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REMIT Inside Information Reporting Platform for GB Electricity

This report provides an overview of the modification proposals for the REMIT Inside Information Reporting Platform for GB Electricity. It discusses the history of the proposal, the REMIT regulations, definitions of inside information, obligations to publish, and the proposed aims of the platform.

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REMIT Inside Information Reporting Platform for GB Electricity

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  1. BSC Panel 210 14 February 2013

  2. Report on Progress of Modification Proposals Adam Lattimore 14 February 2013

  3. Modifications Overview

  4. 210/04 P291 ‘REMIT Inside Information Reporting Platform for GB Electricity’ David Kemp 14 February 2013

  5. P291 Modification ProposalREMIT Inside Information Reporting Platform for GB Electricity

  6. History at Panel • Initial paper 193/08 to Panel (Jan 2012), asking whether the Panel felt that a quickly developed bulletin board solution would assist participants in meeting their obligations • Not considered a robust solution by Panel, in addition insufficient guidance was available from ACER at that time to recommend progression of a change. • Subsequent paper 205/06 to Panel (Nov 2012), highlighting that 2nd revision of ACER Guidance had been published that provided further clarity on some issues, and advocating development of the BMRS as the GB reporting platform • Panel generally supportive in principle of development of BMRS as a central reporting tool for insider information, whilst being mindful of potential costs and liability issues.

  7. REMIT Regulations REMIT’s aim is to improve the functioning of energy markets through prohibiting market abuse on wholesale energy markets. REMIT introduces, for the first time, a consistent EU-wide framework: • Defining market abuse, in the form of market manipulation, attempted market manipulation and insider trading, in wholesale energy markets • Introducing explicit prohibitions of market manipulation, attempted market manipulation and insider trading in wholesale energy markets • Establishing a new framework for the monitoring of wholesale energy markets to detect and deter market manipulation and insider trading • Providing that national regulatory authorities should be given enforcement and investigatory powers and that member states establish a penalties regime for sanctioning of breaches at a national level by 29 June 2013.

  8. Article 2: Definitions • “‘Inside information’ means information of a precise nature which has not been made public, which relates, directly or indirectly, to one or more wholesale energy products and which, if it were made public, would be likely to significantly affect the prices of those wholesale energy products.” ... information means ... • “other information that a reasonable market participant would be likely to use as part of the basis of its decision to enter into a transaction relating to, or to issue an order to trade in, a wholesale energy product.” …Art 4.1 goes on to say...

  9. Article 4: Obligation to Publish “inside information” REMIT Art 4.1: “Market participants shall publicly disclose in an effective and timely manner inside information which they possess in respect of business or facilities ... Such disclosure shall include information relevant to the capacity and use of facilities for production, storage, consumption or transmission of electricity or natural gas ... including planned and unplanned outages.” …the (non-legally binding) Guidance Notes go on to say… From the Guidance Note (2nd Ed. 28/09/12): 4.6.1 “As regards wholesale electricity products ... The Agency believes that the following examples may constitute inside information ... - Any planned outage, limitation, expansion or dismantling of capacity of one generation unit, consumption or transmission facility that equals or exceeds 100MW, including changes of such plans; - Any unplanned outage or failure of capacity that equals or exceeds 100MW for one generation unit, consumption or transmission facility, including updates on such outages or failures.“

  10. Guidance Note: Effective public disclosure From the Guidance Note (2nd Ed. 28/09/12): 6.2 “... inside information should be disclosed in a manner ensuring that it is capable of being disseminated to as wide a public as possible...Agency believes that the disclosure of inside information through platforms has its merits and why…this disclosure mechanism is considered as the most effective.” - Agency considers a dual approach to effective disclosure:- • “If platforms for the disclosure of inside information exist…market participants…should use such disclosure mechanisms, if not otherwise specified…” • “…such publication…constitutes simultaneous, complete and effective public disclosure.” • “if adequate transparency platforms do not yet exist…market participants may be allowed, at least for an interim period or unless otherwise specified, to publish…on their own website.”

  11. Proposal and Aims P291 proposes to utilise the BMRS as a central platform for disclosure of inside information, with the following aims in mind :- • To leverage an existing platform that has evolved as a key reporting and transparency tool within the GB electricity industry • Align UK practice with the most recent ACER guidance in providing the preferred central platform as the most effective means of disclosing inside information • Establish agreed GB standards of reporting of inside information, allowing an on-going regulatory oversight and scrutiny through BSC governance • Provide traders with a single platform to view information, increasing efficiency and reducing risk of inadvertent breach

  12. P291: Modification Proposal • Amend the BSC to allow a REMIT Inside Information Reporting Platform to be introduced to the BMRS website • Platform would be developed as part of the Modifications process

  13. P291: Things to Consider • What inside information should be reported? • What are the system requirements for the platform? • How would information be submitted/published? • Should reporting on this platform be mandatory or voluntary? • What liability issues could there be? • E.g. liability issues should the BMRS be unavailable • Is there any relationship with the Transparency Regulation?

  14. P291: Proposed Progression • Recommend that P291 progresses to an Assessment Procedure • Recommend a four month Assessment Procedure • Three Workgroup meetings • 15WD Impact Assessment & 15WD Assessment Consultation • Assessment Report presented to Panel in June • Workgroup membership should include: • SSMG members • Other relevant experts & interested parties

  15. P291: Panel’s Considerations • Panel invited to agree P291 should undergo an Assessment Procedure • Agree Workgroup’s membership and Terms of Reference • Panel invited to agree progression timetable • Recommend four-month Assessment Procedure

  16. P291: Recommendations The Panel is invited to: • DETERMINE that Modification Proposal P291 progresses to the Assessment Procedure; • AGREE the proposed Assessment Procedure timetable such that an Assessment Report should be completed and submitted to the Panel at its meeting on 13 June 2013; • DETERMINE that the P291 Workgroup should be formed from members of the Settlement Standing Modification Group and any other interested parties; and • AGREE the Workgroup’s Terms of Reference.

  17. Minutes of Meetings 207 208 & 209 & Actions Arising Adam Richardson 14 February 2013

  18. Chairman’s Report BSC Panel Andrew Pinder 14 February 2013

  19. 210/01 ELEXON Report Peter Haigh and Chris Rowell 14 February 2013

  20. Distribution Report David Lane 14 February 2013

  21. National Grid Update Ian Pashley 14 February 2013

  22. European Update: Ofgem Lisa Charlesworth 14 February 2013

  23. 210/01a Report from the ISG 14 February 2013

  24. 210/01b Report from the SVG 14 February 2013

  25. 210/01c Report from the PAB 14 February 2013

  26. 210/01d Report from the TDC 14 February 2013

  27. 210/01e Report from the JESG 14 February 2013

  28. 210/02 Trading Operations Report 14 February 2013

  29. 210/03 Change Report 14 February 2013

  30. 210/05 ‘Responses to the Draft Business Plan’ Victoria Moxham 14 February 2013

  31. Recap on process Engagement with BSC Parties pre and post the consultation deadline to discuss the Business Plan, respond to questions and gain a better understanding of views on it.

  32. Interest in the Business Plan • Document downloaded 99 times by 88 unique individuals between 17 December and 23 January (external downloads only – i.e. excluding ELEXON viewings). • High average view time (8 mins 16 seconds) – indicates it’s being read rather than just being glanced at (average view time per page of the ELEXON website is approx 2 mins). • We haven’treceived the message that Parties didn’t have time to respond. • Generally - Parties are reverting back to the stance they took before the new mission and vision were introduced in the 2011/12 Business Plan; i.e. not feeling compelled to comment because there’s nothing causing them concern.

  33. Responses received • 2 formal written responses from ScottishPower & SSE • Exchanges with npower and British Gas throughout the period • Confirmed verbally that there’s nothing in the strategy or budget that causes them concern. • Feedback (but no formal written response) from EDF • Considered the Business Plan internally, decided not to formally respond (partly because of other priorities, partly because they are comfortable with the Business Plan). • Have sought reassurance that Parties will have the opportunity to comment on and influence changes to internal IT systems.

  34. Amendments to the Business Plan • No specific actions needed in response to industry comments • But, value in providing additional clarity and reassurance to BSC Parties in 2 areas: • NB Some additional changes may be made to the Budget to reflect headcount changes – will be highlighted to the Board in March.

  35. Next steps • NB The small number and nature of comments received gives the potential for bringing the Panel’s approval of the strategy forward to February (see timetable on next slide). • This is in line with the approach adopted last year.

  36. Timetable 1 3 6 8 10 & Note Process & Key Themes Request to vary timetable Consider comments & revisions Strategy approval Review draft Strategy Panel 7 9 2 11 & Consider comments & revisions Review Budget & Strategy Consider Panel comments Approve Budget Board 5 Workshop Parties Issue for comment 4

  37. Recommendations • The Panel is invited to: • NOTEthe comments received on the draft Business Plan; • NOTEthe actions taken by ELEXON to address the comments received; • NOTEthe revised Business Strategy and Budget; • APPROVE the Business Strategy; and • NOTEthat the Board will be asked to approve the budget to deliver this strategy.

  38. Balancing Network Code Update Steve Wilkin 14 February 2013

  39. Overview of Electricity Network Codes Source: National Grid JESG website

  40. Recent and Future Milestones for the Electricity Balancing Network Code • September 2012 - final version of Electricity Balancing Framework Guidelines (the scoping document for the Network Code) published by ACER • Scope extends to balancing mechanism & imbalance settlement, so will directly impact the BSC • December 2012 – European Commission instructed ENTSO-E to start drafting the Electricity Balancing Network Code and to submit it by 1 January 2014 • January 2013 - Part draft of the Electricity Balancing Network Code published on ENTSO-E website in January • March 2013 – ENTSO-E plans to publish the draft Network Code for a two-month public consultation. As part of this there is likely to be a public workshop.

  41. Probable content of the Electricity Balancing Network Code • From verbal report by National Grid to the Ofgem/DECC stakeholder group: • The imbalance settlement part will include: pricing, rules, imbalance calculation and Settlement Period Duration, and roles • The Balancing Mechanisms/Markets will gradually merge so that there are multiple Coordinated Balancing Areas (CBAs) where the majority of BM products and prices are shared between neighbouring TSOs with a common merit order. • By 2020 we expect one EU wide Balancing Mechanism (BM).  • Personal view: • Two tier system with current GB Balancing Market interacting with EU-wide BM is possible

  42. Possible impacts on the BSC in more detail (1) • Balancing Mechanism Gate Closure up to 1 hour but perhaps less Bid/Offers in common format Common EU merit order (for some or all products) All Bid/Offer Acceptances to be paid at marginal price (unless there is a better alternative) – initial proposal to be made within one year (according to the part draft Network Code)

  43. Possible impacts on the BSC in more detail (2) • Imbalance Settlement Harmonised principles for calculating imbalances and imbalance prices main features to be harmonised within 3 years of Network Code coming into force (which probably means by January 2018) Settlement Period should be no longer than 30 minutes & ENTSO-E shall do cost-benefit on harmonising its duration across Europe Public consultations must last at least 4 weeks (appears at first sight that this would include BSC Modifications) ENTSO-E to provide annual report on progress towards harmonisation

  44. Other European Developments that may impact the BSC • CACM Network Code • ACER Opinion on CACM drafting issued to ENTSO-E in December • ACER/ENTSO-E discussions continue • Market splitting is a potential impact on the BSC • Transparency Regulation about to enter comitology • Data to central European ENTSO-E platform • Probably has to be implemented by end 2014 • Data reporting for GB electricity via BMRS has been suggested • REMIT • Reporting of inside information - P291 has been raised • BOAs reportable to ACER in longer term

  45. Update on Chairman Appointment Process Adam Richardson 14 February 2013

  46. Any Other Business

  47. I: Governance Review 14 February 2013

  48. Next Meeting: 14 March 2013

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