Status Update England

1
Status Update - England Wales

• Retail competition began rollout in September
• - profiling based settlement
• - 14 month final reconciliation
• - Retailer-hub commercial framework
• Major review of market initiated by government
• - bilateral contract based trading
  arrangements
• - centralised control
• - 2 year 500 million programme to
  implement

2
Key Issues - England Wales

• Form of new Trading Arrangements - especially
  balancing market
• Demonstration / evaluation of benefits - key
  concerns regarding liquidity, transparency,
  security of supply
• Governance of new market - central control via
  NGC
• Vertical integration

3
Parallel Markets
Forwards and Futures Settlement
Day Ahead Auction Settlement
Residual Settlements
Short term Bilateral Market Settlement
Balancing Market Settlement
Ancillary Services
Capacity Options?
4
Trading Electricity - Today
Delivery
Risk Management
Spot Market
Settlement
Despatch
Transmission
Special Issues
Liquidity
Timing (generator flexibility)
Real time balancing
Shared, constrained capacity Mutual risk of
disconnection
14 month reconciliation
Bilateral contracts EFAs, CfDs
Pooling and Settlement Agreement (the Pool)
Today
NGC licence
5
Trading Electricity - Proposed
Delivery
Risk Management
Spot Market
Settlement
Despatch
Transmission
Special Issues
Liquidity
Timing (generator flexibility)
Real time balancing
Shared, constrained capacity Mutual risk of
disconnection
14 month reconciliation
Forwards, Futures
RETA
Balancing and Settlement Code/NGC licence
Short Term Bilateral market
6
Proposed Governance
Implementation
Enduring
OFFER / DTI
OFFER
Development and Implementation Steering Group
Balancing and Settlement Code Panel
NGC
Service Providers
Expert Groups

• Balancing and Settlement Code
• - advice from Panel
• - authority via NGC licence
• NGC breakup?

• Informal structure
• Reliance on NGC and other providers

7
Vertical Integration
49.5
42
11.5