Download Powergen response - Changes to electricity generation

Christiane Sykes
Trading Arrangements
David Halldearn
Director - Scotland and Europe
Office of Gas and Electrcity Markets (Ofgem)
9 Millbank
London
SW1P 3GE
14th March 2003
Reference
Dear David
Response to the first consultation on the electricity generation, distribution
and supply licences under BETTA
Thank you for the opportunity offered to Powergen to comment on the proposed
changes to the electricity generation, distribution and supply licences under
BETTA. The amendments and powers introduced through the E(TT) Bill provides
the opportunity to take a fresh look at the current arrangements in England and
Wales and ensure that many of the shortcomings of NETA are not transferred
through to BETTA.
We recognise that it is appropriate that the scope of the Secretary of State’s
powers to designate relevant industry codes is limited to that ‘necessary and
expedient to implementing the GB trading and transmission arrangements’. In our
view this should not prevent the Secretary of State from seeking to simplify the
current contractual and licensing frameworks that exist across GB electricity
markets.
We accept that many of the licence changes made are consequential changes of
developing GB-wide arrangements and so it follows that definitional changes such
as BSC to GB BSC, can go ahead without the need for any detailed consultation.
We have attempted below to confirm our viewpoints on some of the less obvious
amendments to the current licences.
Security Arrangements
In those licences, which relate to security arrangements for England and Wales
and Scotland it is sensible that those referring to security arrangements in
Scotland be removed and those relating to England and Wales remain, but are
amended to reflect a harmonised GB Fuel Security Code (FSC). We welcome the
review of the FSC to bring it more into line with the more comprehensive
arrangements that have been developed for England and Wales
Powergen UK plc
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Westwood Business Park
Coventry
CV4 8LG
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Powergen UK plc. Registered office: 53 New Broad Street, London, EC2M 1SL. Registered in England and Wales No.2366970
www.powergen.co.uk
Compliance with Pooling and Settlement Agreement and NETA
Those licence conditions, which relate to the implementation of NETA, should be
removed in the event that they are spent by the time BETTA is implemented.
Certain run-off provisions could allow for this. We fully support such streamlining
of the licences through the removal of redundant clauses, thereby creating more
relevant and lucid documents.
The importance of streamlining the current processes should not be underrated.
Whilst the E(TT) Bill seeks provisions to establish a GB BSC, GB CUSC and GB
Grid Code this could be taken further to combine the commercial codes, that is
the BSC and CUSC and their ancillary documents into one Code.
One other perhaps more pragmatic method of streamlining the process might be
simply to provide one overarching panel to govern the BSC and CUSC and their
ancillary documents. This would, at least, ensure greater efficiency in the
requirements to tie in one code with another and facilitate more co-ordinated
arrangements.
Clearly, this would also involve amending the Licensing arrangements requiring
the GB SO to establish particular codes, statements, charging methodologies etc.
Such arrangements would allow market participants to propose changes to all
aspects of electricity trading arrangements and not just those defined under the
BSC and CUSC. Currently, even if Ofgem support suggested industry changes to
various statements and connection and use of system charging methodologies
they cannot implement such changes without the supporting recommendations of
NGC.
Compliance with SAS and with the Trading Code in Scotland
In considering the supplementary standard conditions for Scotland, as we have
previously stated in our response to the impact of BETTA on the SAS, the SAS
ought to exist as a stand-alone agreement until final reconciliation, with run-off
operations managed by the GB BSCCo. For completeness, the agreement
should be modified by deleting sections and terms that are not relevant to past
business. The advantages of this are that it helps to keep costs separate,
enabling BETTA implementation costs to be budgeted and allocated
appropriately. Furthermore, we concur that this approach would mean run-off
terms would not have to be included in the GB BSC. Potential issues arising in
relation to Scottish and English law would also be avoided, and it would ensure
clear demarcation between the licence responsibilities of SPDL and SHEPDL in
the pre-BETTA world and the System Operator in the post-BETTA world.
It is reasonable, therefore, that certain provisions, appropriately amended, need to
remain in place in the supplementary SLCs in relation to any arrangements, which
are relevant only to past business in the SAS. We concur that the licence
condition relating to the Trading code is removed under BETTA.
The special licence conditions in the licences of SPDL and SHEPDL will also
have to be amended to reflect the obligation on these two licensees to provide the
SAS only for the run-off period.
Powergen are happy to discuss any of the above issues raised in this document.
Yours sincerely
Christiane Sykes.