends the full meeting

■ Ofgem have been attending since Sept 2015 (only for Agenda – P272)

■ On average, 8 Members attended each meeting:

–Reflective of operational requirements

■ No issues achieving quorum (4 Members or their acting Alternates must be present)

Membership

Members’ background

Seeking Small Supplier/Party Agent

experience following Colin Prestwich / Tony Neville

resignations

Large Supplier, 4

Small Supplier, 1

Supplier Agents, 2

Distributor, 1

Independent, 2

Reports from the

SVG and TDC

12 May 2016

252/01a and c

Trading Operations: BSC

Operations Headline Report

12 May 2016

252/02

System Price Analysis Report

12 May 2016

ISG 180/03

Approval of Funding Shares

Audit Scope

12 May 2016

252/10

Kathy Ferrari

BSC Funding Share Audit Scope

■ Funding Shares used to charge ELEXON’s costs to Trading Parties

■ Funding Shares Audit required by the BSC

■ Panel required to agree scope of Audit

■ Scope is limited to calculation of Funding Shares - costs separately audited

■ Funding Share data accompanying ELEXON’s invoices can be checked against the website and assistance is always available from the Finance Team

BSC Funding Share Audit Scope

■ Calculation of Main Funding Shares, SVA (Consumption) Funding Shares, SVA

(Production) Funding Shares, and General Funding Shares (on a default basis)

■ Calculation of Annual Funding Shares (used by FAA)

■ Checking of BSC Cost shares through to invoices

Recommendations

The Panel is invited to:

a) APPROVE the proposed scope of the Funding Shares Audit

Review of the Credit Committee

Terms of reference

12 May 2016

252/11

Thomas Routier

Background

■ BSC Section B5.3.2 requires all Panel Committees to have written Terms of

Reference (ToR)

■ The Credit Committee ToR was last changed in September 2007

■ The lack of diversity in the Credit Committee membership was highlighted at the

March panel meeting as five out of the six members were also Panel chairman,

members, or alternate

■ The Credit Committee has recommended that new members should be welcome

from BSC Parties as four seats are currently available

Proposed changes

■ The Credit Committee members suggested changing the Credit Committee ToR to

open membership to all BSC Parties

■ Changes to Paragraph 2.1.2 ii) that currently restricts membership to members of

the Panel, the ISG and SVG is necessary

■ The proposed changes to the ToR are highlighted in Attachment A

Next step…

■ If you agree with the recommended changes, we will advertise the Credit Committee

available seats in Newscast and on the ELEXON website

Recommendations


a) AGREE the change to the Credit Committee Terms of Reference as provided in

Attachment A ‘Redlined Credit Committee Terms of Reference’; and

b) NOTE that ELEXON will advertise the Credit Committee membership to all BSC

Parties.

Escalation of Potential

Breach and Default

Process (BDP) matter

from the Performance

Assurance Board (PAB)

12 May 2016

252/12

Anna Millar

Types of Performance Assurance Techniques

■ We apply a range of Performance Assurance Techniques (PATs)

overseen by the Performance Assurance Board (PAB)

Error and Failure Resolution (EFR)

■ EFR is a remedial technique

■ It can be identified through any PAT or through communication between PAPs and

ELEXON

■ Requires PAPs to set out actions it will take to resolve the issue with timescales.

■ Process monitored by:

■ - OSMs

- Area experts/data experts

- EFR Analyst

- The PAB

EFR Timeline

■ Issue detected

■ Investigate to check for potential issues with our data or to determine if issue may

have already been fixed

■ Recommend the PAB turn EFR on

■ Send letter/email to confirm this and request plan

■ Plan received

■ Plan reviewed (can be several iterations)

■ Plan “baselined”

■ Plan monitored

■ Issue resolved or plan revised. If required, the issue is escalated.

What do we require from plans?

■ Plans based on milestones that we track using our Resolution Monitoring System

(RMS)

■ Analysis to determine root causes

■ Actions to prevent root causes reoccurring (addressing cause)

■ Actions that address any outstanding errors (addressing symptoms)

■ Forecasted performance improvements (ideally centrally trackable)

Background

■ At its August 2015 meeting, the PAB asked ELEXON to set out the options for

escalating Parties with issues that are subject to the EFR process to the Panel.

■ In November 2015 ELEXON presented the PAB with the options (PAB175/05).

■ The PAB noted that there are two routes that can be taken:

ELEXON escalate the issue to the Panel following breach and Default processes in

(“BDP”).

PAB to escalate the issue by following the escalation process set out in section 2.2.3

of BSCP538 “Error and Failure Resolution”.

■ PAB noted that these two routes could work together and in March 2016 the PAB

agreed an approach and process for how the two processes should operate with

ELEXON.

Overview of Breach and Default Process (BDP)

■ 4,5 and 6 are most relevant to EFR and require ELEXON to send a breach notice

(referencing H3 of the Code) to the relevant Party before default action is taken by

the Panel.

■ Once a Party is considered in Default there are actions that the Panel can take.

Trigger for Parties to be in Default BSC Reference

1 Non-payment of Trading Charges H3.1a

2 Non-payment of any others sums under the Code (other than Trading Charges) H3.1b

3 Credit Default H3.1c

4 Breach of any material provision of the Code which is capable of remedy H3.1d

5 Breach of any material provision of the Code which is not capable of remedy H3.1e

6 Persistent breach of any BSC provision H3.1f

7 Insolvency H3.1g

Principles for when BDP should be used for EFRP issues

■ BDP should be used where there has been insufficient progress or co-operation

within the EFRP such that the escalation steps in BSCP538 “Error and Failure

Resolution” have not resulted in an adequate level of improvement.

■ Use of BDP could be instigated by ELEXON at an earlier stage, if there were a

significant impact on Settlement activities or other BSC Parties.

■ The above approach would be limited to the case of BSC Parties that have been

subject to the EFRP due to the breach of a provision of the BSC and where the other

EFRP escalation processes have taken place.

■ Panel approval will be sought for ELEXON to put a Party in Default.

Escalation – Step 1

■ The Party is escalated to the PAB in accordance with BSCP538 after all previous EFR

processes steps have been completed.

■ ELEXON and the PAB have agreed criteria for when escalation from ELEXON to the

PAB will be applied.

■ At the relevant PAB meeting, ELEXON will explain the nature of the breach of the

Code.


■ The PAB will consider, discuss the Party's EFR plans and determine any actions

required of the Party. If the PAB is dissatisfied with the plans, progress or co-

operation of the Party, it can determine, on a case by case basis, to escalate the

Party to the Panel in accordance with BSCP538.

■ Prior to doing this the PAB will indicate to the non-performing Party in writing what

is deficient about the Party plan, progress against the plan or set clear expectations

and provide the Party with a reasonable timescale to address the concerns.

■ If a decision to escalate the Party to the Panel is made, the PAB will inform the Party

and provide them with the opportunity to provide the PAB with any mitigating

reasons why it has been unable to meet the PAB's expectations or provide any other

reasons it does not believe the Panel should escalate the issue.

■ The PAB will then make a decision whether to escalate the issue to the Panel and

communicate this to the Party and the Panel in writing.


■ The Party is escalated to the Panel in accordance with BSCP538.

■ At the relevant Panel meeting, ELEXON will explain the nature of the breach of the

Code.

■ ELEXON will ask the Panel if it would like ELEXON to investigate breach and Default

options. If not a subsequent request can be made.


■ If the Panel request ELEXON investigate breach and Default options, ELEXON will

provide an update at the next Panel meeting.

■ After the update, the Panel will be asked to recommend whether ELEXON take

action in respect of the breach and Default provisions of the Code (that this will not

necessarily result in a breach notice being issued immediately).

■ If ELEXON does not believe that any of the breach and Default provisions are

appropriate, it will ask the Panel to endorse a recommendation to agree this.


■ If the Panel recommends that ELEXON take action on breach and Default actions,

ELEXON will do so following the timescales prescribed in the Code.


■ If and when a Party is in Default and if the Party has not completed the actions

required by the Panel in the timescales requested by the Panel, ELEXON will consult

with the Panel on further measures:

Suspension of rights to submit ECVNs and MVRNs and/or dis-apply any notifications

already submitted (when gate closure not passed).

Suspension of right to submit bid offer pairs (with consultation with TC).

Suspension of right to register Metering Systems or BMUs (with approval of Ofgem).

Suspension of the right to vote in Panel elections.

Expel the Party from the code.

Next steps

■ ELEXON will discuss any comments the Panel provides with the PAB before finalising

this procedure.

■ ELEXON will prepare another paper to set out the interactions between the EFRP

and the removal of SVA Qualification.

Recommendations


a) NOTE the contents of the paper; and

b) APPROVE the approach to Breach and Default process for Parties escalated from

the PAB to Panel through the Error and Failure Resolution process as set out in this

paper.

Progressing Ofgem’s CGR3

findings

12 May 2016

252/15

Adam Richardson

Background

■ CGR3 launched in 2015

■ Findings published on 31 March 2016

1. Extended SCR provisions

2. Increased use of Self-Governance

3. Enhanced Code Administration

– Critical Friend

– Harmonisation

– Cross-code change and joint working

– Consumer impacts

–Monitoring and oversight

4. Charging Methodologies

■ Request for a Plan - Ofgem letter (3 May 2016)

Delivery Plan

Spring Summer Autumn Winter Spring Summer Autumn Winter2016 2016 2016 2016/17 2017 2017 2017 2017/18

Stream A: Changes that require Modification to the BSC or changes to its subsidiary documents

Stream B: Changes that require amendments to ELEXON or BSC Panel working practices

Stream C: Changes that require further development through code administrator joint working and/or amendments to the CACoP

New SCR Process

New Self-Governance Process

Revised Modification Templates

Revised Self-Governance Guidance

Critical Friend Guidance Published

Dedicated CACoP Webpage

Joint Working Processes published

New Panel processes for project management and assurance

Consumer impacts included in Modification assessments going forward

Revised Metrics Reporting

Central Modification Register

Revised Forward Work Plan processes

Licence Amendments Modification

Modification

Change Proposal

Develop Guidance Ofgem Approval

Develop

Review

Develop

Develop Governance &

Working Practices

Develop

Approach and Next Steps

■ Work to be led by Douglas Alexander

■ Panel Sponsor:

–Sounding board

–Monitor progress

–Ensure Panel needs are met

■ Issue plan to Ofgem

■ Use in deliberations with other code administrators

– Joint workshop (early June - tbc)

■ Amendments subject to Panel / Panel Sponsor approval

■ Notify updates to Ofgem

Recommendations

The Panel is invited to:

a) APPOINT a Panel Sponsor for this work;

b) CONSIDER whether to delegate responsibility for approving variations to this

approach to the Panel Sponsor; and

c) APPROVE the approach and timetable outlined in this paper.

Scope for review of

Market Entry, Exit and

qualification

arrangements and for

review of Metering

Dispensations and Non-

Standard BMU

12 May 2016

252/13

Nick Rubin

Overview

■ Summary of proposed scopes for

–Review of Market Entry, Exit and Qualification arrangements; and

–Review of Metering Dispensations and non-standard BMUs

■ We’d like the Panel to:

–APPROVE the scope of the reviews; and

–NOMINATE sponsor(s) for each review

Review of Market Entry, Exit and Qualification (RMEQ)

■ To check whether the arrangements are fit for purpose, we propose to:

– Identify where we can improve the efficiency of the Entry, Exit and Qualification arrangements, i.e.

reduce cost and time

– Identify how we can improve the guidance and support we provide applicants and Parties exiting the

BSC

– Identify the extent that the BSC Entry and Qualification arrangements are flexible enough to

accommodate our understanding of NTBMs (futureproof)

■ Scope:

– Initial enquiry through to point at which energy may be attributed to a Party’s energy accounts (entry)

or is no longer recognised by the BSC (exit)

– Related Code and licensing arrangements will be considered but not reviewed in detail

■ Engagement: Stakeholder Review Group

■ Deliverables: Final Report (early 2017); regular updates (ELEXON Report)

‘Review of Market Entry and qualification arrangements - The Panel has identified a need to

review the current market entry and exit arrangements. The review should consider whether the

current arrangements are fit for purpose, reflective of working practices and whether they encourage

and enable competition within the market, particularly within the context of non-traditional business

models (NTBM).’

Review of Metering Dispensations and non-standard BMUs

■ We propose to:

– Review existing dispensations and non-standard BMUs to identify where we can improve or introduce

Generic Dispensations to accommodate common themes to reduce likelihood of further dispensations

– This work may identify a need to review aspects of the CoPs

– Consider application of recommendations to existing dispensations to reduce number of outstanding

temporary dispensations

■ Scope:

– All current Metering Dispensations, non-standard BMUs and pending applications

■ BSC Review: this review will constitute a BSC Review in accordance with BSC Section C3.8

■ Engagement: Metering Dispensation Review Group (MDRG) – peer review of ELEXON findings

■ Deliverables: Final report (October 2017); regular updates (ELEXON Report)

‘The Imbalance Settlement Group continues to be concerned by the high volume of metering

dispensations. This encompasses both new applications and requests to extend longstanding

dispensations where corrective action has not been progressed. The Panel has suggested that it may

be appropriate to address this issue via a review of the relevant Codes of Practice (CoPs) to ensure

that they are fit for purpose.’

Role of Panel Sponsor

■ We’d like the Panel to nominate a Panel Sponsor for each review

■ The role is intended to be an advisory, rather than executive, role

■ Where appropriate, the sponsor will:

–Provide advice and direction to ELEXON

–Attend and contribute to any stakeholder meeting

–Help ELEXON to identify relevant stakeholders

■ ~1 day a month

Recommendations


a) APPROVE the scope for the Review of Market Entry, Exit and Qualification

arrangements;

b) NOMINATE a Panel Sponsor for the Review of Market Entry, Exit and Qualification

arrangements;

c) APPROVE the scope for the Review of Metering Dispensations and non-standard

BMUs; and

d) NOMINATE a Panel Sponsor for the Review of Metering Dispensations and non-

standard BMUs.

Next Meeting: 9 June 2016

bsc panel 224 - elexon · background & issue modification p226 ‘improving large combustion...

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