BSC Panel 204 11 October 2012. Report on Progress of Modification Proposals Adam Lattimore 11 October 2012.

BSC Panel 204 11 October 2012

Report on Progress of Modification Proposals Adam Lattimore 11 October 2012

2 Modifications Overview New Definition- Assessment P272, P274, P275, P276, P277, P278, Standing Issue 43 ReportP272 With Authority - Authority Determined - Self-Gov Determined -

204/04 P274: Cessation of Compensatory Adjustments Talia Addy 11 October 2012

4 Data for Settlement periods that have been subject to Final Reconciliation cannot be changed If an error is identified in a Settlement Period it can be compensated for in a later period, that has not yet been subject to RF, by using Gross Volume Correction P274 contends that the use of GVC can adversely affect Settlement P274 seeks to more clearly define and impose restrictions on the use of such compensatory techniques P274: Issue

5 The P274 Proposed solution introduces definitions of GVC and Re- initialisation into the BSC Re-initialisation formalises existing dummy meter exchange process Restricts use of GVC to errors that are not ‘excessive’ and for volumes within 28 months of the date of GVC application Mandates the use of Re-initialisation for excessive error volumes Introduces requirements for NHHDC audit trail for both Re- initialisation and GVC BSC changes are high level, details are in BSCP504 drafting P274: Proposed Solution

6 The P274 Alternative solution continues to allow the use of GVC under existing rules but introduces a definition of GVC into the BSC and limits use of GVC to only volumes within a defined period Limits would initially be five years prior to the latest RF Run at the date GVC is performed Limit can be changed by the SVG following review BSC changes are high level, details are in BSCP504 drafting P274: Alternative Solution

7 ELEXON costs: £1,200 (5 Man Days) Industry Impacts: Significant impacts and costs for both Suppliers and NHHDCs One-off impacts and costs associated with system changes On-going annual costs in additional resource to manage process Impacts to GVC activities that would require staff training Amending existing processes Documentation changes P274: Proposed Modification Impacts and costs

8 ELEXON costs: £1,200 (5 Man Days) Industry Impacts: Minor impacts and costs for Suppliers and NHHDCs One-off costs and impacts associated with system changes Little on-going annual cost in additional resource to manage process Limited impact to GVC activities that would require staff training Minor amendment of existing processes Documentation changes P274: Alternative Modification Impacts and costs

9 Group Recommends an Implementation Date of: Proposed - next BSC Release at least 12 months from approval date For example, Implementation Date will be 7 November 2013 (November Release) if approval is received by 7 November 2012 Alternative - next BSC Release at least 3 months from approval date For example, Implementation Date will be 28 February 2013 (February Release) if approval is received by 28 November 2012 P274: Implementation Date

10 Respondents consisted of 5 Suppliers (1 small, 4 big), 1 Distributor and 2 Party Agents No new arguments raised Workgroup addressed comments received on solutions and drafting P274: Consultation Responses Facilitates Applicable BSC Objectives?YesNoNeutral Proposed Modification260 Alternative Modification431 Impacted by Implementation?YesNoNeutral Proposed710 Alternative530

11 Majority of Workgroup members believe P274 Proposed would not better facilitate Objectives (c) and (d) Objective (c) Creates a barrier to entry as new Suppliers are likely to have difficulty managing data and addressing issues Restriction GVC use would decrease the accuracy of Settlement Objective (d) Introduces significant additional complexity and cost Arrangements excessively onerous on Suppliers and Supplier Agents There is no defect in the BSC so changes are unnecessary The issues identified by P274 arose due to the implementation of CP1310 and are unlikely to recur P274: Applicable BSC Objectives (1 of 4)

12 Minority of Workgroup members believe P274 Proposed would better facilitate Objectives (c) and (d) Objective (c) New entrants less likely to have energy volumes attributed to them that relate to periods before they began trading Reduces attribution to Suppliers of energy volumes that relate to periods with different wholesale energy prices LDSOs better able to produce suitable forward looking Line Loss Factors for use in Settlement Addresses unreasonable GVC usage, i.e. application over excessive periods Objective (d) Additional incentive to settle the correct volume of energy within the 14- month reconciliation window Review of threshold introduces flexibility into the arrangements P274: Applicable BSC Objectives (2 of 4)

13 Majority of Workgroup members believe P274 Alternative Modification would better facilitate Objectives (c) and (d) Objective (c) Provides additional control around GVC and confidence in GVC application, which should be generally beneficial for competition Addresses unreasonable GVC usage Objective (d) Review of threshold introduces flexibility into the arrangements Retains GVC as a sensible means of correcting errors P274: Applicable BSC Objectives (3 of 4)

14 Minority of Workgroup members believe P274 Alternative Modification would not better facilitate Objectives (c) and (d) Objective (c) If an error is identified it should be corrected in its entirety, which GVC currently permits and the Alternative would limit Objective (d) Additional complexity for no benefit No change is required P274: Applicable BSC Objectives (4 of 4)

15 Majority of Workgroup therefore believes: Only the Alternative better than the existing baseline P274 Alternative is better than P274 Proposed Workgroup’s majority recommendation is: Approve P274 Alternative Modification Reject P274 Proposed Modification P274: Conclusions

16 The Panel is invited to: NOTE Assessment Report AGREE draft BSC & BSCP504 legal text for Proposed and Alternative AGREE Implementation Date: Proposed Modification - next BSC Release at least 12 months from the date of approval Alternative Modification - next BSC Release at least 3 months from the date of approval P274: Recommendations (1 of 2)

17 AGREE views against Applicable BSC Objectives: Agree Proposed Modification not better than baseline against Objectives (c) and (d) Agree Alternative Modification better than the baseline against Objectives (c) and (d) Agree Alternative Modification better than Proposed Modification against Objectives (c) and (d) AGREE initial recommendation to: Approve Alternative Modification (and therefore reject Proposed) AGREE to submit P274 to Report Phase ELEXON will issue Report Phase Consultation Draft Modification Report to December Panel meeting P274: Recommendations (2 of 2)

204/05 P282: ‘Allow MVRNs from Production to Consumption or Vice Versa ’ David Kemp 11 October 2012

19 Energy Account BM Unit Current arrangements: Production and Consumption kept separate Fundamental principle of NETA Keep level playing field between different types of Party Promotes liquidity Energy from BM Units allocated to Lead Party’s corresponding Energy Account P BM Units to P Energy Account C BM Units to C Energy Account P282: Issue (1 of 2) C CP P

20 Energy Account BM Unit Can use MVRNs to reallocate energy to corresponding Energy Account of another Party Can reallocate either a specified volume or a percentage of the BM Unit’s volume Can only use MVRNs from: P BM Units to P Energy Accounts; or C BM Units to C Energy Accounts Trading between Production and Consumption must be done using ECVNs ECVNs must be for specified volumes of energy MVRNs can be for a percentage of the BM Unit’s volume P282: Issue (2 of 2) C CP P

21 Proposal: Allow MVRNs from P BM Unit to C Energy Account or vice versa Would also allow a Party to MVRN energy from own P BM Unit to own C Energy Account or vice versa Can replace relevant ECVNs with percentage MVRNs Proposer considers: P282 increases flexibility for smaller Parties Larger Parties have found ways around current restrictions Exempt Export BM Units can currently choose P/C Status P282: Solution Energy Account BM Unit C CP P

22 Costs: Central Costs: Approx. £140k Party Costs: Range from minimal to £130k Participant Impacts: MVRNAs BSC Trading Parties ECVAA and SAA Document Impacts: BSC Sections D, P, T, X-1 & X-2 ECVAA & SAA Service Descriptions & URSs NETA IDD Part 2 P282: Costs and Impacts

23 Workgroup’s majority view is to Approve P282 Views based on Applicable BSC Objectives (b), (c), (d) and (e) P282: Applicable BSC Objectives (1 of 5)

24 ‘Winners’ and ‘Losers’ from P282 Reduction or no change in Parties’ imbalance charges But reduction in amount of RCRC, disbenefiting Parties paid RCRC Parties worse at balancing seem to benefit the most from P282 Only benefit if long in one Account and short in the other Net shortfall in one Account with gain in other – avoid SBP/SSP spread Notified Volume Charge also impacted Calculated on volume of ECVNs and fixed-volume MVRNs P282 likely to result in ECVNs being replaced with percentage MVRNs Materiality much lower than imbalance charge/RCRC impacts P282: Applicable BSC Objectives (2 of 5)

25 P282 will allow Parties to consolidate all volumes in one Account Biggest benefit to Parties on both sides of market May allow smaller Parties to club together, but other obstacles remain Interconnector Users could net imports and exports SO feels P282 may increase no. of balancing actions required Reduce incentive to go long, reducing ‘free’ reserve Constraint actions could become balancing actions – impact SBP/SSP But ‘self-balancing’ could help balance system Consideration that P282 unlikely to have significant impact on incentive to balance P282: Applicable BSC Objectives (3 of 5)

26 Unconvinced separation of Production and Consumption has led to intended liquidity Can currently use ECVNs/MVRNs to ‘self-balance’ Unconvinced P282 will have material impact on liquidity Impact confined to short-term intra-day market due to better self- balancing Unsure about longer-term – impacted by other factors Liquidity about who Parties trade with, not number of Energy Accounts P282: Applicable BSC Objectives (4 of 5)

27 P282: Applicable BSC Objectives (5 of 5) ABOYesNo (b)Majority Self-balance – more efficient Reduce overall imbalance Minority Increase volatility/uncertainty SO may need more reserve (c)Majority More flexibility to manage imbalance Reduce complexity and costs Level playing field Remove a barrier to Market Entry Don’t believe current separation proven valid Minority One-sided Parties lose out Reinforce position of incumbents Parties worse at balancing benefit the most (d)Majority Remove unnecessary restriction Reduces admin and complexity Greater flexibility and efficiency Minority Central implementation costs with no central efficiency benefits (e)Minority Harmonisation Majority (Neutral) No specific legislation requiring this

28 Views of respondents split equally for and against Agree with Workgroup’s views for and against No new arguments raised P282: Consultation Responses Does P282 Better Facilitate Applicable BSC Objectives? YesNo 66

29 Workgroup recommends Implementation Date of: 07 Nov 13 if P282 is approved on or before 07 Feb 13 27 Feb 14 if P282 is approved after 07 Feb 13 but on or before 27 May 13 Lead time to make required Central System changes ECVAA, SAA and Funding Share changes P282: Implementation Date

30 Workgroup has discharged its Terms of Reference Workgroup recommends that P282 is Approved P282: Conclusions

31 The P282 Workgroup invites the Panel to: AGREE an initial recommendation that P282 should be made; AGREE an initial Implementation Date of: 7 November 2013 if an Authority decision is received on or before 7 February 2013; or 27 February 2014 if an Authority decision is received after 7 February 2013 but on or before 27 May 2013; Continues P282: Recommendations (1 of 2)

32 AGREE the draft legal text; AGREE that P282 is submitted to the Report Phase; and AGREE that ELEXON will issue the P282 draft Modification Report (including the draft BSC legal text) for a 15 Working Day consultation and will present the results to the Panel at its meeting on 13 December 2012. P282: Recommendations (2 of 2)

204/06 P285: Revised treatment of RCRC for Interconnector BM Units David Kemp 11 October 2012

34 CMP202: Removed BSUoS charges from Interconnector BM Units Implemented on 30 August 2012 Proposer considers RCRC to be related to imbalance cost element of BSUoS Potential to distort cross-border trades Potential for windfall gains/losses Could also be perceived as non-compliant with Third Package Requires no additional charges levied on cross-border trades P285 raised following consideration of relationship by CMP202 Workgroup P285: Issue

35 Proposal: Exclude Interconnector BM Units from RCRC RCRC would be allocated based on Parties’ non-Interconnector volumes Materiality: Approx. 3% of total RCRC Net redistribution of £700k in 2011 Materiality of current situation low, but should be resolved as soon as possible P285: Solution

36 Costs: Central Costs: Approx. £70k Combined central saving of 40% if deployed in parallel with P286 Party Costs: Range from minimal to £10k Participant Impacts: Interconnector Users and IEAs All other BSC Trading Parties that are subject to RCRC SAA and ECVAA Document Impacts: BSC Section T SAA Service Description & URS P285: Costs and Impacts

37 Workgroup’s majority view is to Approve P285 Views based on Applicable BSC Objectives (a), (c) and (e) P285: Applicable BSC Objectives (1 of 3)

38 Unclear if RCRC is a charge on cross-border flows Part of imbalance cash-out mechanism, which Third Package permits Not convinced RCRC and BSUoS are related RCRC part of imbalance charges; BSUoS is a cost-recovery mechanism Believe correlation is poor P285: Applicable BSC Objectives (2 of 3)

39 P285: Applicable BSC Objectives (3 of 3) ABOYesNo (a)Majority Takes National Grid’s obligations into account Minority (Neutral) No impact (c)Majority Allows cross-border trades to be based on price-differentials Prevent Interconnector Users from receiving windfall gains/losses Minority Parties causing imbalance being excluded from RCRC – reduces incentive to balance; should treat all Parties the same (e)Majority Could be perceived as a charge on cross-border flows Minority (Neutral) Unsure if RCRC is a charge Premature given possible future changes

40 Majority of respondents agree with Workgroup’s view Agree with Workgroup’s views for and against No new arguments raised P285: Consultation Responses Does P285 Better Facilitate Applicable BSC Objectives? YesNo 62

41 Workgroup recommends Implementation Date of: 27 Jun 13 if P285 is approved on or before 24 Jan 13 07 Nov 13 if P285 is approved after 24 Jan 12 but on or before 06 Jun 13 Lead time to make required Central System changes P285: Implementation Date

43 The P285 Workgroup invites the Panel to: AGREE an initial recommendation that P285 should be made; AGREE an initial Implementation Date of: 27 June 2013 if an Authority decision is received on or before 24 January 2013; or 7 November 2013 if an Authority decision is received after 24 January 2013 but on or before 6 June 2013; Continues P285: Recommendations (1 of 2)

204/07 P286: Revised treatment of RCRC for generation BM Units David Kemp 11 October 2012

46 CMP201: Proposes to remove BSUoS charges from generation BM Units CUSC Panel recommends implementing Original Solution Currently with Ofgem for decision Allows GB generators to compete on equal basis with imports over Interconnectors Proposer considers RCRC to be related to imbalance cost element of BSUoS Potential for windfall gains/losses P286 raised following consideration of relationship by CMP201 Workgroup P286: Issue

47 Proposal: Exclude BM Units in delivering Trading Units from RCRC RCRC would be allocated based on Parties’ volumes from BM Units in offtaking Trading Units Materiality: Approx. 35% of total RCRC Net redistribution of £7.5m in 2011 P286: Solution

48 Costs: Central Costs: Approx. £70k Combined central saving of 40% if deployed in parallel with P285 Party Costs: Range from minimal to £10k Participant Impacts: Generators All other BSC Trading Parties that are subject to RCRC SAA and ECVAA Document Impacts: BSC Section T SAA Service Description & URS P286: Costs and Impacts

49 Workgroup’s majority view is to Approve P286 Conditional on CMP201 being approved – if CMP201 is rejected, then Workgroup’s unanimous view is to Reject P286 Views based on Applicable BSC Objectives (a), (b) and (c) P286: Applicable BSC Objectives (1 of 3)

50 Not convinced RCRC and BSUoS are related RCRC part of imbalance charges; BSUoS is a cost-recovery mechanism Believe correlation is poor Consideration of whether P286 is appropriate Majority: P286 should be approved if CMP201 is approved Minority: Reject P286 and consider under SCR Impact on power prices RCRC factored into power prices But uncertainty in many pricing elements Bilateral trades outside of BSC P286: Applicable BSC Objectives (2 of 3)

51 P286: Applicable BSC Objectives (3 of 3) ABOYesNo (a)Majority Takes National Grid’s obligations into account Minority Don’t agree RCRC and BSUoS linked Not convinced of link to National Grid’s obligations (b)Majority CMP201 without P286 may reduce incentives to balance Minority (Neutral) Uncertain if there would be an impact on incentive to balance (c)Majority Allows cross-border trades to be based on price-differentials Prevent generators from receiving windfall gains/losses Allow GB generators to compete on equal basis with imports over Interconnectors Conditional on CMP201, but if CMP201 approved then better to approve P286 Minority Both generators and Suppliers cause imbalance, should both be subject to imbalance mechanism, including RCRC

52 Majority of respondents agree with Workgroup’s view Agree with Workgroup’s views for and against No new arguments raised P286: Consultation Responses Does P286 Better Facilitate Applicable BSC Objectives? YesNo 42

53 Workgroup recommends Implementation Date of: 01 Apr 15 if P286 is approved on or before 31 Mar 13 01 Apr 16 if P286 is approved after 31 Mar 13 but on or before 31 Mar 14 Dates align with CMP201 Original Solution Workgroup considers that P286 and CMP201 should be implemented in parallel Lead time to allow Parties to amend their contracts P286: Implementation Date

55 The P286 Workgroup invites the Panel to: AGREE an initial recommendation that P286 should be made; AGREE an initial Implementation Date of: 1 April 2015 if an Authority decision is received on or before 31 March 2013; or 1 April 2016 if an Authority decision is received after 31 March 2013 but on or before 31 March 2014; Continues P286: Recommendations (1 of 2)

Minutes of Meeting 202 & 203 Actions Arising Adam Richardson 11 October 2012

Chairman’s Report BSC Panel Andrew Pinder 11 October 2012

204/01 ELEXON Report: Smart Update Peter Haigh/Chris Rowell 11 October 2012

Distribution Report David Lane 11 October 2012

National Grid Update Ian Pashley 11 October 2012

National Grid: New Operating Model Ian Pashley - BSC Panel 204, 11 th October 2012

National Grid: New UK Structure 63

Need to print this? It looks best on A3 National Grid: UK Structure Chart UK Business Change Pete Massey Gas Distribution Jeremy Bending (Interim) Grain & Metering Jon Carlton Gas Transmission Asset Management Neil Pullen Electricity Transmission Asset Management David Wright UK RIIO Delivery Chris Bennett Capital Delivery Ian Galloway Transmission Network Service Mike Calviou Market Operation Chris Train **Safety, Sustainability & Resilience Jon Butterworth UK Regulation Paul Whittaker Executive Director, UK Nick Winser UK Chief Operating Officer John Pettigrew Gas Distribution Operations Ed Syson Gas Distribution Network Strategy Vivienne Bracken (Interim) Operate the System Nicola Pitts Electricity Market Reform project Mark Ripley *UK/EU Business Development Peter Boreham Emergency Response & Repair Sara Habib Network Development Pauline McCracken Maintain Dan Davies Business Support – HR, IS, Legal, Finance & Shared Services, Corporate Affairs not shown * Dotted line to Alison Wood ** Dotted line to John Pettigrew Gas Distribution Functions and Processes

European Update: Ofgem Report Dora Ianora 11 October 2012

204/01a Report from the ISG 11 October 2012

204/01b Report from the SVG 11 October 2012

204/01c Report from the PAB 11 October 2012

204/01d Report from the TDC 11 October 2012

204/01e Report from the JESG 11 October 2012

204/02 Trading Operations Report 11 October 2012

204/03 Change Report 11 October 2012

204/12 Joint European Standing Group: Feedback on the JESG to the BSC Panel Barbara Vest 11 October 2012

Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. Joint European Standing Group Feedback on the JESG to the BSC Panel Barbara Vest, JESG Independent Chair 11 October BSC Panel 204/12a Joint European Standing Group - Terms of Reference Review - Attachment 1

75 Background »The JESG has been running since August 2011, in this time: 9 JESG meetings 7 technical workshops (code specific) »Format and content of meetings has evolved as developments have progressed »At their September 2012 meeting, The JESG reviewed and reflected on: What has gone well? What could have gone better? What improvements can we make? Updating the Terms of Reference

76 Feedback sought – JESG meetings 9 respondees

77 Comments – JESG Meetings »Provision of meeting details Always provided. Though at one point there was a lot of reorganisation of timetable, it was to a more logical order. I have no problem with the provision of dates just prior to each meeting. However, I do find I keep checking the JESG website to see if anything has changed on the longer term dates - do you send out updates when the meetings list changes? I would prefer getting emailed updates rather than having to check the website where the JESG and its list of meetings is quite deeply buried. »Timeliness of communications Generally good, but occasionally material not received in time for review before meeting »Headline report Could do with being more detailed. Sometimes it doesn't give enough detail. E.g. At the meeting the following items were discussed… and it lists the items without indicating the nature of the discussion. A useful summary for circulating to those not directly involved in the meetings »Frequency of meetings Monthly seems to be about the right frequency »Representation at meetings Generally, appropriate representation from those knowledgeable on the specific subject areas »Overall impression of meetings A very useful to find out what's going on, particularly when we are not members of a stakeholder organisation

78 Feedback sought – technical workshops 9 respondees

79 Comments – Technical Workshops »Timeliness of communications Generally good, but occasionally material not received in time for review before meeting »Frequency of meetings Only seem to do 'during consultation' & 'post-submission‘ »Representation at meetings Generally, appropriate representation from those knowledgeable on the specific subject areas »Material covered Need to avoid being distracted from detailed review I have only attended CACM workshop in May - preferred more focused, article by article discussion on Day 1 to more general discussions on Day 2 »What would you like to see more of? Perhaps workshops for particular stakeholders- "What the Target Model means for Suppliers" for example. I think the comparison documents are a good idea such as the RfG Full Grid Code & European Code Comparison.

80 Feedback sought - general

81 Comments - General »JESG website Good that all the documents are in one place. What is missing is an easy-to-find simple overview of what the process of harmonisation entails. Not easy to locate material on specific network codes. Good but JESG is too deeply buried on the National Grid site for me! »Update emails (e.g. ENTSOE information) Usually unable to determine significance of item without opening link. Inclusion of a summary of contents would be useful. Notification of changes to index structure not required. »Facilities The normal location is fine. Was not able to attend several meetings due to the change in location. Since most are at ELEXON I couldn't really say anything else! »Any additional comments? The meetings are useful and the split between technical and high-level meetings is sensible.

82 Ways to improve the JESG »Technical workshops – continue to focus on article by article review »Seek improvements to website Including sections which have material associated with each individual network code »Aim for circulation of all meeting material minimum 1 week in advance of meeting Circulate draft agendas with meeting invitation »Ongoing review of headline report to ensure clarity and relevance »Circulate a weekly email of JESG and European Issues

83 JESG Terms of Reference »The JESG Terms of Reference have been revised to reflect: Technical workshops Ongoing review of membership Use of actions and issues log »The BSC Panel, CUSC Modifications Panel and GCRP are being asked to agree to the revised Terms of Reference at their October / November Meetings

204/08 Creation of a new BSC Agent Service Description Adam Richardson 11 October 2012

85 Appointing a BSC Service Manager Work StreamResponsibility 1. Modification P284: Enables BSCCo to outsource work to a BSC Service Manager. The Authority makes a determination following a BSC Panel recommendation. 2. BSC Service Description : Defines the services capable of being outsourced. The BSC Panel is responsible for approving the BSC Service Description for use. 3. Contract: Negotiating and agreeing appropriate Contractual Provisions required for outsourced arrangement with a BSC Service Manager. The BSCCo Board is responsible for putting in place appropriate commercial and contractual provisions.

86 Background June 2012: Panel Paper 199/10: Timetable for creation, consultation and approval of the BSC Service Manager Service Description Consultation 10 WDs July 2012: Panel Paper 200/07: Revised Service Description incorporating consultation comments – deferred pending P284 August 2012 September 2012 Contract Principles Consultation 23 WDs Contract Principles Workshop P284 Approved

87 Sought advice and input from 2 Panel Members throughout 9 Responses: 6Yes 1 No (captured services but wanted more detail) 2 Requested more time Themes: Important to reference BSC and CSDs Reference to undocumented services Request for more information on Service Levels Consultation Does the Service Description appropriately capture all of the services currently provided by BSCCo? v1.3

88 12 Responses Discussed at Contract Principles Workshop Themes: Professional Services (only where no conflict arises) BSC Strategy and Business Plan (supporting role only) Clarity on BSC procurement / service management policies Removal of erroneous requirement (non-BSC opportunities) Service Levels (delivery in compliance with BSC) Contract Principles Consultation Are there any specific discretions, judgements or services currently provided by ELEXON Ltd that you feel it would be inappropriate for BSCCo to subcontract to a service management company? v1.4

89 Service Description (v1.4) captures all services that could be outsourced To be used to underpin work on outsourcing If BSCCo Board determines to outsource less we will reflect the reduction in scope in the Service Description and return to Panel for approval Next Steps

90 The BSC Panel is invited to: APPROVE: the BSC Services Manager Service Description v1.4 for use in the investigation and development of an outsourcing arrangement; and NOTE: that the approved BSC Services Manager Service Description will be used in any subsequent contractual negotiations relating to the appointment of a new BSC Services Manager. Recommendations

204/09 Market Index Definition Statement Review 2012 : ISG Recommendations Oliver Xing 11 October 2012

92 The Market Index Definition Statement (MIDS) is a document that defines how the Market Index Price (MIP) is calculated. The MIP reflects the price of wholesale electricity in Great Britain. The MIP determines the “reverse” Energy Imbalance Price. The MIDS is reviewed annually in accordance with the BSC. What is the MIDS?

93 What are the Individual Liquidity Threshold (ILT), product and timeband weightings? The current Individual Liquidity Threshold remains suitable at 25 MWh. The current timebands and products remain suitable. Trades made within 12 hours of Gate Closure. Half Hour, 1 Hour, 2 Hour and 4 Hour products. An option to remove timeband 6 was identified in the initial analysis. Initial Findings

94 The ISG recommended no change to the current Individual Liquidity Threshold (ILT). The ISG recommended that ELEXON consult the industry on the below possible changes: 1)Remove timeband 6 or; 2)Include the overnight product O or; 3)Remove timeband 6 and include the overnight product O. ISG Discussion

95 3 Responses were received. Comments on Ofgem’s SCR. Comments on “within day” auctions. Having considered the responses in their September meeting, the ISG has made a final recommendation that no change should be made to the MIDS. Consultation Responses QuestionYesNoNo Comment The ILT should remain at 25 MWh300 Remove timeband 6 (8-12 hours to GC)120 Include product ‘O’030 Remove timeband 6 and include product ‘O’030

96 The Panel is invited to: NOTE the contents of the paper; NOTE the ISG’s recommendations; AGREE no change to the Market Index Definition Statement (MIDS). Recommendations

Settlement Review Scoping update David Jones 11 October 2012

98 Timetable

Settlement Reform Scoping- Update »Progress to Plan! »2 Group meetings »Consultation drafted (based on final report) »Group to review »Consultation notification & Seminar invitation going out 15 Oct »Consultation issued w/e 19 Oct »Direct contact with ‘non traditional’ stakeholders

204/10 Report on Issue 44 – Balancing Mechanism Pricing Issue John Lucas 11 October 2012

Confidential Closed Session 11 October 2012

204/11 Applications for ISG & SVG Membership Kathryn Coffin 11 October 2012

103 A recent resignation created vacancies for an Industry Member on both ISG and SVG Have advertised for potential applicants via Newscast and website Received one application for ISG and two for SVG There is room to appoint all three applicants, bringing numbers to: 11 SVG Industry Members out of a possible 12 (and 13 Members in total including Distributor Member and Panel Sponsor) 7 ISG Industry Members out of a possible 9 (and 10 Members in total including Transmission Company Member, Distributor Member and Panel Sponsor) Process followed

104 We invite the Panel to: APPOINT Phil Hewitt as an ISG Industry Member; APPOINT Harish Mistry as an SVG Industry Member; APPOINT Tom Rix as an SVG Industry Member; and/or CONTINUE advertising for further applicants for one or both Committees Recommendations

204/13 Audit & Qualification Procurements Christian Thrussell/Douglas Alexander/ Helen Boothman 11 October 2012

Any Other Business

Next Meeting: 8 November 2012

BSC Panel 204 11 October 2012. Report on Progress of Modification Proposals Adam Lattimore 11 October 2012.

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