1 / 11

Credit Cover Arrangements provided by ELEXON

Credit Cover Arrangements provided by ELEXON. APEx Conference: Leipzig. October 2004. Agenda. What is covered and how? How it works Our experience and lessons. What charges?. Imbalance Settlement Gross ~€600m /year Charges for being short Payments for being long

marlie
Download Presentation

Credit Cover Arrangements provided by ELEXON

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Credit Cover Arrangements provided by ELEXON APEx Conference: Leipzig October 2004

  2. Agenda • What is covered and how? • How it works • Our experience and lessons

  3. What charges? • Imbalance Settlement Gross ~€600m /year • Charges for being short • Payments for being long • Surplus or shortfall reallocation (payments and charges) • Administration charges ~€100m/y • ELEXON costs • BETTA costs • NETA implementation costs

  4. Mutuality or Credit Cover? • Imbalance Charges : Explicit credit cover rules • The Pool - Cash / Letters of Credit / Credit Rating /Parent Company Guarantee – relaxed implementation. One failure and a shortfall. • NETA/BETTA – Cash or LOC only – more rigorous *Required for Consumption AND Generation* • Administration Charges : Mutualised risk • Shortfall shared.

  5. How much needs to be covered? • 29 days arrears • Actual charges not known for all 29 days • Pre-set price and volume used where actual data not available • Reminder – ImbalanceVolume = Contract notification-Meter reading Also payments and charges for balancing action

  6. How does it work? • The Party provides cash or LOC to their chosen level • This is converted to energy credit cover at the pre-set price • The system calculates credit cover percentage each half hour at gate closure • The party can provide zero credit cover

  7. Default level 1 • 80% - Level 1 • 24 hour Query Period • 1 business day Default Cure Period • Not corrected then in default if ELEXON says so • Party notified and posted on website • Out of default when below 75%

  8. Default Level 2 • 90% - Level 2 • Straight into default if ELEXON says so • Notified and posted on Website • Contract notifications which do not improve the position are rejected • Out of default below 90%

  9. Experience • 2-4 /month in query period • 1 – 2 /month into default(level 1 or level 2) • Only trivial cases of shortfalls.

  10. Lessons • Cash is best • LOC due on demand BUT • Case 1 - took a week • Case 2 – agreed to pay on the steps of the Court • Most defaults are errors • Most queries are for rapid shifts in customer base

  11. Lessons • We hold an excess of cover (€300m) • Credit seems to be duplicated for the same energy in the life cycle • LOCs appear to be cheap for most parties • Shorter settlement would release some cash • The arrangements have worked –supported a graceful exit for ENRON • Proved flexible to rapid changes

More Related