Strategic Priorities

BSC Rules Management

Elexon’s Rules Management covers:

Helping and supporting BSC Parties and stakeholders to develop proposals to modify the BSC and then managing implementation of those changes is one of the most important contributions we can make to our customers. It also makes sure the BSC plays its part in meeting the net zero challenge.

Our priorities for BSC rules management in the coming year are to continue working on BSC changes whether they are required to meet regulatory deadlines, to open up new market opportunities for BSC Parties or to address routine changes. In the following paragraphs we describe some of these Modifications.

Modifications required by major regulatory initiatives

Modification P402 ‘Enabling reform of residual network charging as directed by the Targeted Charging Review (TCR)’.
This change introduces new reporting requirements on Licensed Distribution System Operators (LDSOs) and Elexon to provide data to National Grid ESO in line with Ofgem’s TCR reforms. We expect that this change will be implemented in the February 2022 release

Modifications P344 ‘Project TERRE’ and P407 ‘Project MARI’ (Manually Activated Reserve Initiative)
Now that the Brexit Implementation Period has finished there is no premise in the UK and EU Trade and Cooperation Agreement (TCA) for GB’s participation in TERRE or MARI.

We are working with National Grid ESO to assist with determining the next steps for Project TERRE. National Grid ESO is undertaking a cost-benefit-analysis to explore whether to implement a GB-only Replacement Reserve (RR) product, and this is due to complete late spring/early summer 2021. We have finalised our work on testing Settlement systems to support Project TERRE. This ensures that we can resume work at a later date if this is required.

Following conversations with Ofgem, ‘P407 ‘Project MARI’ and the corresponding Grid Code Modification (GC045) were withdrawn in early February to reflect that is no requirement to implement MARI in GB.

Modification P410 ‘Changing imbalance price calculations to comply with the Imbalance Settlement Harmonisation regulations

is also linked to the implementation of European regulations. They require a new parameter, Value of Avoided Activation of balancing energy’ (VOAA), based on available actions, to be used in imbalance price calculations. Throughout 2021 we will be working to ensure that P410 can be implemented around December 2021 before the compliance deadline in January 2022.

Modifications which build on progress to net zero

We continue to support industry with the adaptation of the BSC so it progresses towards a smarter, more flexible electricity system. Such changes are a growing area of activity for Elexon as can be seen from previous Modifications, and those Modifications still in flight. More are expected in order to achieve net zero.

Modification P375 ‘Settlement of Secondary BM Units using metering at the asset’ has seen us working closely with a VLP and the industry to enable data from asset meters fitted at units behind the boundary point to be submitted into Settlement. It could have a transformative effect on the energy system by offering DSR providers and other small asset owners more opportunities to provide balancing services. The reforms would also give LDSOs more accurate control of their networks, allowing them to dispatch assets with more efficiency. There has been strong support for these reforms during the Workgroup phase. P375 was approved by Ofgem in February 2021 for implementation in June 2022.

Modification P415 ‘Facilitating access to wholesale markets for flexibility dispatched by Virtual Lead Parties’ follows on from the Wider Access reforms. It would amend the BSC so that consumers offering DSR can trade this in the wholesale electricity market through a VLP, rather than through their Supplier. P415 anticipates using processes developed through the implementation of P375 to obtain and use data from asset meters. During 2021 we plan to complete the work with the Workgroup and bring the Modification to the Panel for its views. A date has not been set for implementation.

Modification P379 ‘Multiple Suppliers through Meter Splitting’ proposed to change the BSC so that meters can account for two different supplies of consumption. The change was withdrawn by the proposed (GridBeyond) after independent analysis (requested by the Panel) showed that the costs for implementing it would significantly outweigh the benefits.

We would like to thank all industry parties for their dedication and insights that have supported development of the proposal. There are important learnings from the development process for P379, which we now plan to compile and publish. We hope these learnings will assist in development and proposals for future BSC changes and
wider energy policy.

Code consolidation and simplification

There is a clear need to consolidate the codes landscape so that it is easier to navigate for both existing and new energy companies. Without reform, the current arrangements could slow down progress to net zero as the change process for the codes is lengthy and cumbersome. Having 11 codes, managed by six administrators does not lend itself to making widespread, cross-industry changes which will be needed. However, a review of codes by Ofgem and
BEIS has made limited progress so far.

Following the Energy White Paper, published in December, it is expected that the Government will consult later this year on energy code governance arrangements, and review the organisational structure for the electricity SO. Ofgem has also recommended to Government that an independent body is set up to carry out the electricity SO role. This body would be completely separate from National Grid.

Together with system operation, the energy codes form the core of central services for the energy system. We believe it is right for the future of the SO roles to be considered alongside reforms for code arrangements. In our latest Policy View we have outlined options for reforms. We believe the gas and electricity SOs could be merged, and a ‘market operator’ could be created as a single body to manage all energy codes. In our view, this will help progress to net zero by promoting better management of the energy system.

Making it easier for customers to interact with the BSC

Until reforms for the code arrangements are in place, our goal is to speed up the BSC change process and make it as easy as possible for our customers to interact with the BSC and understand how the rules impact on them. Typically it takes eight months for a BSC Modification to be developed and sent to Ofgem for a decision. We generally schedule approved changes into three system ‘releases’ per year so that they are implemented in a co-ordinated way. To make better use of resources by Elexon, the industry and Ofgem, we want to reduce incidences where industry develops BSC changes which are not then approved by Ofgem.

Ofgem’s current practice is to wait until it receives a recommendation from a code panel on a Modification before deciding whether to approve it. It would be better if Ofgem was able to make its views known earlier in the process.

We are looking to establish a cross electricity sector change group to strategically review and manage change to industry systems, so that there is more detailed forward planning of Modifications and the changes necessary to enact Significant Code Review reforms.

“ Elexon are supportive, professional and are experts within their relevant fields.”
Elexon customer survey 2020

Digitising the BSC

We recognise that the BSC and its subsidiary documents are complex. That is why each of its sections are supported with a simple guide and we also provide numerous guidance notes to further aid our customers. We have been working to digitise the BSC documents so that they are more accessible. During 2020 we investigated technology options and explored our customers’ needs. In 2021 we plan to deliver our first version of the digitised code and to work closely with stakeholders to ensure they are seeing the full benefit.

This will be achieved in phases, focusing on elements that will deliver the most value first. By making best use of this technology we will help our customers to ‘selfserve’ and get quicker answers to their questions. It will also reduce the amount of time our colleagues spend on updating code rules manually, increasing our efficiency and ability to implement change more quickly.

“Our monthly Operational Support Manager (OSM) meeting has been discursive in nature and we are confident that the feedback from our experience is being collated for consideration at expert groups and at the Performance Assurance
Board (PAB).”
Elexon customer survey 2020

Assurance

A distinguishing feature of the BSC and Elexon’s services is the extent of our assurance activity. The work we do to provide assurance on the robustness and accuracy of Settlement is encompassed within our Assurance product, which we provide to our customers and the market. Elexon assurance services aim to efficiently manage and mitigate the risks associated with Settlement. This is captured in the Performance Assurance Framework (PAF) which is made up of a number of techniques, that work holistically to manage all aspects of risk across all the participants in the market, and pivot to respond to changes in industry and the wider economy.

Changes to the Performance Assurance Reporting and Monitoring System (PARMS) and other data collection systems aim to improve analytic abilities and techniques. They also seek to avoid risks becoming issues in the future and ensure that industry Parties’ time and effort is spent in the most effective way possible. In addition, the assurance team has fed into all aspects of changes occurring in wider industry, such as the move to smart metering and MHH Settlement.

2020 has shown the Elexon PAF to be flexible and agile in the face of challenge and change. COVID-19 restrictions across the country caused significant disruption to the ability to read and service meters, as well as once in a lifetime shifts in usage and consumer demand. Elexon recognised the significant impact that the lockdown would have on Suppliers and therefore quickly convened a group of experts to determine how Settlement procedures could be adapted to provide the flexibility needed to allow Suppliers to focus their workforce and efforts in aiding the customers.

“ Elexon’s expertise in the BSC is widely recognised by the industry and I can rely on them providing valuable advice when needed. From my interaction with the Change team, they have been outstanding when helping the industry develop the mod proposals and facilitate the right level of discussion.”

The Performance Assurance Board and Panel approved the proposals and introduced arrangements which could remain flexible and could be switched on and off to cater for subsequent lockdowns. These arrangements were explained earlier in the document.

By managing the risk effectively and efficiently we ensure that Settlement calculations are accurate and that data and meter readings used in the calculations are robust and timely. We deliver this by managing Settlement Risks. This risk-based approach allows us to deploy the right performance assurance procedures and techniques at the right time. We focus on providing the right level of assurance to all industry participants, whilst being mindful of Parties’ and industry’s resources in balancing requirements.

The refreshed PAF comprises 34 Settlement Risks managed by a suite of performance assurance techniques. The framework allows the Performance Assurance Board, a sub committee of the BSC Panel, to target specific issues and risks, which are most important in maintaining Settlement accuracy. Its flexible nature also enables better management of the cost to run the PAF arrangements and the cost to industry in interfacing with it. As the marketplace continues to evolve. The way in which the risks are structured allows us to ensure that we are focusing the efforts of both Elexon and the industry on the most crucial areas each year.

Customer Engagement

Customer Engagement

Elexon offers an ‘end-to-end’ management service for the BSC. As well as managing Settlement accurately 24/7, we help companies enter the market, support them once they are active in it, and help them exit the market if they need to. We also manage the BSC rule change process and compliance with the rules.

Having this ‘end-to-end’ oversight gives us the depth of knowledge and expertise to help industry, the Government and Ofgem develop the solutions and new arrangements that are essential if we are to achieve net zero.

Our new structure is built on Elexon being a customer centric organisation. Under it, customer service is encompassed in all that we provide and the way in which we deliver it.

To deliver the end-to-end service we want to continually improve our relationship with customers and our understanding of their needs and the issues they face. We came top of Ofgem’s 2019 energy code administrators’ performance survey for the third year in a row, with 86% of respondents saying they are satisfied with our performance. The survey was carried out for Ofgem between May and August 2019 by independent researchers, based on feedback from more than 200 industry stakeholders.

Due to COVID-19, Ofgem did not conduct the energy code administrators’ performance survey for 2020. However, we have not let our standards slip. Every year we conduct our own survey of customer satisfaction using an independent consultancy to contact our customers and in 2020, despite having to work remotely we are delighted with the results which showed high customer satisfaction scores, particularly relating to the change process and our communications. The survey also showed our customers’ very positive reaction to our COVID-19 response and changes made to performance assurance.

To help us deliver an improved service for customers in the coming years, we are trialling the use of a customer relationship management (CRM) system internally. We are doing this to evaluate whether the system would help to further improve our engagement with, and understanding of, our customers and their needs.

New corporate website and improvements to www.elexon.co.uk

In September 2020 we launched a new website www.elexon.com to demonstrate what Elexon can offer the wider electricity and energy industry, over and above the day-to-day running of the BSC. We also overhauled www.elexon.co.uk so that this site’s content concentrates on the BSC such as the change process, BSC operations and Settlement. Meanwhile we continue to publish Settlement data and industry information on the Elexon Portal and on the BMRS.

On www.elexon.com you can find more high level information about Elexon’s role in the market, how we work, our governance arrangements and our senior leadership team. We also provide information on what Elexon is like as a place to work, together with links to our corporate reports and policy views.

We have introduced more functionality to www.elexon.co.uk. Users now have the option to switch on our new glossary function for key pages on our website to quickly understand a term on a page by hovering over an underlined word. Customers can still click through to the respective glossary pages if required. This is the first phase of work to make the glossary a much more effective tool for customers.

Following feedback from our customers and stakeholders, we have introduced ‘plain English’ explanations as we recognise that many of the formal definitions use very legalistic or technical descriptions. This also helps us to meet our commitments as members of the Plain English campaign.

We have also made enhancements to the site-search facility and will continue to introduce improvements to the BSC website during 2021/2022, responding to feedback from our customers and stakeholders. We were delighted that our improvements were recognised by our customers in our 2020 annual customer survey where these improvements to our website and other communication channels saw higher satisfaction scores and positive comments.

Voice of the Customer

We are enhancing our response to customer feedback and continuing to look at how we can better deliver our services to meet customer needs.

Our focus will be to follow up on requests made by our customers, investigate the viability of the request and implement improvements to our services. We are also keen to involve our customers in seeing how our products could be enhanced. We will set up workshops, user groups and feedback mechanisms to obtain customer views on this.

In essence the Voice of the Customer approach will make sure that we have a more consistent, detailed and methodical response to customer feedback.

Operational Support Managers (OSMs)

Our customers have always been positive about our OSM service, where each BSC Party has a dedicated Elexon colleague who works with them to resolve issues, manage Settlement performance, engage in the change process and generally assist our customers.

We are looking to further boost that capability and promote a greater understanding within our OSMs of their customers’ businesses and the challenges they face. In this way we expect this relationship and cooperation to strengthen for the benefit of our customers and Elexon.

 

Continuing to deliver leading customer service through our People Strategy

We depend on the expertise, dedication and knowledge of all Elexon colleagues to continue our high standards of customer service. In our annual satisfaction survey our customers continually tell us how much they value our expertise and personnel. As the energy system changes, so too will the needs of our customers, which is why we were pleased to recruit a Chief People Officer, Geraldine Buckland, to our Executive team earlier in 2020. She has been leading the development of our people strategy for 2020 to 2025.

Our people strategy aims to retain and attract colleagues so that we can maintain our high customer service standards and deliver the products that you have read about in our business plan, over the next and in subsequent years. As our customers are aware, we provide more than rules administration and rule change services, we are also responsible for the underlying systems that deliver those rules and the changes to those systems to enable market development and innovation. That means that as well as requiring talented people with energy and markets expertise, we also need individuals with technology experience and delivery capability, both of which are in high demand despite the current economic uncertainties.

Our vision is to create the leading provider of essential market services to the GB energy sector by 2025, for the benefit of market participants and their customers. Our people strategy therefore sets the direction for ensuring that all Elexon colleagues are geared up to help us deliver that vision and meet the challenges of the future energy system.

Supporting diversity and the well-being of our staff

We want Elexon to be a great place to work for all of our colleagues and we are committed to supporting diversity and equal opportunities across the organisation.

We have set up a diversity and inclusion forum where Elexon colleagues volunteer their time to discuss, agree and put into practice changes to our ways of working to further inclusion, equality and diversity. This includes training on understanding unconscious bias and reviewing the accessibility of employment in Elexon (including for people with visible and non-visible disabilities).

We have a strong focus on the well-being of all of our colleagues. During 2021 we will continue to promote advice from the Mental Health Foundation (one of the two charities our staff have chosen to raise money for between January 2020 and January 2021). We have also trained a number of volunteers from across each of the
directorates, including two of the Executive team, to become Mental Health First aiders to help members of staff who may need support. We viewed this initiative as ever more important with the challenges of COVID-19 restrictions and the impact on staff wellbeing. During 2021/22 we aim to sign up to the Mental Health at Work Commitments.

Our European facing work

Although the United Kingdom left the European Union on 31 January 2020, we continue to remain subject to EU legislation until the end of the transition period on 31 December 2020.

As a result of the Free-Trade agreement we remain aligned with the EU Internal Energy Market (IEM). While almost all responsibilities lie with National Grid ESO, we remain a nominated Designated Operator and as such will work closely with National Grid ESO to jointly implement change.

Although the UK Government does not have an active role in the EU’s organisations, it is able to make its views known via the joint committees as well as diplomatic lobbying. We continue to look for opportunities to support BEIS in this and provide expert advice wherever and as much as possible. Similarly, we remain members
of Europex and via this organisation and its influential lobbying, we are able to make our views known and influence decision-making.

It is worth noting that the present EU Commission is only a little over 18 months old. It has set-out its priorities for implementation of a European Green Deal, revisions to the European-wide transmission network; integration of all energy systems; a network code on cyber security; and the creation of a North-Sea network.

Over the next 12-18 months we will start to see details of how the Commission will implement the necessary changes. So while the last 12 months have been relatively quiet compared to previous years, and has essentially just seen consolidation, we should expect to see a lot more output from the Commission and its associated bodies such as the Agency for the Cooperation of Energy Regulators (ACER) and the European Network of Transmission System Operators for Electricity (ENTSO-E).

Now that the Brexit Implementation Period has finished the relationship between the UK Government and the EU continues to evolve. We are liaising with BEIS and Ofgem to support them where we can on aligning markets and policy, particularly regarding working towards carbon neutrality.

This means that we are therefore able to horizon scan for any potential changes that may impact the operation of the BSC. While there is very little alignment on Balancing or Settlement within the TCA, there are agreements to work together in areas that could affect the BSC, for example development of the North Sea Grid. Since the end of the Brexit Implementation Period, BMRS has been designated as the reporting platform for GB. We are working with Ofgem to explore how market monitoring and inside information reporting may change to meet the changing needs of the GB market, while maintaining liaison with the EU as per the TCA.

Electricity Market Reform

BSC Parties will be aware that EMR Settlement Ltd (EMRS), Elexon’s wholly owned subsidiary, is the Settlement Services Provider to the Low Carbon Contracts Company (LCCC) and the Electricity Settlements Company (ESC), calculating, collecting and distributing payments for both the Capacity Market (CM) and Contracts for Difference (CfD) schemes.

The separation between Elexon and EMRS ensures risks and liabilities from EMR Settlement activities cannot affect Elexon. While some of our people are full-time on this EMR activity, other industry experts from Elexon support EMR Settlement activities part-time, but regardless, all record their time to ensure their cost is allocated appropriately to BSC or EMR activities. This also enables us to allocate a proportionate share of the Elexon overheads such as office costs etc.

Nearly £4.7m of such overheads have been borne by EMRS since 2015, meaning that without the EMR activities, BSC Parties would have had to bear an additional £4.7m over that period.

Following a detailed review of the EMRS contract in 2019 by LCCC and ESC, EMRS was successfully given the ‘green light’ to continue its Settlement operations until 2026.

Given the similarities between EMR and Elexon key offerings, best practice is shared and we will continue to do so across these products to further realise efficiencies and synergies for the benefit of both the EMR and Elexon customers.