Mod_32_18 Working Group 2 Dublin, 13 March 2019

Revised SSE Mod – Impact Assessment Current implementation uses availability and a binding Replacement Reserve flag as a substitute for Replacement Reserve quantity. System Service quantities not present in market systems. SSE revised mod to apply System Service Flags based on units providing Ramping Margin 8. A settlement grade quantity representing Ramping Margin 8 does not exist in the market systems.

Revised SSE Mod – Impact Assessment Proposal needs to develop these design changes to indicate: Calculation of an RM8 value (complex) Interfacing the central systems to the TSOs’ system services (complex) Change in proposal to remove requirement for complex changes. Possible to implement a variant based on Availability; however, this would be a change to high level design. Not in a position at this stage to have proposal assessed by vendor(s) until questions are bottomed out: What is best way to represent RM8 (or alternative) in the calculation? Where do the values for the calculations come from? Is RM8 the best system service to use?

SEMO Mod – Impact Assessment Mod would be implemented by calculating the System Service Flag based on broader set of constraints that limit an increase a units output: All Operating and Replacement Reserves  (except Negative Reserves) S_MWR_ROI, S_MWR_NI S_SNSP_TOT S_RoCoF, S_MWMAX_NI_GT, S_REP_NI, S_REP_ROI, S_MWMAX_ROI_GT, S_MWMAX_CRK_MW , S_MWMAX_STH_MW and any others that may be added from time to time . Units bound by a binding constraint would be flagged. This includes units that are included in the constraints that are OFF. Units that are not available are not flagged. We have tested the application of this approach and can confirm that we would be in a position to implement the change immediately if approved.

Current vs SEMO Mod – CDIFFCNP on 24th Jan

Current vs SEMO Mod – CDIFFCNP on 24th Jan IE DSUs NI DSUs NI GTs CGT8 Trip TH RP TP ED LPS AT PB TB MP2 Out GI4 Out C30 Out

Current vs SEMO Mod – CDIFFCNP on 24th Jan IE DSUs NI DSUs NI GTs RP TP ED CGT8 Trip TH LPS AT SSE mod would have broadly similar effect with following differences: All available DSUs and GTs may be covered. Slow units may not be covered. Depends on units that provide RM8, which may not be all units. PB TB MP2 Out GI4 Out C30 Out

Current vs SEMO Mod – CDIFFCNP on 9th Oct This value needs to be considered in light of closed Known Issue 5883.

Current vs SEMO Mod – CDIFFCNP on 9th Oct NI GTs LPS TH RP TP ED IW DW AT NW5 Out AD2 TYC TB PB B32, B10 Trip MP1,2&3 Out

Current vs SEMO Mod – CDIFFCNP on 9th Oct NI GTs LPS TH RP TP ED IW DW AT NW5 Out SSE mod would have broadly similar effect with following differences: All available DSUs and GTs may be covered. Slow units may not be covered. Depends on units that provide RM8, which may not be all units. AD2 TYC TB PB B32, B10 Trip MP1,2&3 Out

Questions raised Greater clarity is required on how the SS flags would be created through this proposed modification. SS flags would be created as the product of the Non-Energy flags associated with the relevant constraints: SO Flag NM Flag SS Flag MWR POR 1 Min 5 units HOL Final Flag

Questions Does this mean if the operating reserve constraint is binding, all units that are not on are not exposed to difference / non performance charges? Or is it just a unit that has an operating reserve flag applied to it? The latter. The approach that is applied to SO Flags is applied SS Flags. The only difference is that: SO Flags are based on all Operational Constraints whereas SS Flags are based on a subset of Operational Constraints that limit an increase in the output of the unit.

Questions Why is the min not included? Should it not be when the min is binding that requires the MW from the area on that should result in the SS flag? A unit bound by a min constraint can increase its output whereas a unit bound by a max constraint cannot. Therefore, it is appropriate to remove difference charges for units that cannot operate at higher levels for system reasons. It is less clear why you would remove difference charges for units that can increase their output.

Questions The governance of this needs to be clearly identified. How are ad hoc / weekly constraints applicable to this SS flag? There is a trade off between the certainty that is provided by hardwiring the constraints applicable to the SS flag in the TSC and the flexibility that need to reflect new constraints as they arise. This is the same for SO flagging. This is a matter for the Modification Committee and RAs. Recommend specifying a clear principle in the TSC with the actual constraints that conform to this principle being specified in an information document.

Questions Is the Methodology for determining SO and NM flag document just indicative and the TSO do not have to strictly follow it? The rules in Appendix N specify when a unit is flagged e.g. for SO Flags, when it is bound by an Operational Constraint in the latest Indicative Operations Schedule. This is legally binding. The Methodology sets out how we comply with the provisions of Appendix N.

Questions Is a scheduled output of 0 MW from the Indicative operations schedule mean a unit is bound by the presence of an operational constraint? How does the operating reserve constraint apply to a unit at 0 MW? Depends. In the case of some constraints, the unit can contribute to it when off e.g. replacement reserve. In others e.g. POR, the unit must be synchronised. Where a constraint limits the output of a set of units, a unit that is available but off can be flagged.

Questions Just increased or does decreased come into affect? This mod proposes to SS flag only units bound by constraints that limit increases. The reason for this is that the unit should only be absolved of non-performance difference charges where it could not increase its output.

Questions If the 9th Oct is used, the ramping binding constraint was a prolonged constraint which is no longer in place, therefore, in demonstrating the effect of the SEMO proposal, it should be highlighting how it will work, outside of this binding constraint no longer in place. Outcome would be the same. MWR_ROI was binding on the 9th Oct. If MWR_ROI was not binding, the result would be twofold There would be less SS flags at zero so more units would be more exposed to difference charges. The price would be less extreme as the more of the stack would be available to set the price. These are complementary effects.

Questions The current wording is also ambiguous. If a unit PN was set at zero and the scheduled output from the most recent Indicative Operations Schedule was zero —is this scenario covered in the proposed drafting? If increases in output are not possible as the unit is bound by an operational constraint in the Indicative Operations Schedule, it would be covered. Where the unit is not bound by an operational constraint in the Indicative Operations Schedule, it is not covered.

Questions The implementation timelines for the proposal and possible impacts were agreed to be necessary as part of the proposal. These haven’t been included, please can they be provided? Proposal can be implemented as soon as the modification proposal can be approved; however, the change must follow due process and may not be acceptable to either the Mods panel or the RAs. Likely impacts have been provided here.

Comment Finally, we note that the SEMO mod clearly indicates itself as an alternative proposal to 32_18. There wasn’t a consensus in the working group, that the SEMO proposal was a clear replacement to the 32_18. It also should be noted that BnM do not see both modifications as mutually exclusive and that we see value in running both in parallel. We do not consider that the two modification proposals are mutually exclusive and if the Modifications Committee considers it appropriate, it could progress the two approaches.

Comment … expedience is paramount for this interim modification as there are real exposures for participants to capacity difference payments until a modification is in place. We would proposed that the next working group, would it be scheduled as soon as possible, with the aim of having an emergency modifications committee meeting in March. We agree with the RAs that there is a degree of urgency around this issue and that we need a practical solution to be adopted in the near term, but on an interim basis (until an enduring solution); We can discuss next steps at the Working Group.

Conclusions Hopefully, the materials today have answered participants’ questions. Proposed approach is good, quick and cheap: Good: Extends the current design rather than changing it. Would effectively address the concerns of participants without removing the incentive to perform. Retains dynamic inherent in market design. Quick: Can be implemented immediately subject to a modification to the TSC. Cheap: Will not require significant expenditure to change systems and processes. SSE mod requires further work before it can be fully assessed; however, this can be progressed alongside any consideration of the SEMO proposal (as appropriate).