BSC Simple Guide Section T: Settlement and Trading Charges Section T sets out: (a) (b) (c) how Trading Charges for each Trading Party and National Grid are determined; the data required in order to calculate the Trading Charges; and the processes undertaken by the Settlement Administration Agent (SAA) in connection with the determination of the Trading Charges. As this is the case, Section T sets down the majority of the algebraic calculations undertaken in order to determine the Trading Charges for each Trading Party and National Grid on each Settlement Day. In this summary of Section T, the use of algebraic expressions has been avoided. General Obligation and Entitlement of Parties Trading Parties and National Grid have a liability to pay to, and an entitlement to receive from, ELEXON Clear the amounts of the Trading Charges determined in accordance with Section T. Trading Charges for each Trading Party for each Settlement Day are: (a) (b) (c) (d) (e) the Daily Party BM Unit Cashflow, which if positive represents a credit to the Trading Party and if negative a debit; the Daily Party Non-Delivery Charge, which if positive represents a debit to the Trading Party and if negative a credit; the Daily Party Energy Imbalance Cashflow, which if positive represents a debit to the Trading Party and if negative a credit; the Daily Party Information Imbalance Charge, which if positive represents a debit to the Trading Party and if negative a credit; and the Daily Party Residual Settlement Cashflow, which if positive represents a credit to the Trading Party and if negative a debit. Trading Charges for National Grid include the Daily System Operator BM Cashflow, which if positive represents a debit to National Grid and if negative a credit. Data Requirements The SAA needs the following data to carry out its calculations: (a) Final Physical Notification Data, Bid-Offer Data, Acceptance Data and Balancing Services Adjustment Data, Applicable Balancing Services Volume Data, Loss of Load Probability data and (when appropriate) Demand Control Instructions from National Grid; ELEXON Limited 2018 Page 1 of 20
(b) (c) (d) (e) (f) (g) BM Unit Metered Volumes (other than for Supplier BM Units and Interconnector BM Units), Interconnector Metered Volumes, GSP Group Takes for each GSP Group and (when appropriate) BM Unit Demand Disconnection Volumes from the Central Data Collection Agent (CDCA); Metered Volume Fixed Reallocations by BM Unit and Subsidiary Energy Account, Metered Volume Percentage Reallocations by BM Unit and Subsidiary Energy Account, and Account Bilateral Contract Volumes for each Energy Account from the Energy Contract Volume Aggregation Agent (ECVAA); BM Unit Metered Volumes for each Interconnector BM Unit from the Interconnector Administrator; Supplier BM Unit Metered Volumes and (when appropriate) BM Unit Allocated Demand Disconnection Volumes from the Supplier Volume Allocation Agent (SVAA); certain data registered in Central Registration System (CRS) from the Central Registration Agent (CRA); and Market Index Data from Market Index Data Providers. Data Receipt and Validation The SAA validates the data it receives in accordance with BSCP01. For the Interim Information Run, if the SAA does not receive the required data by the time it is to carry out the run, and the SAA does not believe that the missing data is significant, the SAA is required to inform ELEXON and input default data (as prescribed in BSCP01). If the missing data is, in the SAA's opinion, significant, and if the SAA believes that the data will be forthcoming by the end of the next following Business Day, ELEXON is informed and the Interim Information Run is delayed. If the SAA does not believe that the data will be forthcoming or if it has been delayed, and does not receive the data by the end of the next Business Day, then the SAA and ELEXON are required to determine whether to use default data or whether the Interim Information Run should be further delayed in order that the data may be obtained. It should be noted, however, that an exception to these provisions is the data from the SVAA. In relation to the Initial Settlement Run, if the SAA does not expect to receive substantially complete data in time to carry out the run, then the SAA is required to inform ELEXON and ELEXON is required to determine whether to use default data or whether to delay the Settlement Run in order that the data may be obtained. In certain circumstances (where there is no Interconnector Error Administrator (IEA) for an Interconnector), the BM Unit Metered Volumes for all BM Units on the Interconnector are set to zero. Finally, Supplier BM Units with no associated Metering Systems have a BM Unit Metered Volume of zero (this is principally targeted at clarifying the BM Unit Metered Volume of Base BM Units that have been created, but to which no meters have been allocated). Market Index Definition Statement The Panel is responsible for establishing and maintaining, at all times, a Market Index Definition Statement which is approved by the Authority. The Market Index Definition Statement will be established and maintained with due regard to, and accord with the following principles; Market Index Data will be used in Settlement to calculate a price (in /MWh) for each Settlement Period. This price is intended to be reasonably reflective of the price of wholesale electricity in Great Britain, for delivery in respect of a Settlement Period in the short term ELEXON Limited 2018 Page 2 of 20
market where the liquidity in the market is deemed to be sufficient (as determined by application of the Individual Liquidity Threshold). It should be noted that: The intended method of delivery for a specific Settlement Period is by way of meeting submitted Energy Contract Volume Notifications or Metered Volume Reallocation Notifications; The market referred to is the market in general, not any particular market or type of market; Short term in relation to a specific Settlement Period, is the period of hours or days immediately prior to Gate Closure, but no more than three Business Days prior to Gate Closure; and The price of wholesale electricity for delivery in respect of a Settlement Period may include the price for a block of Settlement Periods which include that Settlement Period, as long as the block comprises no more than 24 hours in total. The Market Index Definition Statement will contain the nominated Market Index Data Providers (MIDPs) responsible for the provision of Market Index Data for each Settlement Period, the (full) definition of the data and methods used in the derivation of the Market Index Data, including, as relevant, identification of the products (i.e. what the MIDP is trading), the period it is trading over and any weighting applied. The statement will also contain the definition of the minimum liquidity requirement (i.e. the minimum (acceptable) amount traded which is eligible for inclusion in the derivation of Market Index Data for the specific MIDP), the Individual Liquidity Threshold (a MWh volume representative of the minimum depth of trading). The Individual Liquidity Threshold can be zero, and it can vary by Settlement Period and / or Settlement Day, as required. The Panel will review the Market Index Definition Statement from time to time, but at least every twelve months, and where there is a change to the circumstances whereby the provision of Market Index Data by a MIDP may be materially affected. The Panel will also review the statement where necessary to implement any Approved Modification, by the Implementation Date for that Approved Modification. Where the Authority, when approving the statement, identifies revisions required, then the Panel will make such revisions. When establishing and reviewing the Market Index Definition Statement, the Panel should consider what data exists and is available in respect of the market. The Panel will consult on the statement with interested Parties and will have due regard to any representations made (which are not withdrawn) during such consultation. Copies of such representations will be provided to the Authority. Where the Authority approves a revised Market Index Definition Statement, then the revised statement will be effective from the date specified by the Panel, and approved by the Authority, applying to all Settlement Days from that date. The Panel Secretary will notify each Party, the SAA and the BMRA of the effective date of the revised statement. BSCCo will also ensure that a copy of any revised statement is sent to each Party, the SAA and the BMRA and is published and made available on request to any person. Provision of Market Index Data It should be noted that references to a Market Index Data Provider are to a MIDP nominated in the version of the Market Index Definition Statement effective at the time in question, and references to Market Index Data are to the data to be provided by a MIDP in accordance with the Market Index Definition Statement. Each Market Index Data Provider will provide Market Index Data for each Settlement Period, comprising a MWh volume (Market Index Volume) and a /MWh price (Market Index Price), determined in accordance with the Market Index Definition Statement. The MIDP will submit the ELEXON Limited 2018 Page 3 of 20
Market Index Data to the BMRA, so that the BMRA receives the data no later than the end of the Settlement Period to which the data pertains, and to the SAA and BSCCo in a daily submission (containing Market Index Data for all Settlement Periods in the Settlement Day to which the Market Index Data pertains), to be received by the SAA and BSCCo by the end of the Business Day following the Settlement Day. For each Settlement Period where a MIDP derives a Market Index Volume which is less than the Individual Liquidity Threshold for that Settlement Period, the MIDP will default the Market Index Volume to zero. Excluding any recourse for BSCCo under the Market Index Data Provider contract, if the MIDP is unable to determine and/or submit its Market Index Data to the timescales set out above, then the MIDP will inform BSCCo, the BMRA and SAA immediately, and notifying them of the cause of the inability, the likely timescales for rectification, and detailing the Settlement Periods likely to be affected. Furthermore the MIDP will endeavour to derive and submit the data as soon as reasonably possible, and the data will be taken into consideration in the next Settlement Run for the relevant Settlement Day. Where, for any Settlement Day, the SAA does not receive Market Index Data from a Market Index Data Provider, the SAA will not determine whether the omission is significant, or take further action to determine the missing data (as described in "Data Receipt and Validation" above), but instead will notify BSCCo and will default, in accordance with the rules described for the calculation of Energy Imbalance Prices, the Market Index Volume to zero. Excluding amendments required as the result of a Trading Dispute, the MIDP can amend Market Index Data following the initial submission of the data, where any change in the supporting data occurs, which renders the initial submission unreflective of what it should have been for the relevant Settlement Period and Market Index Definition Statement. The MIDP will notify BSCCo of the amendment to Market Index Data and will resubmit the amended data for the relevant Settlement Periods, and the amended Market Index Data will be taken into consideration in the next Settlement Run for the relevant Settlement Day. BSCCo will enter into a contract with each person nominated to be a Market Index Data Provider for the provision of Market Index Data, in accordance with the requirements set out in this section. A MIDP is not a BSC Agent, however, some of the provisions relating to BSC Agent contracts apply (namely the obligation of BSCCo to enter into a contract to ensure that Code obligations, including exit arrangements, are met, the obligation on BSCCo to consult with the Panel before undertaking any proceedings / arbitration against the MIDP under the relevant contract, the obligation on BSCCo to inform the Panel of any proceedings / arbitration threatened or commenced against the MIDP and to keep the Panel informed of the progress, the obligation on BSCCo to inform the Panel of any substantial / abnormal circumstances which affect the performance of the MIDP, the requirement for BSCCo to report to the Panel in relation to the performance of the MIDP in respect of the contract, and the requirement to have a contract in place that meets the obligations of the Code in respect of BSC Agent contract requirements, including termination of the contract and the relationship between BSC Parties, BSCCo and BSC Agents). However, it should be noted that a number of provisions specified for BSC Agent contracts will not apply to the Market Index Data Provider contract, namely those relating to the selection and appointment of BSC Agents will not apply, as the selection and appointment of MIDPs will be set out in the Market Index Definition Statement. Furthermore, references to Service Descriptions in the relevant BSC Agent provisions can be disregarded for the MIDP. A MIDP may be, but does not have to be, a BSC Party. Where the MIDP is also a BSC Party, then the BSC Party, in its capacity of MIDP, shall have no rights, benefits, obligations or liabilities to any other Party under the Code. References to Parties in the Code should be understood as excluding any MIDP acting only in the capacity of MIDP. ELEXON Limited 2018 Page 4 of 20
Since the provision of Market Index Data is undertaken in accordance with the MIDP contract, and not directly in accordance with the Code, Market Index Data shall not be considered to be relevant Party data for the purposes of data ownership. Furthermore, the provision, disclosure and use of any information relating to a Party which is used in, or in connection with, the determination of Market Index Data by an MIDP, should not be considered, or understood, to have been made in accordance with the Code. For the purposes of all other data ownership provisions within the Code (Section H) apply to MIDPs, if references to BSC Agents and/or BSC Agent contracts, include MIDPs and/or MIDP contracts. References to BSC Agents and BSC Agent contracts in relation to Trading Disputes (Section W of the Code) include MIDPs and MIDP contracts, respectively. Loss of Load Probability Calculation Statement The Panel is responsible for establishing and maintaining, a Loss of Load Probability (LoLP) Calculation Statement which is approved by the Authority. The statement sets out two methods for calculating LoLP values a Static LoLP Function Method and a Dynamic LoLP Function Method. The Transmission Company calculates LoLP values in accordance with the Static Method between 5 November 2015 and 31 October 2018, and the Dynamic Method from 1 November 2018. The Panel are required to review the statement from time to time or to give full and timely effect to any relevant Approved Modification. Single (contingency) Imbalance Price (following Secretary of State direction) Certain Contingency Provisions (e.g. those applying in a Black Start Period as set down in Section G) require a single contingency imbalance price to be determined for the purposes of energy imbalance settlement. Where these provisions are activated, the normal calculations of System Buy Price and System Sell Price do not apply. Instead, a contingency price is determined to equal the price that would, in the opinion of the Panel, have been the price of bulk electricity in the relevant Settlement Periods. In this context, bulk electricity means the price at which electricity is traded under bilateral contracts, leading to the notification of Energy Contract Volumes. The Panel can make reference to reported prices and price indices in determining the relevant prices, and if practicable, must determine the prices in time for the Initial Settlement Run. Parties are notified of the contingency imbalance price to apply in each relevant Settlement Period by ELEXON once determined by the Panel. Allocation of Transmission Losses Delivering and Offtaking Trading Units Trading Units are a collection of (one or more) BM Units and are established in accordance with Section K. If the Trading Unit is a net exporter 1 of electricity over a Settlement Period (i.e. if the sum of the BM Unit Metered Volumes of the constituent BM Units is greater than zero), then the Trading Unit is termed a "delivering" Trading Unit in that Settlement Period. Alternatively, if it is a net importer, it is termed an "offtaking" Trading Unit in that Settlement Period. Whether or not a BM Unit is in a delivering or offtaking Trading Unit affects (amongst other things) the allocation of Transmission Losses to the BM Unit (see below). Transmission Loss Factors The BSC provides for each BM Unit to be allocated a specific Transmission Loss Factor (TLF) that is used to vary the relative weighting of transmission losses allocated to a BM Unit according to its geographical location ( Zone ) and the time of year ( BSC Season ). From 1 April 2018, a non-zero 1 As is explained in Section X, imports and exports are measured relative to the transmission system, i.e. generators typically export, and suppliers typically import. ELEXON Limited 2018 Page 5 of 20
Seasonal Zonal TLF, calculated in accordance with Annex T-2, has been assigned to each BM Unit (prior to this date all TLFs were set to zero). All BM Units within a Zone receive the same single Transmission Loss Factor value for every Settlement Period in a BSC Season. Determination of Transmission Loss Multipliers The Transmission Loss Multiplier (TLM) for BM Units other than Interconnector BM Units is a composite factor used in order to allocate a proportion of losses to an individual BM Unit. It takes into account two things, first the Transmission Loss Factor allocated to the BM Unit, and second an adjustment depending upon whether the BM Unit is in a delivering or offtaking Trading Unit. The values of TLM change in each Settlement Period to reflect the proportion of transmission losses being allocated to BM Units other than Interconnector BM Units. The TLM will vary by delivering or offtaking Trading Units and Zone. In calculating the TLM a parameter (alpha) is applied with a 45:55 allocation of total transmission losses to generation (delivering) and demand (offtaking). Further, a Transmission Loss Factor is applied to a BM Unit in the calculation of its Transmission Loss Multiplier. From 1 April 2018, there will be 14 Zonal TLMs for each Settlement Period, due to the introduction of Seasonal Zonal TLFs. Note that Interconnector BM Units are assigned a TLM of 1 and are therefore exempt from transmission losses. Typically, the TLM for BM Units other than Interconnector BM Units in delivering Trading Units will be less than 1 and that for BM Units other than Interconnector BM Units in offtaking Trading Units will be greater than 1. The TLM for a BM Unit other than Interconnector BM Units is used to allocate transmission losses to that BM Unit and to calculate the Trading Charges for the Lead Party of that BM Unit. This is covered later in this summary of Section T. Settlement of Balancing Mechanism Actions Conversion of Data Received from the Transmission Company The settlement calculations must process a variety of time-varying data (e.g. Final Physical Notification Data, Bid-Offer Pairs and Acceptance Data). This is typically received from National Grid in a "from/to" format. Thus, for example, the value of Final Physical Notification for a BM Unit may be from 500MW at 12:00 to 450 MW at 12:05. Because of the way the settlement software operates, this must be converted to an alternative time format in order for the settlement calculations to function. This alternative format relies on point values (e.g. Point FPNs), associated times and associated Point Value Identification Numbers. Section T sets out the detailed rules for the conversion of this data. The conversion between the two conventions for expressing time-varying data does not alter the underlying information used in settlement, it merely changes the way in which the data is expressed in order that it may be processed by the settlement software. Continuous Acceptance Duration Once converted to the alternative time varying format discussed above, the Acceptance Data is used to determine the Continuous Acceptance Duration for each Acceptance. This involves a number of steps. First, for each Acceptance k, a finite set of other "related" Acceptances for the same BM Unit is identified. This finite set of related Acceptances comprises those Acceptances with Bid-Offer ELEXON Limited 2018 Page 6 of 20
Acceptance Times that fall within either the three Settlement Periods before or the three Settlement Periods after the Settlement Period which contains the Bid Offer Acceptance Time for Acceptance k. Next, the related Acceptances are checked to determine whether they are "continuous" with Acceptance k. An Acceptance may be considered to "start" at the earliest spot time associated with a Point Acceptance Volume of that Acceptance, and "end" at the latest spot time associated with a Point Acceptance Volume for that Acceptance. In order to be continuous with Acceptance k, a related Acceptance must either: (1) start before k starts, and end after k starts; or (2) end after k ends, but start before k ends, or (3) be continuous with any other Acceptance determined to be continuous with k. In this way chains of continuous Acceptances that overlap in time are identified. Finally, the Continuous Acceptance Duration for Acceptance k is determined as the duration from the earliest start time to the latest end time, each selected from the set of Acceptances which comprises those continuous with k and Acceptance k itself. Continuous Acceptance Duration Limit The Continuous Acceptance Duration Limit is set to be equal to 15 minutes. It can be changed by the Panel, after consultation with Parties, with the Approval of the Authority. Price Average Reference The Price Average Reference (PAR) is set equal to 50MWh until 31 October 2018 and will decrease to 1MWh from 1 November 2018. The PAR determines the final set of balancing actions used to calculate an imbalance price for a particular Settlement Period. Replacement Price Average Reference The Replacement Price Average Reference (RPAR) is set equal to 1MWh. The RPAR determines the balancing actions used to calculate the Replacement Price for a particular Settlement Period. Value of Lost Load The Value of Lost Load (VoLL) is a defined parameter in the BSC and is based on an assessment of the average value that electricity consumers attribute to the security of supply. It is set at 3,000/MWh until 31 October 2018 and will rise to 6000/MWh from 1 November 2018. Establishment of Final Physical Notification (FPN) The values of Point FPN are used to define the Final Physical Notification function within each Settlement Period. The Final Physical Notification indicates the power level at which the BM Unit should be operating (either importing or exporting) for each instance in time in the Settlement Period. It is based upon the Physical Notification Data for the BM Unit submitted to National Grid (under the Grid Code) at Gate Closure. The value of Final Physical Notification at any instant in time is defined by using linear interpolation between the values of Point FPN. Because the final physical notification is a continuous function of time, it is not actually ever evaluated (because it has an infinite number of values in any non-zero time interval). It is instead an intermediate variable used to define other variables (in particular Period FPN). Establishment of Bid-Offer Volume As with the Final Physical Notification, the Bid-Offer Volume is a continuous function of time, defined using linear interpolation from (time-format converted) Point Bid-Offer Volume data. The Bid-Offer Volume expresses the incremental (or decremental) quantity of MW available from a particular Bid- Offer Pair as a function of time over the Settlement Period. Because of a restriction in Section Q ELEXON Limited 2018 Page 7 of 20
(which restricts the MW levels in the Bid-Offer Data submitted to National Grid), the Bid-Offer Volume for any particular Bid-Offer Pair is constant across a particular Settlement Period. Establishment of Acceptance Volume A similar approach is also used to define the Acceptance Volume as a continuous function of time from values of Point Acceptance Volume. The Acceptance Volume represents the power level at which a BM Unit should operate in order to comply with the requirements of a particular Bid-Offer Acceptance at any given instant in time. The calculation of Acceptance Volume differs slightly from that of Final Physical Notification and Bid- Offer Volume because (with a one hour Gate Closure Period) any particular Acceptance can in theory result in Acceptance Volumes in up to three Settlement Periods. As a consequence when processing the Point Acceptance Volumes associated with a particular Acceptance, it is necessary to determine the values of the Acceptance Volume function across three Settlement Periods. Thus the Point Acceptance Volumes for a single Acceptance define the Acceptance Volume as a continuous function of time in up to three separate Settlement Periods (i.e. those Settlement Periods falling within the Balancing Mechanism Window Period for the particular Acceptance). Establishment of Bid-Offer Upper Range and Bid-Offer Lower Range in relation to FPN and Submitted Bid-Offer Pairs Each Bid-Offer Pair has a Bid-Offer Pair Number (ranging from +5 to 5 in accordance with Section Q). It also has an associated Bid-Offer Volume, defined earlier as a continuous function of time across the Settlement Period. Bid-Offer Volumes are defined on a relative basis. Thus, assuming that it has not already been accepted, the quantity of Offer available at any given time from Bid- Offer Pair Number +1 2 is equal in MW to the value of Bid-Offer Volume relative to FPN. If, therefore, the Bid-Offer Volume for the Bid-Offer Pair numbered 1 3 were added to the final physical notification, then the resulting continuous function of time represents the maximum number of MW at which a particular Acceptance can operate before exhausting the MW available from Bid-Offer Pair number +1. As a consequence, the continuous function of time defined by the sum of: (a) (b) the final physical notification; and the Bid-Offer Volume of the Bid-Offer Pair number +1, is termed the Bid-Offer Upper Range for that Bid Offer Pair. Bid-Offer Upper Ranges for Bid-Offer Pairs with sequentially higher Bid-Offer Pair Numbers are defined by adding their Bid-Offer Volume to the previous Bid-Offer Upper Range. If the final physical notification at any instant in time is greater than or equal to zero, and the Acceptance Volume at that time extends above the top Bid-Offer Upper Range, then the top Bid-Offer Upper Range is extended upward to include the Acceptance Volume. Thus, in this case, the Bid-Offer Upper Range for the highest numbered Bid-Offer Pair is equal to the maximum of: (a) (b) the sum of the final physical notification and the value of the Bid-Offer Volume for all positively numbered Bid-Offer Pairs; and the maximum value of any value of Acceptance Volume at that instant in time. Similarly the Bid-Offer Lower Range is defined for each Bid-Offer Pair with a Bid-Offer Pair Number that is less than zero. The Bid-Offer Volume for such Bid-Offer Pairs has a negative value (or zero). 2 Assumed to be the Bid-Offer Pair submitted for that Settlement Period that has the lowest positive Bid-Offer Pair Number. 3 i.e. the Bid Offer Pair with a Bid-Offer Pair Number equal to 1. ELEXON Limited 2018 Page 8 of 20
The Bid-Offer Lower Range for the Bid-Offer Pair number 1 4 is defined by adding the Bid-Offer Volume for that Bid-Offer Pair to the final physical notification (the resultant sum will therefore be less than the final physical notification because the Bid-Offer Volume is negative). The Bid-Offer Lower Range for Bid-Offer Pairs with consecutively lower Bid-Offer Pair Numbers is defined by adding in turn the associated Bid-Offer Volume function. If the final physical notification at any instant in time is less than or equal to zero, and the Acceptance Volume at that time extends below the bottom Bid-Offer Lower Range, then the bottom Bid-Offer Lower Range is extended downward. Thus, in this case, the Bid-Offer Lower Range for the lowest numbered Bid-Offer Pair is equal to the minimum of: (i) (ii) the sum of final physical notification and the value of the Bid-Offer Volume for all negatively numbered Bid-Offer Pairs; and the minimum value of any value of Acceptance Volume at that instant in time. Determination of Accepted Bid-Offer Volume The quantity of each Bid-Offer Pair that a particular Acceptance is determined to have 'accepted' at any instant in time is called the Accepted Bid-Offer Volume. Because of the way in which the Balancing Mechanism operates, (i.e. because it is "firm for National Grid" and once an Acceptance has created an Accepted Bid-Offer Volume it cannot be undone except by creating a further Accepted Bid-Offer Volume) the Accepted Bid Offer Volume for each Acceptance must be determined sequentially based on the time at which each Acceptance was issued (the Bid- Offer Acceptance Time). Thus, each Acceptance is processed in turn, starting with the Acceptance with the earliest Acceptance time. It is only possible for an Acceptance with a Bid-Offer Acceptance Time, which falls a maximum of one hour before the start of any particular Settlement Period, to have an Acceptance Volume in that Settlement Period (in fact Acceptance Volumes are only defined for such Acceptances see "Establishment of Acceptance Volume" above). Thus each Acceptance with a defined Acceptance Volume for a particular Settlement Period is processed in order of Bid-Offer Acceptance Time. At any point in time, the Accepted Bid-Offer Volume for a positively numbered Bid-Offer Pair for a particular Acceptance is measured relative to the Acceptance Volume of the previously processed Acceptance (or final physical notification if there is no such previous Acceptance Volume). Broadly speaking at each point in time, it is the difference in MW between the Acceptance Volume and the previous Acceptance Volume (or, if none, the final physical notification), where, for the purposes of calculating the difference, each of the Acceptance Volume functions are bounded by the Bid-Offer Upper Range of the relevant Bid-Offer Pair, and the Bid Offer Upper Range of the next lowest numbered Bid-Offer Pair. A similar approach is used to determine the Accepted Bid-Offer Volume for negatively numbered Bid- Offer Pairs. Here, however, the functions are bounded by the Bid-Offer Lower Range of the relevant Bid-Offer Pair and the Bid-Offer Lower Range of the next highest numbered Bid-Offer Pair. Accepted Offer Volumes and Accepted Bid Volumes The Accepted Bid-Offer Volume for a Bid-Offer Pair is a continuous function of time defined across each Settlement Period (in fact it is defined for each of three Settlement Periods for each Acceptance) in relation to a particular BM Unit. The maximum value of the Accepted Bid-Offer Volume at any given 4 Assuming that this is the Bid-Offer Pair with the highest negative Bid-Offer Pair Number submitted for the relevant Settlement Period. ELEXON Limited 2018 Page 9 of 20
instant in time is generally capped by the magnitude of the Bid-Offer Volume at that time, and the minimum value is generally capped by minus the magnitude of the Bid-Offer Volume at that time 5. Where this function is positive it represents the acceptance of the Offer part of a particular Bid-Offer Pair, i.e. the Acceptance implies an increase in exports (or decrease in imports) for the BM Unit relative to the previous Acceptance or final physical notification at that instant in time. Where the function is negative, it represents the acceptance of the Bid part of a particular Bid-Offer Pair. The positive and negative parts of the Accepted Bid-Offer Volume are separated into two continuous functions of time which are defined across the Settlement Period. The Accepted Offer Volume is defined at any instant in time as the maximum of the Accepted Bid-Offer Volume and zero, and the Accepted Bid Volume is defined at any instant in time as the minimum of the Accepted Bid-Offer Volume and zero. Thus if an Acceptance leads to a certain Acceptance Volume, which is greater than FPN, and a second Acceptance leads to a lower Acceptance Volume then there will be a (positive) Accepted Offer Volume from the first Acceptance followed by a (negative) Accepted Bid Volume from the second. Determination of Period Accepted Offer Volume and Period Accepted Bid Volume A large number of continuous MW functions of time have been defined across each Settlement Period. In many cases, these functions are integrated over the Settlement Period. When integrated over the Settlement Period, the resulting MWh value represents the total energy implied by the MW function over the half hour. Thus for example, if the final physical notification for a BM Unit were 10MW for every spot time in the Settlement Period, the integrated value across the Settlement Period would be 5MWh. The Period Accepted Offer Volume and Period Accepted Bid Volume are the values of the Accepted Offer Volume and Accepted Bid Volume respectively integrated over the Settlement Period. For a particular BM Unit in a particular Settlement Period, the Period Accepted Offer Volume represents the MWh of energy accepted from the Offer part of a particular Bid-Offer Pair by a particular Acceptance. Similarly, the Period Accepted Bid Volume represents the MWh of energy accepted from the Bid part of a particular Bid-Offer Pair by a particular Acceptance. Note that the Period Accepted Bid Volume will always be a negative quantity (or zero). Determination of Period Priced Accepted Offer Volume and Period Priced Accepted Bid Volume The Period Priced Accepted Offer Volume and the Period Priced Accepted Bid Volume are determined in exactly the same manner as the Period Accepted Offer Volume and the Period Accepted Bid Volume respectively, except that they are not calculated for certain Settlement Periods. Those Settlement Periods for which no values are determined are those which include (or are spanned by) the start time or end time of any Acceptance for the relevant BM Unit that has a Continuous Acceptance Duration of less than the Continuous Acceptance Duration Limit. In addition, no values of Period Priced Accepted Offer Volume or Bid Volume will be calculated for Excluded Emergency Acceptances. Determination of Period BM Unit Total Accepted Offer Volume and Period BM Unit Total Accepted Bid Volume It is possible for the Offer part of a Bid-Offer Pair to be partially (or wholly) accepted by more than one Acceptance. The total quantity (of MWh) of a particular Offer within a Bid-Offer Pair that is accepted in aggregate by all Acceptances is the Period BM Unit Total Accepted Offer Volume. This total is calculated by summing the individual values of Period Accepted Offer Volume pertaining to different Acceptances. 5 This is not quite true because, as has been discussed, in some cases the Bid-Offer Upper Range and Bid- Offer Lower ranges are extended beyond the sum of final physical notification and the relevant Bid-Offer Volumes. ELEXON Limited 2018 Page 10 of 20
Similarly, the total quantity (in MWh) of a particular Bid purchased by all Acceptances is termed the Period BM Unit Total Accepted Bid Volume. This total is calculated by summing the individual values of the Period Accepted Bid Volume pertaining to different Acceptances. Note that the Period BM Unit Total Accepted Bid Volume will be a negative quantity (or zero). Determination of Period BM Unit Total Priced Accepted Offer Volume and Period BM Unit Total Priced Accepted Bid Volume In a similar manner to the above calculations, the Period BM Unit Total Priced Accepted Offer Volume for a BM Unit is determined as the sum of the values of Period Priced Accepted Offer Volume, and the Period BM Unit Total Priced Accepted Bid Volume as the sum of the values of Period Priced Accepted Bid Volume. Determination of Period BM Unit Offer Cashflow and Period BM Unit Bid Cashflow The Period BM Unit Offer Cashflow is determined by multiplying the Period BM Unit Total Accepted Offer Volume by the associated Offer Price and by the Transmission Loss Multiplier for the BM Unit in that Settlement Period. Similarly, the Period BM Unit Bid Cashflow is determined by multiplying the Period BM Unit Total Accepted Bid Volume by the associated Bid Price and by the Transmission Loss Multiplier for the BM Unit in that Settlement Period. Note that, assuming a positive Transmission Loss Multiplier, if the Bid Price is positive, the Period BM Unit Bid Cashflow will be negative. Determination of Period BM Unit Cashflow The Period BM Unit Cashflow is the overall payment to be made to or by the Lead Party for accepted Bids and Offer from that particular BM Unit in a particular Settlement Period. It is determined by summing the values of Period BM Unit Offer Cashflows and Period BM Unit Bid Cashflows over all Bid- Offer Pairs. Determination of Total System BM Cashflow and Daily Party BM Unit Cashflow The Total System BM Cashflow is the aggregate amount of payments or charges to be made for accepted Bids and Offers on a system-wide basis in each Settlement Period. It is determined by summing the Period BM Unit Cashflow over all BM Units. This represents the total payment for balancing action in this Settlement Period. The Daily Party BM Unit Cashflow is determined by summing the Period BM Unit Cashflow over all BM Units for which a Party is the Lead Party, and overall Settlement Periods in the Settlement Day. This represents the total payment or charge to or from a particular Party for balancing action in the relevant Settlement Day. Determination of Reserve Scarcity Price The Reserve Scarcity Price is calculated as the product of Loss of Load Probability (LoLP) multiplied by Value of Lost Load (VoLL). The LoLP is determined in accordance with the LoLP Calculation Statement The VoLL is set to 3,000 until it is increased to 6,000 on 1 November 2018. The VoLL is reviewed from time to time, or on request by the Authority. It is reviewed in accordance with the VoLL Review Process. Determination of STOR Action Price A STOR Action is a System Action derived from an Acceptance or BSAA provided by a Party that is a STOR Provider and that is during a Settlement Period in a STOR Availability Window. ELEXON Limited 2018 Page 11 of 20
The STOR Action Price for each STOR Action is determined as the greater of the Offer Price or Balancing Services Adjustment Price and the prevailing Reserve Scarcity Price. Determination of System and Balancing Demand Control Volumes In respect of each Settlement Period relating to a Demand Control Event, the System Demand Control Volume shall be equal to the sum of the Demand Control Volumes where the Demand Control Volume Notice has included a SMAF Flag of Yes. The Balancing Demand Control Volume is the sum of the Demand Control Volume where the Demand Control Notice has a SMAF Flag of No. Determination of Supplemental Balancing Reserve (SBR) Actions and the SBR Action Price The Transmission Company may dispatch SBR services through the Balancing Mechanism. SBR is a form of Balancing Service. Where the Transmission Company dispatches SBR, it sends an SBR Notice to BSCCo or SBR Flags the associated Acceptance. SBR Actions are Offers derived from Acceptances which have an associated SBR Notice or are SBR flagged. In order that SBR Actions reflect their value to the market in the imbalance price calculation, BSCCo ensures that SBR Actions are priced according to the SBR Action Price, which is equal to the VOLL. Settlement Calculations Treatment of Interconnector BM Units IEAs are allocated two BM Units in relation to each Interconnector for which they are the IEA. These BM Units are the Production Interconnector BM Unit and the Consumption Interconnector BM Unit of the IEA. The BM Unit Metered Volume allocated to these BM Units is determined by calculating the difference between the Interconnector Metered Volume (basically the amount of energy metered as flowing across the Interconnector in the Settlement Period) and the sum of the BM Unit Metered Volumes for Interconnector BM Units for which the Lead Parties are Interconnector Users for that Interconnector. If the difference is a positive amount, it is allocated as the BM Unit Metered Volume of the Production Interconnector BM Unit, and the BM Unit Metered Volume of the Consumption Interconnector BM Unit is set to zero. Alternatively if the difference is a negative amount, it is allocated as the BM Unit Metered Volume of the Consumption Interconnector BM Unit, and the BM Unit Metered Volume of the Production Interconnector BM Unit is set to zero. Determination of BM Unit Metered Volume for Supplier BM Units For any Settlement Run other than an Interim Information Settlement Run, the BM Unit Metered Volume for Supplier BM Units is determined by multiplying by -1 the relevant metered quantity for the BM Unit that has been sent to the SAA by the SVAA. This is required because the SVAA treats imports as a positive quantity and exports as a negative quantity. Multiplying these values by 1 converts them to be consistent with convention adopted by the SAA. Determination of Information Imbalance Volumes and Charges The Period FPN for a BM Unit is determined by integrating the values of Final Physical Notification over the Settlement Period. The Period FPN represents the MWh of energy that the BM Unit would have imported or exported in the Settlement Period had its operation followed its Final Physical Notification within the Settlement Period. ELEXON Limited 2018 Page 12 of 20
For each Settlement Period, the Period BM Unit Balancing Services Volume is determined by summing the Period BM Unit Total Accepted Offer Volume and the Period BM Unit Total Accepted Bid Volume over all Bid-Offer Pairs in a Settlement Period and then adding the BM Unit Applicable Balancing Services Volume (i.e. the volume deemed, by the Transmission Company, to have been delivered by the BM Unit when providing Applicable Balancing Service(s) in the Settlement Period) and adding any BM Unit Demand Disconnection Volumes (as calculated by the CDCA and SVAA). This sum represents the net total MWh of accepted Offers, Bids, Applicable Balancing Services and Demand Disconnection Volumes for the BM Unit in the Settlement Period. The Period Expected Metered Volume is the sum of the Period FPN and the Period BM Unit Balancing Services Volume for a BM Unit in a particular Settlement Period. This represents the energy that the BM Unit would have imported or exported in the Settlement Period had its operation followed its final physical notification adjusted for Accepted Bids, Offers and Applicable Balancing Services within that Settlement Period. The Information Imbalance Volume is the modulus of the difference between the BM Unit Metered Volume and the Period Expected Metered Volume (i.e. it is the difference between what the BM Unit actually imported or exported and that which it was expected to import or export). The Information Imbalance Charge for a BM Unit in a particular Settlement Period is determined by multiplying the Information Imbalance Volume (which must be positive) by the Information Imbalance Price. The Information Imbalance Price is currently set to zero (hence all Information Imbalance Charges are currently zero). A modification to the BSC would be required to set this to a non-zero value. The Total System Information Imbalance Charge is the sum of the Information Imbalance Charges over all BM Units in a particular Settlement Period. The Daily Party Information Imbalance Charge is the sum of the Information Imbalance Charge over all BM Units for which the Party is the Lead Party and overall Settlement Periods in the Settlement Day. Determination of Energy Imbalance Prices For each Settlement Period there are always two imbalance prices, System Buy Price (SBP) and System Sell Price (SSP), which each have the same value. For each Settlement Period where the Net Imbalance Volume is not zero, we use the main pricing method to calculate the prices. The main pricing method uses the balancing actions (Bids, Offers, BSAAs and Demand Control Volumes) taken by the System Operator for that Settlement Period. The processes we need to go through to calculate using the main pricing method are described in Section T: Annex T-1. In the event of Net Imbalance Volume equalling zero, we use the Market Price. Should BSCCo receive an SBR Notice or an Acceptance is SBR Flagged, BSCCo ensures that the calculation of imbalance prices for affected Settlement Periods takes account of the SBR Actions priced at the SBR Action Price. If you want to find out more about how we calculate SSP and SBP see the Imbalance Pricing Guidance document on the BSC Website. Determination of Credited Energy Volumes for each Energy Account Section P sets down the arrangements by which Metered Volume Fixed Reallocations and Metered Volume Percentage Reallocations may be submitted. These have the effect of transferring the responsibility for some or all of the BM Unit Metered Volume of a BM Unit from the Lead Party to one or more Subsidiary Parties. ELEXON Limited 2018 Page 13 of 20
The Credited Energy Volume allocated to each corresponding 6 Subsidiary Energy Account from each BM Unit is equal to the Transmission Loss Multiplier for the BM Unit multiplied by the sum of: (a) (b) the Metered Volume Percentage Reallocation multiplied by the difference between the BM Unit Metered Volume of the BM Unit and the Period BM Unit Balancing Services Volume; and the Metered Volume Fixed Reallocation. These values are then rounded towards zero to the nearest kwh. The Credited Energy Volume for the corresponding Energy Account of the Lead Party is equal to the product of the BM Unit Metered Volume and the Transmission Loss Multiplier, less the sum of the Credited Energy Volumes allocated to Subsidiary Parties. This is the Credited Energy Volume that would accrue to the Lead Party in the absence of Metered Volume Reallocations less Credited Energy Volumes actually allocated to the Energy Accounts of Subsidiary Parties. Determination of Energy Imbalance for each Energy Account The Account Credited Energy Volume for an Energy Account is the Credited Energy Volumes summed over all BM Units allocated to that Energy Account. The Account Period Balancing Services Volume for an Energy Account is the sum (over all corresponding BM Units for which the Party holding the Energy Account is the Lead Party) of the values of the product of Period BM Unit Balancing Services Volume and the Transmission Loss Multiplier for each BM Unit. For each Energy Account, the Account Energy Imbalance Volume is the Account Credited Energy Volume less the Account Period Balancing Services Volume, less the Account Bilateral Contract Volume. The Account Bilateral Contract Volume is determined under Section P. The Account Energy Imbalance Volume represents the net energy imbalance for the Energy Account. If this quantity is greater than zero, then the account is "long", and if less than zero, the account is "short". The Total System Energy Imbalance Volume is determined by summing the Account Energy Imbalance Volumes over all Energy Accounts. The Total Period Applicable Balancing Services Volume is determined by summing the BM Unit Applicable Balancing Services Volume over all BM Units. Determination of Energy Imbalance Cashflows If the Account Energy Imbalance Volume for a particular Energy Account is greater than zero, then the Account Energy Imbalance Cashflow is minus the product of the Account Energy Imbalance Volume and System Sell Price. If the Account Energy Imbalance Volume for a particular Energy Account is less than or equal to zero, then the Account Energy Imbalance Cashflow is minus the product of the Account Energy Imbalance Volume and System Buy Price. Irrespective of its Account Energy Imbalance Volumes, the Account Energy Imbalance Cashflow for Energy Accounts held by National Grid are equal to zero 7. The Total System Energy Imbalance Cashflow is the sum of the Account Energy Imbalance Cashflows, summed over all Energy Accounts. 6 Corresponding means that if the BM Unit is a Production BM Unit, then the Energy Account is the Production Energy Account, and similarly for Consumption BM Units and the Consumption Energy Account. 7 Other than in the case where National Grid is voluntarily the Interconnector Error Administrator, in which case it has separate Energy Accounts in this capacity which are settled at Energy Imbalance Prices. ELEXON Limited 2018 Page 14 of 20
The Daily Party Energy Imbalance Cashflow for a Party is the sum of the Account Energy Imbalance Cashflows over the Energy Accounts of the Party, summed overall Settlement Periods in the Settlement Day. Non-Delivery Rule and Calculations The non-delivery rule applies in the event that a BM Unit fails to deliver Offers and/or Bids for which Acceptances have been issued. Whilst Offers and Bids are accepted on a spot time basis (i.e. they specify the changes in power output to be delivered by a BM Unit), the Non-Delivery Rule is based upon a comparison with the BM Unit Metered Volume (i.e. MWh in each Settlement Period) for a BM Unit. For each BM Unit, the Period BM Unit Non-Delivered Offer Volume is the difference between the Period Expected Metered Volume and the BM Unit Metered Volume. This quantity is limited to being not less than zero and not greater than the sum over all Bid-Offer Pairs of the values of Period BM Unit Total Accepted Offer Volume for that BM Unit. Thus, the Non-Delivered Offer Volume is a positive (or zero) quantity representing the quantity (in MWh) of undelivered Offers in the Settlement Period. It follows that the magnitude of the quantity of non-delivered Offers cannot exceed the aggregate quantity of accepted Offers from the BM Unit in the Settlement Period. Similarly, for each BM Unit, the Period BM Unit Non-Delivered Bid Volume is the difference between the Period Expected Metered Volume and the BM Unit Metered Volume, provided that this quantity cannot be greater than zero 8 and cannot exceed in magnitude (i.e. cannot be less than) the sum over all Bid-Offer Pairs of the values of Period BM Unit Total Accepted Bid Volume for that BM Unit. Thus, the Non-Delivered Bid Volume is a negative (or zero) quantity representing the quantity (in MWh) of undelivered Bids in the Settlement Period, and the quantity of non-delivered Bids cannot be more negative than the quantity of accepted Bids from the BM Unit in the Settlement Period. It also follows that it is not possible for both the Period BM Unit Non-Delivered Offer Volume and the Period BM Unit Non-Delivered Bid Volume to be non-zero quantities in the same Settlement Period (i.e. a BM Unit may only be treated as either having not delivered Offers or having not delivered Bids in any given Settlement Period). If the Period BM Unit Non-Delivered Offer Volume is greater than zero, then the quantity is allocated across the various accepted Offers (assuming there is more than one) as follows. The Period BM Unit Non-Delivered Offer Volume is allocated first to the highest priced Offer. If the MWh quantity of the Period BM Unit Non-Delivered Offer Volume is greater than the Period BM Unit Total Accepted Offer Volume of the highest priced Offer, then the remainder is allocated to the next highest priced accepted Offer, and so on, until it has all been allocated. Note that it must be possible to allocate all of the Period BM Unit Non-Delivered Offer Volume in this way, because the quantity was capped to begin with to the aggregate quantity of Period BM Unit Total Accepted Offer Volumes. This process yields one or more non-zero values of Offer Non-Delivery Volume, such that the aggregate of these values equals the Period BM Unit Non-Delivered Offer Volume. If, instead, the Period BM Unit Non-Delivered Bid Volume is less than zero, then this is allocated across values of Period BM Unit Total Accepted Bid Volumes in a similar manner, although in this case, starting with the lowest priced Bid. This process yields one or more non-zero values of Bid Non- Delivery Volume, such that the aggregate of these values equals the Period BM Unit Non-Delivered Bid Volume. The Non-Delivered Offer Charge in relation to each Offer is the product of the Non-Delivered Offer Volume, the Transmission Loss Multiplier, and the difference between the Offer Price and System Buy Price (where the difference is capped at zero). Thus if the Offer Price of a non-delivered Offer is greater than System Buy Price, the Non-Delivered Offer Charge is the TLM scaled quantity of non delivered Offer priced at the difference between the Offer Price and System Buy Price. It represents a 8 The reader is reminded that Period BM Unit Total Accepted Bid volumes are negative. ELEXON Limited 2018 Page 15 of 20