Electricity majority still opposed to locational loss factors

BSC Panel modification report (36 pages, PDF) on the P198 proposal to introduce locational transmission loss factors (based on an allocation of variable losses) in the electricity settlement regime in Great Britain. The report (25 pages, PDF) on the P200 transitional hedging scheme and the report (24 pages, PDF) on P203 were issued at the same time. The Panel recommends (by majority) against any change away from the current geographically uniform allocation of transmission losses.

P198 and P203 are rejected mainly on the grounds that they give rise to windfall gains and losses that are not justified by the benefits of the proposals. These distributional effects are considered to be relevant to the competition objective under the BSC. The main criticism of P200, which seeks to prevent such windfalls, is that it is discriminatory between parties that would benefit from the transitional hedge and those that would not. There is no formal report on P204 as yet, but the argument adopted by the majority of the Panel against P198 and P203 would seem likely to apply to it too.

An Ofgem impact assessment consultation is now expected before Ofgem makes a decision (which, if the past were any guide, would be to direct the implementation of zonal losses).

For further information or advice please contact Franck Latrémolière.

Filed under BETTA, Electricity.

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