P205 approved (back towards a more average cash out)

Ofgem decision (10 pages, PDF) approving P205, the urgent modification proposal which would increase five-fold the band of marginal offers/bids taken into account to calculate some imbalance settlement prices under the Balancing and Settlement Code. This reduces the effect of P194, which replaced an average over the whole stack of accepted untagged bids/offers with an average limited to a specified band of accepted bids/offers with the most extreme prices. In Ofgem's view P205 addresses the unnecessary price volatility that could result from the interaction of P194 with imperfect transmission tagging arrangements, whilst maintaining the claimed benefits of P194 at times of system stress. Implementation will be from 2 November 2006 (same as P194).

Ofgem also notes its belief that “there may be scope for further improvements in the cash out arrangements”, highlighting the influence on energy settlement prices of instructions given by the system operator for transmission constraint or other system reasons. A “wide-ranging review of cash out arrangements” is to be initiated before Spring 2007.

For further information or advice please contact Franck Latrémolière.

Filed under BETTA, Electricity, Ofgem.

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