Nordic Balance Settlement

Transcription

1 Nordic Balance Settlement Handbook for Market Participants (DRAFT) Business process: Nordic Balance settlement Version: 0 Status: For review and comments Date: December 17st, 2013 Nordic Balance Settlement Handbook for market participants

2 Foreword This handbook is an overview of the Nordic imbalance settlement model. The handbook will be constantly developed and revised so that it always contains the latest available information. Currently, the design and preparation of the NBS model is still ongoing and therefore this first version of the handbook is not yet providing the complete view of the model. The purpose of the first version(s) of the handbook is to serve as a guideline for preparing and adapting to the coming changes in the Nordic imbalance settlement. The purpose is also to keep stakeholders up to date on agreed and open items and on the same time increase knowledge about the model. Some parts of this Handbook include areas and methods of the Nordic imbalance settlement model that have not yet been approved by the concerned stakeholders. These parts have been highlighted with blue background colour. The purpose of the Nordic Balance Settlement Handbook is to collect the essential information of the target state of the Nordic Balance Settlement model from market participant s perspective so that market participants can start preparing for the coming transformation. The handbook collects information about rules, regulations and standards which acts as requirements for market participants operating in different roles. All market participants operating in the countries involved in the Nordic Balance Settlement are to follow the defined rules, standards and regulations as defined in this handbook. It is to be noted that after the implementation of the Nordic Balance Settlement model some national differences in the imbalance settlement may remain. The handbook will be updated with the latest agreed items and enhancements every half a year. All the changes are listed in the change log included at the end of this document. Nordic Balance Settlement Handbook for market participants

3 Terminology Terminology Term Abbrevation Explanation Balance Responsible Party Distribution System Operator Key Performance Indicator Market Balance Area BRP DSO KPI MBA A Balance Responsible Party is a party that has a contract proving financial security and identifying balance responsibility with ISR. Balance Responsibility means obligations to ensure that a balance exists between the supply and withdrawal and for the purchase and sale agreements it has entered into. A Distribution System Operator is the distribution grid owner with the responsibility to distribute electricity from producers to its customers. The DSOs have the responsibility to meter production, consumption, exchange and report the metered data to the involved stakeholders. This responsibility includes also non-concessional grid operators. KPIs are utilized to measure the performance of different market participants. KPIs are a transparent way to display how TSOs, DSOs, BRPs and Res carry out their respective responsibilities. A Market Balance Area is an area that provides (exchange) schedules that represent a basis for monitoring of imbalances. The Elspot price is always the same within a MBA. Market Entity ME A collective term for MBA, MGA, PU and RO. Market Entity Connection MEC Market Entity Connection is a collective term for different kinds of connections either between different MPs (e.g. bilateral trades between parties) or MPs and MEs (e.g. MP s metered consumption in MGA or MP s production plan per PU). The MEC s time series data is the core of the balance settlement. Nordic Balance Settlement Handbook for market participants

4 Market Participants Metered Data Metering Grid Area Nord Pool Spot MGA NPS Market Participants are the main stakeholders in the settlement: the TSOs, DSOs, BRPs and retailers. These enter into transactions in one or more wholesale energy market. Metered (metering) data is, in this Handbook, used as a general term for all the data that the market participants meter, collect and report to ISR for balance settlement purpose. A Metering Grid Area is a physical area where consumption, production and exchange can be metered. It is delimited by the placement of meters for period measurement for input to, and withdrawal from the area. It can be used to establish the sum of consumption and production with no period measurement and network losses. MGAs are decided on national level. The Nordic energy exchange and the company that organises the physical electricity market in the Nordic countries. Operates in Norway, Denmark, Sweden, Finland, Estonia, and Lithuania. Production Unit PU A Production Unit is a generator or a set of generators within same power plant. Regulation Object Retailer Service Provider Imbalance Settlement Responsible Transmission System Operator RO RE SP ISR TSO A Regulation Object is a set of one or more generators and stations within a MBA decided by the respective Transmission System Operator (TSO) and the BRP. One RO can only include production of a certain technology (wind, hydro, nuclear, etc.). There can only be one BRP per RO. A Retailer sells electricity to an end user. It sells and buys electricity directly from a producer, another retailer or via NordPoolSpot. A retailer has to have an agreement with a BRP. A BRP can also have a RE role in the NBS model. The definition of a retailer might be updated in the next version of the handbook. A Service Provider is a party that provides operational balance management and settlement services for the market participants e.g. BRPs, REs and DSOs. According to what services the SP provides to the market participant, the SP performs the corresponding tasks towards ISR and the imbalance settlement system. The organisation with the responsibility to operate the NBS settlement. ISR is responsible for settlement of the difference between the contracted quantities and the realised quantities of energy products for the Balance Responsible Parties in a Market Balance Area. A Transmission System Operator has the responsibility for both the security of supply and the high-voltage grid. In this document TSO refers to following Nordic TSOs: Statnett, Fingrid, and Svenska Kraftnät. Nordic Balance Settlement Handbook for market participants

5 Table of Contents Foreword 1 Terminology 2 Table of Contents 4 1. Introduction 1 2. Nordic Balance Settlement Model 8 3. Settlement Structure Management Settlement Data Metering and Reporting Imbalance Settlement Invoicing Communication Collateral Management Market Behaviour Reporting Appendices 60 Nordic Balance Settlement Handbook for market participants

6 Detailed contents of the chapters Chapter Contents Basic information about Nordic Balance Settlement project 1. Introduction 2. Nordic Balance Settlement Model 3. Settlement structure management 4. Settlement data metering and reporting Purpose of the handbook Essential changes compared to national models Information sources to national regulations Introduction of the balance settlement organization High level description of the model and functions Roles and responsibilities of each market participant Contents of the agreements between ISR and market participants Description of the settlement structure Responsibilities and time schedules for reporting settlement structure information Examples of the settlement structure changes Metering of settlement data Responsibilities and schedules for reporting settlement data Instructions how reporting for production and consumption is done, including calculation examples for profiling Principles of imbalance settlement 5. Imbalance settlement Calculation of production and consumption imbalance Example of imbalance calculation National reconciliation procedures Invoicing process and invoicing of imbalances and reserves 6. Invoicing Calculation of imbalance price components Fee structures Invoicing procedure and schedule Consideration of taxes 7. Communication 8. Collateral management 9. Market behavior reporting Applied data communication standard Services provided by ISR; information service and online service Reports provided by ISR Collateral management model Calculation of collateral demands Monitoring of market behavior including published reports Key performance indicators Sanctions and controls from bad market behavior Instructions for becoming a new BRP 10. Appendices Handling of balance errors after gate closure National changes compared to NBS model Change log Nordic Balance Settlement Handbook for market participants

7 1. Introduction This chapter provides the basic information about the Nordic imbalance settlement model including its benefits and scope as well as the main changes needed when harmonising the settlement procedures in the Nordic countries. Additionally, the purpose and contents of the Nordic Balance Settlement (NBS) Handbook along with information sources for national regulations are presented. There must always be a balance between supply and consumption of electricity. To achieve this, the TSOs use balancing power procured in the balancing power market. Imbalances arise from uncertainties in plans and failures in generation, consumption and grid. Imbalance settlement is therefore a necessary function in a commercial based electricity market. Historically, Fingrid, Svenska Kraftnät and Statnett each have been operating their own imbalance settlement and have been responsible for supervising the balance of the electricity systems in Finland, Sweden and Norway respectively. In 2010, Fingrid, Svenska Kraftnät and Statnett agreed to form a joint project with the objective to establish a harmonised imbalance settlement model for three of the Nordic countries; called Nordic Balance Settlement (NBS). The model provides harmonized operational preconditions for all Nordic balance responsible parties, regardless of the country or market balance area. Nordic level business processes for reporting, performing settlement, invoicing, collateral management and corrections are established. Consequently, similar rules and standards for information exchange are created. The harmonised solution will require changes in all the countries; however, the changes may differ between the countries. The most significant change will be the establishment of a new Imbalance Settlement Responsible (ISR) organisation which is owned by the three TSOs; Fingrid, Statnett and Svenska Kraftnät with equal share. The new common operational unit is responsible for performing imbalance settlement and invoicing BRPs for imbalances and balancing services. Each TSO is still responsible for national settlement according to national regulations and in verifying that the NBS model and ISR fulfils such regulations. In order to compile all the NBS information into one easily accessible source, this Nordic Balance Settlement Handbook has been created. It is the main source of information needed for each market participant to understand their role and responsibility in the settlement process. A market participant can have several roles in the NBS model (e.g. TSO can have roles as BRP, RE and DSO). One of the most important goals of the handbook is to provide the information in a structured and understandable way so that all market participants can adapt and prepare for the NBS model and eventually work equally in the electricity market in all Nordic countries. Inevitably, there will remain some national differences which may not be possible to harmonise in short term and therefore the national regulations are an important source of information, in addition to this handbook. This handbook also 1

8 includes references to information sources to national regulation. As the NBS project is on-going the handbook is considered a draft and its main objective is to give market participants, in different market roles, the possibility to prepare for the coming transformation in relation to NBS model. 1.1 Nordic Balance Settlement Project A common imbalance settlement solution is supported by the governments and regulators in the Nordic countries. Harmonising the imbalance settlement in Finland, Norway and Sweden is regarded as an important step towards a fully functional common end user market. In order to set up this Nordic Balance Settlement model, the NBS project has been initiated. Imbalance settlement is a natural monopoly and a necessary function in a commercial based electricity market. Traditionally Fingrid, Statnett and Svenska Kraftnät have had the role as Imbalance Settlement Responsible as well as System Operator in Finland, Norway and Sweden respectively. This has led to situation where only few retailers operate in more than one country. Due to differences in the national end user markets, a retailer had to have parallel supply functions in all countries it operates through most of the value chain. Imbalance settlement acts as a significant part of the retailer s value chain, and different national rules and routines in this area have created barriers for entry to market. Common imbalance settlement is therefore a prerequisite for a common end user market. Objectives of the NBS model are presented in Table 1 below. Objectives of the Nordic Balance Settlement model Imbalance settlement between different Market Balancing Areas with as similar principles as possible through one Imbalance Settlement Responsible. Design and provide similar operational preconditions for balance responsible parties regardless of Market Balance Area. Harmonise common rules and standards for information exchange. Contribute to the implementation of a common Nordic retailer market. Be a forerunner in imbalance settlement issues on the European level. Table 1. Objectives of the Nordic Imbalance Settlement model Background Regulators in Finland, Norway and Sweden have decided to support the implementation of NBS and started the processes for the needed regulatory changes in the respective countries. The first NBS design report was published in There has been a close communication with the reference group of stakeholders, both industry and regulators, to discuss the development plans of the NBS model. Stakeholders have provided their industry opinions on prevailing issues to help the NBS project group to find the best solution for issues in question. 2

9 As the NBS project work is currently on-going the first version of the handbook is preliminary and it is obvious that there will be changes, additions and more details in the model before the go live of the settlement model Scope The main function encompassed by the NBS model is the common imbalance settlement. The model is based on the present harmonised model with two balances; production and consumption. Imbalance power for production and consumption is calculated and settled separately. The Imbalance Settlement Responsible (ISR) performs the imbalance settlement and manages invoicing as well as collaterals towards the Balance Responsible Parties (BRP) on behalf of the Transmission System Operator (TSO) in each country. All matters directly related to system operations, for example procurement of balancing services, are outside the scope of NBS model. The NBS model will take all necessary volumes into account when calculating the imbalance and furthermore, ISR is responsible for invoicing of the balancing services as a part of the imbalance settlement. In parallel with establishing a common Nordic imbalance settlement several other harmonisation processes have been initiated by NordREG. The long term aim is to create a common Nordic end user market for electricity in the Nordic region. A harmonised imbalance settlement acts as one part of this Nordic harmonisation. This handbook describes the imbalance settlement and does not give answers to all harmonisation necessary to establish a common end user market in the Nordic region. The reconciliation settlement will not be harmonized on Nordic Level at this stage and current national procedures will apply Benefits The model includes several benefits for the electricity market. The Nordic Balance Settlement is the platform for a common balance settlement in Finland, Norway and Sweden. This means that a Balance Responsible Party (BRP) always has a single interface (the imbalance settlement responsible unit) and one set of rules when settling its imbalances in the Nordic electricity market. The main reason for establishing a common imbalance settlement solution is the creation of a competitive end user market. Lack of end-user competition in the Nordic electricity market gives a loss for the society. Increased competition and reduced margins for the electricity providers will give a socioeconomic efficiency gain. Competition through a common Nordic retail market is considered to be essential in order to ensure high quality services at the lowest price, to stimulate innovation and maximise social welfare in the Nordic region. In general, the NBS model will lower the threshold of being a BRP because the model gives one common access to all countries. In addition, the operational procedures of a BRP are simplified. This makes it easier for a retailer to enter the market and also reduces costs as more BRPs are competing and the price for handling an RE s balance could therefore be lower. Besides, an RE can more easily choose to act as a BRP rather than RE. 3

10 In the NBS model, meter data quality will improve as the Distribution System Operators must notify and be responsible for data errors after the imbalance settlement period is closed. Improved data quality will not only improve the quality of the imbalance settlement but also the settlement and invoicing of end customer as both BRPs and REs get access to the same meter data. A larger market with a common rule set will make it more attractive to invest in innovation. BRPs and REs will face a larger potential for innovative solutions, especially for the core IT systems and new payment and credit management solutions. This will also make the vendor market more attractive as the offers from the various service providers will cover a larger market. A common Nordic approach to imbalance settlement procedures will have more influence on the EU development than if there were several different Nordic solutions. NBS will, in the long run, lower the operational costs of imbalance settlement because one organisation with one common IT solution will be more efficient than several separate ones. NBS will also make the related costs more transparent as these will be separated from cost elements at each respective TSO. Such transparency is a condition for operational cost efficiency. 4

11 1.2 Essential Changes in the Balance Settlement NBS model encompasses several changes for the imbalance settlement. Required changes differ by country due to current solutions and processes. A harmonised model will, in overall, require changes in all countries and all levels of the market. Major changes are described in this sub-chapter and more specific changes by country are described later in the chapters. The starting point for NBS model is the common principles agreed in 2009, consisting of two balances with national imbalance power pricing, cost structures, payment components and gate closure times for reporting settlement data. The common Nordic electricity retail market aims to have a common Nordic balance with common imbalance settlement and reporting, single balance agreement and unified gate closure times, though some national differences may apply. The main changes are illustrated in Figure 1 below. Figure 1. The most essential changes in the settlement model. National changes caused by the NBS model have been collected into a table in Appendix Regulation Common rules in the electricity law and secondary legislations in the Nordic countries provide additional information and set requirements for the market participants. This chapter includes the information sources to national legislation and regulations per each respective country Finland In Finland following laws and secondary regulations guide the electricity market: Electricity market act (EMA) (588/2013) (Finnish version) Decrees of the Finnish government and decrees of the ministry of the employment and the economy: o The Finnish Government decree of electricity deliveries settlement and measurement (dated ) 5

12 o The Ministry of the Employment and the Economy decree of the information exchange concerning electricity deliveries settlement (809/2008) ka%5d=809%2f Norway In Norway following laws and secondary regulations guide the electricity market: Primary act: LOV nr 50: Lov om produksjon, omforming, overføring, omsetning, fordeling og bruk av energi m.m. (energiloven) - The Energy Act html Secondary Legislation: FOR nr 301: Forskrift om måling, avregning og samordnet opptreden ved kraftomsetning og fakturering av nettjenester - MAF Sweden In Sweden following laws and secondary regulations guide the electricity market: Energy market act: SFS 1997:857 Ellag Lagar/Lagar/Svenskforfattningssamling/Ellag _sfs / National Energy Authority's regulations and general guidelines on measurement, calculation and reporting of electricity: STEMFS 2007:5 Mätningsföreskrift a%20f%c3%b6reskrifter/statens_energimyndighets_foreskrifter_och_allmanna_rad_om_matning _berakning_och_rapportering_av_overford_el_stemfs_2007_5.pdf Power regulation: SFS 1999:716 Mätnings förordning The Nordic Imbalance Settlement Responsible esett A new operational company, esett, has been established in Finland. The company is owned by Fingrid, Svenska Kraftnät and Statnett. The company will act and operate in the role of Nordic Imbalance Settlement Responsible. It must be noted, that the national regulations stipulate that each national Transmission System Operator (TSO) is still ultimately responsible for balancing operations. The company will operate in English but manages customer services by serving all three countries with their local languages. The company s relations to other market participants are illustrated in Figure 2. 6

13 Figure 2. Relations between esett and the market participants ISR Operations ISR has many operational tasks. Daily processes include collection and verification of data, controlling master data and making collected data available for market participants, conduct preliminary balance settlement, follow up reported data and do final imbalance settlement. Weekly duties for ISR are invoicing of the imbalance settlement, invoicing of other fees on behalf of TSOs, controlling collaterals and followup of BRPs in relation to risk and collaterals, and cash management. On a monthly basis ISR will monitor, publish and follow-up Key Performance Indicator (KPIs) of the imbalance settlement process. Some of the KPIs are also monitored daily or on a weekly basis. ISR does market monitoring, customer support and reporting, and publishing of settlement results (including incoming data) continuously. [email protected] Operating hours: 9:00 16:00 (CET) Most of the ISR operations are done in the ISR s imbalance settlement solution which consists of an imbalance settlement system to be used by ISR personnel and an Online Service and Information Service to be used by external stakeholders. These tools are described in chapter 7. 7

14 2. Nordic Balance Settlement Model This chapter presents the Nordic Balance Settlement model and its functions in more detail. The roles and responsibilities for the different market participants are described as well as the concept of balance responsibility and legal agreements related to it. The Nordic Balance Settlement model is based on the present harmonised model with separate balances for production and consumption which are calculated and settled separately. At the core of the NBS model is the common operational Imbalance Settlement Responsible unit (esett) which is responsible for settlement of imbalances. The ISR performs services on behalf of the three TSOs. The balance agreement is a legal contract between the balance responsible party and the ISR including liabilities, collateral requirements and procedures for exclusion and legal items such as place of court. The main stakeholders in the NBS model are the Retailers (RE), the Balance Responsible Parties (BRP), the Distribution System Operators (DSO), the Transmission System Operators (TSO), Nord Pool Spot (NPS) and the Imbalance Settlement Responsible (ISR). The role of these stakeholders is presented in the Terminology table in the beginning of this Handbook. The different procedures and operations of the Nordic Balance Settlement model are divided into five core functions: settlement structure management, metering and reporting data, settlement, invoicing and reporting. In addition the NBS model includes own functions for collateral management and market behaviour monitoring. 2.1 NBS Model The main objective of the NBS model is to perform imbalance settlement on Nordic level. The model is based on two balances; production balance and consumption balance. Both are calculated and settled separately. The NBS model ensures a transparent and common imbalance settlement and equal treatment of market participants. The model provides identical and necessary procedures for imbalance settlement in all countries participating in NBS: Settlement structure defines how the information about the imbalance settlement structure and hierarchy (relations) is collected and managed, e.g. information about a new Metering Grid Area (MGA) or the contact information of a market participant. Metering and reporting data handles the imbalance settlement data reception, validation, storing and reporting. 8

15 Settlement handles the production and consumption imbalance settlement calculations, quality assurance and publishing of results. Invoicing function handles the ISR s invoicing of market participants, based on realised imbalances. Reporting includes the creation, distribution and publishing of various reports and files provided by the ISR (esett). Reporting is also done through the online service and information service that is provided to market participants. Collateral management includes control of the BRPs collateral demands, as defined and calculated by ISR, as well as follow-up of the placed collateral deposits in comparison to demands. Market behaviour monitoring is based on the analysis of the BRPs' imbalances. These are analysed by calculating a set of KPIs, which show the BRPs market performance (e.g. quality of reported data, reporting frequency, relative imbalances, absolute imbalances and imbalance costs per unit). The quality of DSOs reporting will also be monitored. All functions in the settlement model are described in Figure 3 below. Figure 3. The NBS model functions. 9

16 2.2 Roles and Responsibilities The main stakeholders (i.e. market participants) in the Nordic Balance Settlement model along with related roles and responsibilities are presented below Imbalance Settlement Responsible (ISR) ISR is responsible for settlement of imbalances: Perform the imbalance settlement and invoice/credit the Balance Responsible Parties for the balancing power. Set the collateral levels so that they cover the imbalance settlement risk exposure. Collect and monitor the BRP s collaterals and take necessary actions to adjust collaterals when needed. Collect fees from BRPs to cover: o o The operational costs of ISR The reserve costs and related operational costs for the TSO. Monitor imbalances and assess whether they are in accordance with published guidelines and regulations. Publish a set of KPIs to provide statistics on reporting and settlement. Operate and provide an imbalance settlement system that the market participants can use to access and report settlement data. Report imbalance settlement data including statistics, KPIs and other market information Transmission System Operator (TSO) TSOs have the responsibility to supervise the balance of the electricity system and take actions to rebalance the system. In the NBS model a TSO has the same responsibilities as a BRP and in addition the following: Balance the production/import with the consumption/export during the delivery hour to meet the overall demand of frequency at 50 Hz. Calculate regulation power prices per hour and determine imbalance prices. Submit necessary information per BRP to the ISR for the imbalance settlement of the BRPs; e.g. production plan and activated regulation power during the operation hour. 10

17 Act as the financial counterpart towards the BRP for all reservations of reserves (ISR is the financial counterpart for the corresponding reserves related to the imbalance settlement Distribution System Operator (DSO) A DSO is a grid operator with the responsibility to connect producers and consumers to its grid. The DSOs have the responsibility to meter production, consumption and exchange with other grids in addition to report the metered data to the entitled parties. This includes also non-concessional grid operators. The DSO has several obligations in relation to imbalance settlement. DSO s responsibilities are the following: Register BRPs and REs metering points in the respective Metering Grid Areas Operate the metering system and submit metering data to the Retailers, Balance Responsible Parties and ISR. Calculate and report load profile shares (according to national guidelines). Calculate the final profiled consumption and the reconciled energy when all metering for a grid area is completed (according to national guidelines, see sub chapter 5.6. Reconciliation). Imbalance corrections after the balance settlement reporting is closed shall be settled between the DSO and RE. See appendix 2 for more details Balance Responsible Party (BRP) A BRP is a party having signed an agreement with the ISR. BRP s responsibilities are following: Have a balance agreement with the ISR and provide the required collaterals. Plan balanced schedules on an hourly basis. Submit production plans to the TSO which will forward them to the ISR. Submit bilateral trade information. Act as the financial counterpart for the settlement of imbalances, activated regulation power and reconciliation according to national guidelines Verify that all relevant data reported by the ISR, and notify deviations. Inform the imbalance settlement responsible of which REs that the BRP is responsible for Retailer (RE) An RE sells electricity to final consumers and balances the sales with purchases in bilateral and organised markets. The RE s responsibility regarding balance settlement is: 11

18 Have an agreement with a BRP Retailer can use one BRP for consumption and one BRP for production in the same MGA and use different BRPs in different MGAs, this division is highlighted in the following Figure 4 where Finland is used as an example. Figure 4. Model for Retailers using different BRPs per MGA Market Operator (Nord Pool Spot) The responsibilities for Nord Pool Spot, in its role as power exchange and in regard to imbalance settlement are following: Report trade data for Elspot- and Elbas trade per BRP/RE and Market Balance Area to ISR (and TSO if needed). Report cross border trade with other power exchanges (market coupling) to TSOs. Report to ISR into which MBA each MGA belongs to. 2.3 Balance Responsibility and Agreements The parties of the balance agreements will be the Imbalance Settlement Responsible and the BRP. Only one balance agreement is required per BRP, regardless of how many countries the BRP is active in. The scope of the balance agreement will be limited to issues regarding the settlement and invoicing of activated regulation power. As before, a BRP shall have an agreement with the TSO if the BRP is providing reserves in the ancillary service markets. 12

19 2.3.1 Agreement between ISR and BRP Only a company that has a valid agreement with the ISR may act as a BRP. This agreement regulates the relations between the parties. The purpose of the balance agreement is to assure financial liability for and planning of imbalances between the generation and consumption of power. The purpose of the balance agreement is to assure financial liability for and planning of imbalances between the generation and consumption of power: Liability of the ISR Collateral requirement Procedures when contract is breached by the BRP Law and place of court Etc. (will be finalised later) Detailed agreement will be published later 13

20 3. Settlement Structure Management Chapter three presents the settlement structure and hierarchy management in the Nordic Balance Settlement model. It describes the reporting responsibilities and the rules and guidelines for reporting changes in the structural information as well as reporting schedules and methods. The settlement structure is one of the key elements in the NBS model. Each market participant is responsible for informing and updating structural information. Structural information is information about market participants and their relations to each other (e.g. the relationship between a BRP and an RE) and to the market entities and market entity connections (e.g. the relationship between a BRP and a MGA). Every party in the market has to register for acceptance to operate in the market. The parties themselves are responsible for registering and keeping their information up to date. Distribution System Operators will be responsible for updating the structure of the Metering Grid Area they are accountable for (e.g. MGA exchange per MGA per adjacent MGA) and Balance Responsible Parties and Retailers will control their own information (e.g. which RE in the different MGA they are responsible for). The market participants shall send the information of changes in the settlement structure to the ISR either electronically in a market message or by entering the changes via the NBS Online Service. Market message for settlement structure shall be defined later. In exceptional situations, the changes can also be reported by or phone. When the changes are entered into the imbalance settlement system of the ISR, the changes are validated and approved. Once the changes are approved they will be used in the balance settlement. The structure information is published on the NBS Online Service where market participants can view the up to date settlement structure information. The viewing of the settlement structure is restricted with access rights in accordance with legislation. 3.1 Settlement Structure Up-to-date structural information is essential to manage the reporting and other imbalance settlement functions. Settlement structure contains the information related to different market participants: TSOs, DSOs, BRPs and Res, and information on the relationship between the market participants. Information regarding who the BRP is for an RE in all MGAs, and during which period of time, is essential to enable correct reporting of data to ISR. One common structure information overview for the market is therefore developed and maintained in the ISR s imbalance settlement system. 14

21 Every entity of structural information has a validity period, defining the period of time during which the entity is considered active. Detailed information on how the structural information will be managed will be added later. 3.2 Market Entity Connections A large amount of settlement information is exchanged between market participants within the Nordic imbalance settlement. The information is organised into so called Market Entity Connections (MEC). The MECs are very central in the balance settlement structure. Market Entity Connections (MECs) are different kinds of connections either between different market participants (e.g. bilateral trades between parties) or between market participants and market entities (e.g. market participant s metered consumption in MGA or market participant s production per Production Unit). The Market Entity Connection s time series data is the core of the balance settlement. Table 2 explains the MECs utilized in the NBS model. Market Entity Connections Name Abbrevation Description Market Balance Area Metering Grid Area MBA MGA Market Balance Area means an area that provides (exchange) schedules that represent a basis for monitoring of imbalances. It is always the same Elspot price within a MBA. A Metering Grid Area is a physical area where consumption, production and exchange can be metered. It is delimited by the placement of meters for period measurement for input to, and withdrawal from the area. It can be used to establish the sum of consumption and production with no period measurement and network losses. MGAs are decided on national level. Production Unit PU Generator or a set of generators within same power plant. Regulation Object Preliminary Profiled consumption Metered Consumption RO PPC N/A A Regulation Object (RO) is a set of one or more generators and stations within a MBA decided by the respective Transmission System Operator (TSO) and the BRP. One RO can only include production of a certain technology (wind, hydro, nuclear, etc.). There can only be one BRP per RO. Estimate of profiled consumption per RE on hourly basis used in imbalance settlement. Estimated as the RERE share of load profile. Metered consumption per MGA per RE on hourly basis used in imbalance settlement. Metered Production N/A Metered production per PU on hourly basis used in imbalance settlement. MGA Exchanges Elspot Trades Elbas Trades N/A N/A N/A The exchange of energy sum that occurs between Metering Grid Areas adjacent to each other. Measured in the border points and reported hourly. Day-Ahead-based market. The Nordic auction-based market for transactions in physical power for each hour during the subsequent 24-hour trading period. Intraday market. The continuous hourly market for transactions in physical power for the present 24-hour period, until one hour before delivery. Trading for the 15

22 following 24-hour period cannot start until after the Elspot trading has concluded. Elspot Flows N/A Planned flow between the MBAs resulting from the day ahead Elspot price calculation (see Elspot Trades). Elbas Flows N/A The net planned flow between MBAs in the Elbas market (see Elbas trades). Bilateral Trade N/A An electricity trade that has been agreed upon between two market participants on hourly basis. Production Plans N/A BRPs reported plans for production, on RO basis. Imbalance adjustment up N/A Imbalance Adjustment means the correction applied to the Position of a Balancing Service Provider or a Balance Responsible Party by Transmission System Operator for the calculation of the Imbalance Volume. Imbalance adjustment down N/A Imbalance Adjustment means the correction applied to the Position of a Balancing Service Provider or a Balance Responsible Party by Transmission System Operator for the calculation of the Imbalance Volume. MGA Imbalance Supportive Power Sold N/A N/A Sum of reported input to, and withdrawals (including network losses) from one MGA. The sum is zero when reporting is correct. Supportive power is power that adjacent TSOs can exchange reciprocally as an element of the regulation of balance in the respective subsystems. Exchanges are made specifying the power, price, link and time to the exact minute of the start and finish of the exchange. Supportive power is settled as the hourly average value. Table 2. Market Entity Connections. 3.3 Settlement Structure Management Function The Settlement Structure Management function handles the collection and management of the imbalance settlement structure information. The balance settlement structure is formed as part of this function. In short, the activities are the following: the ISR receives a message from one of the market participants containing balance settlement structure information that should be added, updated, or closed in the imbalance settlement system. The message is either sent directly electronically from the participants system to the system or entered via the NBS Online Service (described more detailed in chapter 7), or in abnormal situations by or phone to ISR personnel. The new or changed structure information is validated by the ISR s imbalance settlement system or ISR employee where needed. When the settlement structure has been updated, ISR publishes the settlement structure to market participants in the Online Service and the Information Service. 16

23 3.4 Reporting Responsibilities and Schedules Every participant in the electricity wholesale market will have to apply for acceptance into the settlement structure from the ISR. The parties themselves are responsible for registering and verifying that their information is up-to-date. Responsibilities regarding the settlement structure information management are explained in the following sub-chapters ISR ISR hosts the common settlement structure information. The related responsibilities are the following: Setting BRPs as active when the balance agreement is set into force. o This includes all prerequisites for a valid balance agreement as e.g. complying with the collateral requirements. Setting BRPs as inactive when the balance agreement has been terminated. Setting DSOs as active when they fulfill all requirements as DSO. Setting DSOs as inactive when DSOs activity has ended. o The DSO has for example been merged with another DSO. Setting REs as active when they fulfill the requirements set upon them by the regulators. o o Since an RE may have a different BRP in every MGA it's most efficient that ISR perform this control instead of many DSOs or BRPs controlling the same RE. An active retailer will be able to handle consumption, trade and production. Setting REs as inactive when their activity has ended. Manage MECs for MGA imbalance. Manage MECs for MGA exchange trade RE RE is responsible for reporting the following structure information to ISR: Registering company as an RE. Retailer initiates the switch of supplier process. This process can only be initiated when the RE has a valid BRP in the MGA where the delivery will take place. Update own contact information. 17

24 3.4.3 BRP BRPs are responsible to report their bilateral trades and connections between production units and Regulation objects. BRP is responsible of reporting following structure information to ISR: Registering company as a BRP. Registering for which REs they take on the responsibility for production imbalance, and in which MGAs. It is the new BRP that is responsible for applying the correct structure. Registering for which REs they take on the responsibility for consumption/trade imbalance, and in which MGAs. It is the new BRP that is responsible for applying the correct structure. Manage MECs for bilateral trade for REs that they are responsible for. The BRP representing the seller and the BRP representing the buyer must both register the bilateral trade. Assigning production units (PU) to correct regulation object (RO). Update own contact information DSO DSOs have the main responsibility in maintaining the correct and up-to-date settlement structure. DSO is responsible for reporting the following structure information to ISR: Registering company as a DSO. Manage MECs for consumption. Manage MECs for production. Manage MECs for MGA exchange. Both DSOs must register the MEC. The DSO must for every MGA select one RE that handles the DSOs losses, end-users without supplier, MGA-imbalance and MGA-exchange trade. Update own contact information NPS NPS is required to register as a BRP in the settlement structure. In addition NPS is responsible of reporting occurred Elspot and Elbas trades. NPS is responsible of reporting following structure information to ISR: Registering company as a BRP. 18

25 Manage MECs for Elspot. Manage MECs for Elbas. Relationship between MBAs and MGAs. Update own contact information. Informing ISR if any market participant is misusing the market or is behaving abnormally TSO TSOs have, in addition to below mentioned responsibilities, the similar responsibilities as BRPs (if applicable): Determine the Metering Grid Areas (MGAs). Determine which MGAs make up each Market Balance Area (MBA). The TSO must for its MGAs select an RE that handles the TSOs losses, end-users without supplier, MGA-imbalance and MGA-exchange trade. The TSO may register as an RE itself. Manage MECs for imbalance adjustment. Manage MECs for production plans Reporting Schedule Different settlement structure information needs to be reported according to different schedules and different parties are responsible for updating the structure information. The gate closure times (presented in Table 3 below) are administered and defined by the ISR. Gate closure times are not final and therefore shown with blue background. Structure information Gate closure times for updating structure information Prerequisites/remarks Responsible party Gate closure time Consumption metering points RE must be valid RE must have agreement with BRP DSO Three days before the day of operations 19

26 Production metering points Must be aligned with the change in RO DSO New BRP Old BRP Three days before the day of operations TSO Exchange metering points May require changes in the MGA structure itself DSO (Finland) TSO (Norway, Sweden) Three days before the day of operations MGA structure Structure consists consumption, production and exchange metering points DSO Three days before the delivery day Bilateral trade structure Must be in place to enable reporting from the BRPs Before the day of operation Regulation objects TSO to decide Notify ISR TSO 3 days before the day of operation RE -> BRP structure Must be known which BRP will be responsible for consumption and production in every MGA, where RE will have activity BRP (The RE s new BRP) 14 days before the day of operation MECs cannot be created in MGAs where the RE is without valid BRP. MGA -> MBA structure Up to TSO to decide TSO 14 days before the changes are set active Validity of market participants Will be set valid after all documents have been received by ISR ISR No later than 14 days after documents have been received Table 3. Gate closure times for reporting structure information. 20

27 4. Settlement Data Metering and Reporting Chapter four presents the settlement data metering and reporting activities. It contains information about the reporting responsibilities and time schedules for each of the market entities. Moreover, management of bilateral trade corrections and metering grid area exchange corrections are described. The metered data shall be reported to the Imbalance Settlement Responsible (ISR) by the DSOs. The metered data is reported either via market messages or via the NBS Online Service. The reported data is further aggregated by ISR in order to establish the consumption and production imbalances. All metered data is organized per Metering Grid Area (MGA). One MGA can only be situated in one market balance area (MBA). Aggregated meter data should be aggregated per MGA on BRP level or/and Retailer level. The gate closure times for reporting data and the related reporting requirements are defined in the NBS model. Gate closure times differ depending on what data that is reported. The BRPs are responsible for reporting bilateral trade to ISR. They shall report production plans and bids for up and down regulation to the TSOs. They are also obliged to keep their production plans updated, i.e. report updated values. Nord Pool Spot (NPS) reports Elspot and Elbas trade results to the TSO and ISR. Metered data for production per PU and aggregated metered consumption data per RE and MGA are reported after the delivery to ISR. ISR performs validations on the received metered data and publishes the data in the NBS Online Service. The settlement calculations and the weekly invoicing are then performed as automated processes in the imbalance settlement system. TSOs check the consistency of the data reported by BRPs and report all activated regulation power between BRP(s) and TSO(s). TSOs also report binding production plans to ISR. The verification of the bilateral trades and MGA exchanges is performed by verifying that values reported by the two counterparts are equal. If the values do not match, they will be changed according to predefined correction rules and a notification will be sent to both counterparts. In the NBS model the hourly data is collected weekly and within the stipulated 13 days, this data should be used in the balance settlement. However, if the hourly data is collected less frequently than weekly this part of the consumption will be included in the load profile. This rule is applicable for all consumption without respect to level of yearly consumption or the size of the main fuse. Production used only in exceptional situations can be handled in the consumption balance, this is clarified in chapter

28 4.1 Validation of Reported Data The data is either sent electronically from the market participant s system directly to the imbalance settlement system of ISR or entered via the Online Service. In abnormal situations the data can be reported by or phone directly to ISR personnel. Before aggregation, the syntax and content of the incoming data is validated by the ISR s imbalance settlement system in order to ensure that the data can be used in the settlement calculations. The reporting parties are informed about the validation result (e.g. via acknowledgement messages). After the validation the data is stored in the ISR s imbalance settlement system and the imbalance settlement calculations are performed. Both the data sent by market participants and the final calculated settlement data is published on the Online Service, so that it can be verified and so that possible errors can be reported to the ISR. In addition, the market participants are given the possibility to utilise the Information Service, which provides the market participants such settlement data (time series data) that they are entitled to see. The Information Service (presented in chapter 7.2) is established as a machine-to-machine interface and made available to market participants authorised by ISR. Market participants themselves are responsible for the accuracy and quality of the reported data. ISR sends and publishes the data received from the parties and is not able to verify the correctness of the received data. 4.2 Reporting Responsibilities and Schedules for Reporting The basis for the reporting schedule is a 13 day period during which the settlement data must be reported to ISR. The ISR conducts preliminary balance settlement based on the reported data every day starting from the second day after the deliver until 13 days afterwards. The final settlement report can be done at the latest 13 days after delivery. During the next working day after the final reporting day, ISR publishes the final result of the imbalance settlement. The data reporting period has been defined in number of days in order to harmonize the delivery schedule within the NBS countries. An illustrative picture of the settlement data reporting schedule for one delivery day in September is presented in Figure 5. In the picture, metered data for Sunday in week 1 should be updated at the latest 13 days after delivery day, i.e. on Saturday week 3 in the illustration below. On Saturday all metered data for the whole week 1 is considered to be final and the final settlement is performed. Invoicing of week 1 is done on the first working day after the final reporting day (see more information about the invoicing in chapter 6). 22

29 Figure 5. Time schedule for reporting balance settlement data. The reporting roles and responsibilities per each market participant role are presented below. Data reporting tasks have been divided by the market role and the time when the data reporting takes place. In the last column of the tables the counterpart in each action is marked BRP Reporting of Production Plans A Regulation Object (RO) is a set of one or more generators and stations within one MBA. The TSO decides which PUs that is included in a RO. One RO can only include production of a certain technology (i.e. wind, hydro, nuclear). Production units settled in the consumption balance cannot be in the same RO as production settled in the production imbalance. There can be only one responsible BRP per RO and all production included in RO. BRPs shall, for imbalance settlement, submit the binding production plans per RO before gate closure to the relevant TSO. ISR will receive settlement binding production plans per RO from the respective TSO. The plans shall not include activated reserves before gate closure. Activated regulation power shall be reported separately by the respective TSO. The definition of a RO will be described in later version of the handbook Bilateral Trade reporting All bilateral trades shall be reported before gate closure (delivery hour). A bilateral trade shall be primarily reported on a BRP level, but the reporting can be divided on RE level as well. In the imbalance settlement ISR will aggregate data on BRP level. 23

30 BRPs are responsible for reporting their bilateral trades. Bilateral trade values are verified by the ISR s imbalance settlement system. The reported values by the two counterparts must match. If the values do not match the imbalance settlement system corrects the values according to pre-defined correction rules and sends notification to both parties involved. In case of inconsistency between values, the values can be updated until next day after the gate closure. The correction rules are the following (in case of values not matching): If both BRPs report a sale, zero will be used. If both BRPs report a purchase, zero will be used. If one BRP reports sale and the other reports purchase, the lowest absolute value per hour will be used. If only one of the BRPs have reported values, those values will be used. It is then possible for the BRP to choose one of the following actions: If the time period is closed, BRP can, within x days, do the following: 1. Choose to accept the corrected values. 2. Choose to accept the counterpart s values. If the time period is open, the BRP can do one of the following: 1. Choose to accept the corrected values. 2. Choose to accept the counterpart s values. 3. Enter new values via the Online Service. 4. Send new values in a message electronically. If the BRP does not perform any actions, the corrected values will remain as the final values. The counterpart BRP also has the same possibilities. If the time period is closed, the counterpart that accepts the value (corrected or counterpart s value) first, determines the final bilateral trades value that will be used in the settlement. 24

31 Reporting Schedule BRP BRP s Responsibilities Responsibility Before delivery month Before gate closure Short time after gate closure Delivery day + x Counterpart Report bilateral trade 1 TSO / ISR Report production plans 2 < Report regulation bids for up and down regulation 3 TSO Update production plans 4 (Sweden) Table 4. BRP s responsibilities. Before delivery hour: 1. Report bilateral trades (except NPS trades to TSO) o 20 minutes before delivery hour in Finland o 45 minutes before delivery hour in Sweden and Norway 2. Report production plans per Regulation Object to TSO at the latest 45 minutes before delivery hour 3. Report regulation bids for up and down regulation to TSO at the latest 45 minutes before delivery hour After gate closure: 4. Update production plans during the delivery hour for operational purposes (Sweden) DSO MGA Exchange Reporting DSOs are responsible for reporting MGA exchanges. The imbalance settlement system verifies the reported MGA exchanges and checks if the values match between the two counterparts. If the values do not match, the system changes the values according to pre-defined correction rules. After this the imbalance settlement system sends a notification to the counterparts. The notification is sent to the DSO s 25

32 and also to the Online Service so that the DSOs are alerted. The notification contains information about the new corrected value. Correction rules for MGA exchanges: If both DSOs report export, zero will be used. If both DSOs report import, zero will be used. If one DSO reports export and the other reports import, the lowest absolute value per hour will be used. If only one of the DSOs have reported values, these values will be used. The DSO verifies the corrected MGA exchanges values. If the time period is still open, the DSO can initiate the sending of new values either via the Online Service or in an electronically sent message. If the time period is closed, the DSO can only view what the corrected value was set to Reporting of production DSO (or other metering responsible per generator or station) will be responsible for distributing hourly metered data per production unit to ISR. ISR will then aggregate metered data on BRP level per MBA. The production types can be the following: hydro, wind, nuclear, gas turbine/diesel production, solar, wave or unspecified production. More detailed information regarding production types, process when values are missing and reporting of small production will be added in next version of the handbook Reporting of consumption DSO will be responsible for distributing hourly metered data to ISR. Consumption will be reported on following types: Preliminary profiled consumption, metered consumption, losses, pumped storage, interruptible consumption and industry consumption over 50 MW. More information of the above mentioned types will be in a later version of the handbook. 26

33 Reporting Schedule DSO DSO s Responsibilities Responsibility Before delivery month Before gate closure Short time after gate closure Delivery day + x Counterpart Report metered data per production unit 1 2 ISR Report aggregated metered data 2 3 Report metered data per consumption metering point 1 2 RE Table 5. DSO s responsibilities days after the delivery day: 1. Report metered data before 10:00 AM (CET) the second day after delivery day o o Hourly metered data on production reported to ISR and RE per production unit Hourly metered data per consumption metering point reported to RE 2. Report aggregated metered data before 10:00 AM (CET) on the second day after delivery day. Metered data should be available at ISR s database for BRP and RE as an aggregated volume per RE. Missing daily collected metered data in a single metering point must be estimated by the DSO before aggregation. Updated metered data shall be reported before 12:00 (CET) of day 13. o o Per MGA aggregated metered data from exchange metering points to ISR Per MGA aggregated metered consumption data per RE to ISR o Per MGA aggregated preliminary profiled consumption per RE to ISR 27

34 4.2.3 ISR ISR s Responsibilities Responsibility Before delivery month Before gate closure Short time after gate closure Delivery day + x Counterpart Provide aggregated data 3 Calculate the result of the imbalance settlement 4 BRP Sent invoice 5 Provide aggregated data 3 RE Report quality assurance 2 DSO Table 6. ISR s responsibilities days after delivery: 2. Report quality assurance (QA) on area balance per MGA to DSO 3. Provide aggregated RE hourly metered data on consumption and production to BRP and RE After final imbalance settlement: 4. Calculate the results of the imbalance settlement for settlement day (calculated every day until 13th day after the delivery day) 5. Send invoice for one delivery week electronically to the BRP on the next working day after the final reporting day. 28

35 4.2.4 NPS NPS s Responsibilities Before delivery month Before gate closure Short time after gate closure Delivery day + x Counterpart Report Elspot trades Report Elbas trades 1 2 TSO Report Elspot trades Report Elbas trades 1 2 ISR Table 7. NPS s Responsibilities. Before gate closure: 1. Report all Elspot trades made for the next day to TSO/ISR and BRP 2. Report all Elbas trades 1 hour before the delivery hour to TSO and BRP TSO TSO s Responsibilities Counterpart Responsibilities Before delivery month Before gate closure Short time after gate closure Delivery day + x Report all balancing reserves 1 BRP Report all activated trades Report binding production plans ISR Table 8. TSO s responsibilities Before gate closure: Check consistency of the data reported by BRP and request correction if needed After gate closure: 29

36 1. All activated trades in regulation power market and any other agreed BRP-TSO trades during delivery hour are reported to BRP and ISR. (Incl. Elspot and Elbas trades, bilateral trades and trades between BRP and TSO) 2. Report binding production plans to ISR 4.3 Metering All metering is organised into Metering Grid Areas (MGA). One MGA can only be situated in a single Market Balancing Area (MBA). Aggregated meter data shall be aggregated per MGA per RE by the DSO. It is the TSO who define the MGA and rules might differ between the countries. Description of how MGAs are defined in the countries will be added in a later version of the handbook. There are different types of metered data utilised in the NBS model: 1. Exchange metering point to other MGAs a. Hourly metered exchange with adjacent MGAs 2. Production metering points a. Metered input to the MGA from production 3. Consumption metering points 4. Losses a. Metered consumption from the MGA a. Calculated based on 1-3 above metering points. L= - (1+2+3) Exchange metering Detailed description will be added in a later version Production metering All production metering in the NBS model is based on netted metering. Netted metering is defined as: metering after own consumption used for power generation. Until harmonised, the NBS model will handle both gross and net metered production. Until the legislations of Finland, Norway and Sweden are harmonised the production can be metered, calculated and reported according to principles presented here below. 30

37 More details and information regarding metering and reporting of minor production will be added in a later version of the handbook. Furthermore, if there will be differences between the countries, this will be presented in this section. Figure 10 shows one example Description of gross metering for production Gross metering has been implemented so that meter 1 is for production metering and meter 2 for own consumption 1 metering. Meter 1 will be the reported production of the PU. Metered values from Meter 2 will be aggregated together with other meters that the RE has in this MGA before it is reported to ISR. Figure 6. Own meters for production and own consumption Description of net metering for production Net metering has been implemented so that both generator and own consumption of the production unit are "behind" the same meter. In this first case, the meter is a so called two-way meter and it is possible to measure energy in both directions. If production energy exceeds the own consumption, it is reported as production. If there is no production during the hour then the own consumption will be reported as consumption and handled in the consumption balance of the respective MGA. 1 Own consumption= consumption needed for production. 31

38 Figure 7. One meter for production and own consumption. Net metering of production units 1 MW with own consumption and an additional consumption (C) can/will be set up according to figure 8. The consumption will in this case be calculated as: C=1+2 Net metering of production units <1MW can/will be set up according to figure 6. Figure 8 Meter for production, own consumption and consumption Consumption metering Detailed description will be added in a later version. 32

39 5. Imbalance Settlement This chapter contains an overview of the production and consumption imbalance settlement including a calculation example. Also applied, national, reconciliation settlement models are presented. In the Nordic Balance Settlement model the settlement of BRPs imbalances is based on a harmonised Nordic model which was implemented in all Nordic countries There are two imbalances calculated and settled in the model; production imbalance and consumption imbalance. Production imbalance volume is calculated as the deviation between metered production, planned production and imbalance adjustment. Consumption imbalance is calculated as the deviation between metered consumption, planned production, trades and imbalance adjustment. The production imbalance volume is priced with the less favourable price of the market balancing area's spot price and imbalance price. This is called the two price model. The consumption imbalance volume is always priced with the balancing area's imbalance price. This is called the one price model. ISR will conduct a preliminary imbalance settlement every day starting from the second day after the day of delivery until 13 days after delivery. Imbalance settlement per BRP will be available in the NBS Online Service for BRPs to follow and control their positions. Furthermore the imbalance volumes and amounts, along with time-stamps, are published in the NBS Online Service directly after the calculation is finalised. In the NBS model there are two imbalances being calculated and settled: one for production power and one for consumption power. Calculation equations for the imbalances are the following: 33

40 In the model of two imbalances, production is handled in one balance, and purchases, sales and consumption of electricity in another. Moreover, the production plan given from the production imbalance before the beginning of the specific delivery hour is processed in the consumption imbalance in the imbalance settlement procedure. A different price model is applied to the imbalance deviation existing in the production and consumption imbalances, i.e. to imbalance power. A two-price system is applied to the imbalance deviation in the production imbalance, and a one-price system is applied to the imbalance deviation in the consumption imbalance. More detailed information about pricing can be found in Chapter 6. The BRP is responsible for reporting data to the imbalance settlement before 12:00 (CET) at the latest 13 calendar days after the delivery day and resolve possible errors with the concerned reporting responsible party. Metered data is collected by the DSO. The DSO has at most 13 days to correct erroneous metered data before the ISR invoices the imbalance power. The reporting responsibilities and schedule is presented in chapter 4. No corrections of the imbalance settlement will be made by the ISR after the invoice has been produced. An exception is if the ISR has committed errors or due to extraordinary circumstances (force major or similar). Subsequent bilateral correction of imbalance power settlement is outside of the ISR s scope but principles of the harmonised standards and procedures are presented later in Appendix Production Imbalance Settlement The production balance is composed of a BRP s total production plan, actual production and imbalance adjustment. A balance deviation in the production balance arises when there is a difference between the actual production and the production plan. If the balance responsible party produces less electricity than it planned to produce, in other words the actual production volume is smaller than the total production plan, there is a deficit in the production balance, and the BRP purchases imbalance power from the ISR in order to cover the deficit. Correspondingly, if the BRP produces more electricity than it planned to produce, in other words the actual production volume is greater than the total production plan, there is a surplus in the production balance, and the balance responsible party sells imbalance power to ISR in order to take care of the surplus. A two-price system is applied to the balance deviation in the production balance, i.e. separate prices are calculated for the purchase and sales price of imbalance power. Pricing is more thoroughly explained in chapter 6. The production imbalance settlement volumes are calculated based on received settlement data. The calculation is performed per BRP and includes data from the parties in the BRP's balance hierarchy, using relations in the structure information (e.g. BRP s responsibility over REs). Production imbalance is calculated from the input data in the imbalance settlement system delivered by market participants. This data contains metered production per production unit, production plans per RE per regulation object and summary of regulation data, frequency containment reserves (FCR), frequency restoration reserves (FRR), and replacement reserves (RR). Based on the delivered data the metered production per BRP in MBA, planned production per BRP in MBA, and production reserves up or down 34

41 per BRP in MBA are calculated. Altogether the result is production imbalance per BRP in MBA. Calculation of the amount for production imbalance is shown in Figure 9. Figure 9. Calculation of production imbalance settlement National differences in settlement for production imbalance Currently there are different regimes for settling some of the production without applying two price settlement in the production balance. In Norway and Finland, production under 3 MW (Norway) and 1 MVA (Finland) can be settled in the consumption balance. There is no limit in Sweden; all production is settled in the production imbalance. A more detailed description regarding settlement of minor production will be added in later version of the handbook. 5.2 Consumption Imbalance Settlement A BRP s consumption balance is composed of its total production plan, trades, MGA imbalance and consumption. The balance deviation in the consumption balance arises when there is a difference between the actual consumption and electricity purchases (fixed transactions, production plan), as follows: If the BRP consumes more electricity than it planned to consume, there is a deficit in the consumption balance, and the BRP purchases imbalance power from ISR in order to cover the deficit. Correspondingly, if the BRP consumes less electricity than it planned to consume, there is a surplus in the consumption balance, and the balance responsible party sells imbalance power to ISR in order to take 35

42 care of the surplus. A one-price system is applied to imbalance power in the consumption balance, i.e. the purchase and sales prices of imbalance power are identical. Pricing is explained in sub chapter 0. The consumption balance settlement volumes are calculated based on received settlement data. The calculation is performed per BRP and includes data from the parties in the BRP's balance hierarchy, using relations in the structure information (e.g. between MPs; BRP s responsibility over REs). Based on the received data, amounts per BRP in MBA and finally consumption imbalance per BRP per MBA are calculated. The following picture (Figure 10) shows what data is used in the consumption imbalance calculation and the example calculation in the next chapter. Figure 10. Consumption imbalance settlement. 5.3 Production and consumption imbalance calculation The calculation is performed in the imbalance settlement system independent of whether all the settlement data has been received or not. For MECs from which data hasn t been received the value 0 is used in the calculation but empty settlement data is not changed from void to 0 in the database. If the values have not been received at gate closure time (13 days after the delivery day) the final calculations are to be performed with the value 0. If the calculation was done although not all settlement data was available the market participant in question is notified about this in the online service. The notification includes information on what settlement data was missing. This procedure applies for both consumption and production imbalance settlement. 36

43 5.4 Imbalance calculation example In this chapter an example of the BRP s imbalance calculation is presented. In the calculation the hour in question is assumed to be an up regulation hour. The example is made from the BRP s perspective. The example uses the following values: Production imbalance MWh Total production 50 Metered production 65 Regulation power (up regulation, sale to TSO) -10 Consumption imbalance MWh Total production plan 50 Bilateral trades (purchase) 5 Elspot trades (sale) -25 Metered Consumption -10 MGA imbalance -30 Profiled consumption -5 Table 9. Production and consumption imbalance. Prices and fees used in the calculation are the following: Price item or fee /MWh Up regulation price 40 Elspot price 30 Sales price for production imbalance 30 Purchase price for production imbalance 40 Sales and purchase price for consumption imbalance 40 Production fee 2,10 Consumption fee 3,00 Consumption imbalance fee 7,50 Table 10. Fees and prices used in the imbalance calculation. 37

44 Production balance imbalance calculation Imbalance calculation Metered production [MWh] Total production plan [MWh] Regulation power [MWh] Imbalance [MWh] Operation hour Table 11. Production imbalance calculation. As a result from calculation ( (-10)) there is a 5 MWh production surplus in the BRP s production imbalance. The BRP sells 5 MWh imbalance power to ISR. Consumption balance imbalance calculation Imbalance calculation Total production plan [MWh] Bilateral + Elspot trades [MWh] Metered consumption MGA imbalance Profiled consumption [MWh] Imbalance [MWh] Operation hour Table 12. Consumption balance imbalance calculation. The result of the BRP s consumption imbalance calculation (50 + (-45) + (- 20)) is that there is a consumption deficit of -15 MWh. The BRP buys 15 MWh from ISR. Invoicing is done from the BRP s point of view. The production balance has a 5 MWh surplus and the consumption balance has a 15 MWh deficit. The production balance evens up by BRP selling imbalance power to ISR and the consumption balance evens up by BRP buying imbalance power from ISR. In the invoicing a negative expense means compensation to BRP. Invoicing for production imbalance is the following: Invoicing information production balance Invoicing information [MWh] Sale of imbalance power Purchase imbalance power 0 0 Sale of regulation power 0 0 Sale of regulation power Production fee ,50 Purchase sum -136,50 Sale sum 550 Total 413,50 Table 13. Invoicing information production balance. 38

45 Invoicing for consumption imbalance is the following: Invoicing information consumption balance Invoicing information [MWh] Selling imbalance power 0 0 Purchase imbalance power Consumption fee ,00 Consumption imbalance fee ,50 Purchase sum ,50 Selling sum - 0 Total -847,50 Table 14. Invoicing information consumption balance. 5.5 Management of Imbalance Errors after Gate Closure Handling of balance errors after invoicing is done bilaterally between the contracting parties. Subsequent bilateral correction of imbalance settlement is outside of the ISRs scope but harmonised standards and procedures have been developed by the industry together with the regulators. The proposal of the handling of balance errors from Finnish Energy Industries is added to this document in Appendix Reconciliation Reconciliation is done accordingly to current national practices. Therefore the step-wise-approach is used for reconciliation in the NBS model. This means that reconciliation is done differently in each of the countries and current national procedures are followed. In the imbalance settlement, estimates for the profiled consumption on hourly basis are used when actual meter readings are not available in due time (13 days after delivery day). When the metering data becomes available a new and improved estimate on hourly basis is done and called the final profiled consumption (FPC). In the reconciliation settlement the difference between FPC and PPC is settled using hourly Elspot prices for the Market Balancing Area. In this way, the error in the imbalance settlement due to incorrect estimates of the profiled consumption is corrected. Reconciliation frequency and schedule depends on the national schedule explained in the following sub chapters that present the national step-wise approaches. Reconciliation is done if one of the following changes in the settlement structure is done: change of supplier, customer relocation, metering point switches between the profiled and non-profiled consumption or in case of change of meters. 39

46 5.6.1 Step-Wise Approach in Sweden In Sweden, Svenska Kraftnät (SvK) is responsible for calculating and reporting reconciled energy on the Swedish market. Reconciliation is done on BRP level in Sweden. SvK will invoice the BRPs and report the reconciled energy per BRP. Additionally, there is a variation regarding the reporting of profiled consumption compared to the NBS model in Sweden. The reporting structure in Sweden will be as shown below. Metered data for profiled consumption is collected monthly, actual consumption is aggregated final profiled consumption two months after delivery month for DSO per MGA. SvK calculates reconciled energy per BRP in monthly resolution three months after delivery month. Profiling Load Profile shares are calculated by the DSO before the delivery month. SvK calculates BRPs PPC per MGA. Reporting structure as shown below: DSO reports Load profile shares per MGA and BRP to SVK and BRP SVK reports profiled consumption per BRP and MGA to ISR ISR reports aggregated profiled consumption per BRP and MBA to BRP Reconciliation The DSO calculates Final Load Profile shares and reports it to SvK. SvK calculates BRPs reconciled energy and reports it to BRPs. Reporting structure as shown below: DSO reports final Load Profile shares per MGA and BRP to SVK SvK reports QA data per MGA on reconciled energy to DSO SvK reports aggregated reconciled energy per MGA and BRP SvK make available aggregated BRP reconciled energy consumption SvK report reconciled energy and payment per MBA to BRP Step-Wise Approach in Finland In Finland reconciliation is managed yearly after final meter reading per metering point. Reconciliation is done between DSO and RE. Profiled consumption has annual meter reading and the DSO is responsible for the meter reading. REs are the financial counterparts for DSOs in the process. Final imbalance profiling is done in an equal way in all meters independent on the meter type. Reconciliation settlement is done on hourly basis and the price is the Elspot price of the metering grid area during the delivery hour. Profiled consumption is done annually. 40

47 5.6.3 Step-Wise Approach in Norway The step-wise approach in Norway will be added later. 41

48 6. Invoicing This chapter provides information of invoicing related to the BRPs imbalances; the invoicing process, invoicing schedules and related responsibilities. Additionally the fees and handling of different currencies in the market are discussed. ISR is responsible for the invoicing of imbalances and activated regulation power based on the settlement calculations. The three TSOs are legally responsible for the balance settlement, including setting the rules for the calculations and the applied fees and fee levels. Invoices are sent electronically from the ISR s imbalance settlement system. The ISR will invoice BRPs on a weekly basis. The invoice is a combination of sold and purchased imbalance energy at a given price, and other fees. The invoice will include both imbalance volumes and the settlement of activated reserves. Most of the transactions will be between BRPs, but they pass through the ISR who guarantees the financial settlement. EUR is the default currency and the currency in which settlement is performed. It is, however, possible for a BRP to choose settlement in NOK or SEK by paying an additional currency fee. This fee covers ISR's currency risk. A BRP which is operating in several countries is to select a single currency to be used for its invoicing for all market areas. The fees will cover the national cost base which encompasses costs for operating the ISR as well as costs for imbalance regulation operated by the national TSO. Fees to be invoiced from the market participants will be different for operations in different countries. There will be a fee on actual production and on actual consumption, fee on all imbalances within the consumption balance and a weekly fee. In addition to the harmonised fee structure there will however remain one additional fee related to financing the Swedish peak power reserves. These are invoiced from the BRPs active in the Swedish balancing areas. Current fees are published in the NBS Online Service. 6.1 Invoicing of Imbalances and Reserves ISR performs invoicing of BRPs based on the settled energy and the reserves. The invoicing of the settled energy (imbalances) is based on the consumption and production imbalances (as presented in chapter 6.3). Depending on the imbalance volume during the delivery hour, ISR either charges or disburses the BRP. 6.2 Invoicing Process ISR is responsible for calculating and invoicing the production and consumption imbalances and settlement of activated reserves on weekly basis. The three TSOs are legally responsible for the imbalance settlement, including setting the rules for the calculations and the applied fees and fee levels. The invoicing process and involved parties are explained in Figure

49 Figure 11. Invoicing processes. The weekly invoice/credit note issued by ISR is a combination of fees and sold and purchased imbalance energy plus settlement of activated reserves at a given price. Most of the generated transactions are from the imbalance settlement between BRPs, but passes through the ISR who guarantees the financial settlement. The income from fees and two-price settlement (production imbalances purchased and sold at different prices) is collected by the ISR on behalf of the TSO, and will be transferred to the respective TSO periodically. 6.3 Production and Consumption Imbalance Price Components Prices used in the imbalance calculations are received from the balancing market and NP. A list of the different prices is shown in Table 15, Pricing information. 43

50 Price information used in the imbalance calculations Consumption imbalance price (EUR/MWh) per MBA Production imbalance sale price (EUR/MWh) per MBA Production imbalance purchase price (EUR/MWh) per MBA Main direction of regulation power per MBA Up regulation price (EUR/MWh) per MBA Down regulation price (EUR/MWh) permba Spot price (EUR/MWh) per MBA Swedish Peak Power price (EUR/MWh) Table 15. Pricing information. Consumption imbalance is always priced according to the regulation price in the main direction of regulation in the price area (one price model). Consumption imbalance price is calculated in the imbalance settlement system, using the following components: Consumption imbalance price per MBA = [up regulation price or down regulation price, decided by main direction of regulation power per MBA] If no direction (main direction = 0), then either up regulation or down regulation price Production imbalance is priced according to the spot price in the balancing area, but if the production imbalance contributes to the total system imbalance, the production balance power is priced with marginal regulation price in the main direction (two-price model). Production imbalance price is calculated in the imbalance settlement system, using the following components: The production imbalance sale price (ISR sales to BRPs) shall be the down-regulating price of the hour. If no down-regulation has been regulated or if the hour has been defined as an upregulation hour, Elspot price shall be used as the production imbalance sales price. The production imbalance purchase price (ISR purchase from BRPs) shall be the up regulating price of the hour. If no up-regulation has been regulated or if the hour has been defined as a down-regulation hour, Elspot price shall be used as the production imbalance purchase price. If both up-regulation and down-regulation has been regulated during the operation hour, the hour shall be defined as an up-regulation hour or down-regulation hour depending on which direction more energy has been regulated. If there has been no regulation or if there has been equally much regulation in both directions, the price of imbalance power is regulating market power main price. The pricing model for consumption and production imbalance is presented in Figure

51 Up-regulation hours Down-regulation hours No regulation hours / Equally up/down regulation Two price system Negative imbalance RK-price (up) Elspot Elspot Positive imbalance Elspot RK-price (down) Elspot One price system Negative imbalance RK-price (up) RK-price (down) Elspot Positive imbalance RK-price (up) RK-price (down) Elspot Figure 12. Pricing model for imbalance calculation. A detailed example of imbalance calculation is presented in section 5.3 of this document. 6.4 Fee Structure The fees will cover the national cost base which encompasses costs for operating the ISR as well as costs for reserves.the fees presented in chapter 6.4 will be invoiced from the market participants depending on the market area they operate in. The consumption and production fees are the components which cover the reserve costs of the TSOs. The fees for actual production and actual consumption vary between the different countries as the cost bases are national. These fees are set by each TSO considering the national cost base. The weekly fee will be harmonized but the imbalance fee might vary between the Nordic countries. This is set as an economic incentive for the BRPs to keep their imbalances low and cover part of the balancing costs of TSOs. The fee level is deemed to be low enough not to be a barrier for entering the market. The fees can be changed with one months notice if necessary. The goal is to keep the fees fixed for at least one calendar year at the time, if possible. TSOs are responsible for calculating and setting the fees and notifying ISR to reduce or increase the fee levels. Current fees will be published at NBS website. Fee structure in the NBS model Fee Unit Weekly fee Peak power reserve fee Currency fee Consumption fee Production fee Consumption imbalance fee EUR/Week EUR/MWh (in Sweden) EUR EUR/MWh EUR/MWh EUR/MWh Table 16. Fee structure in NBS model. 45

52 6.4.1 Consumption Fee The consumption fee is for financing the national cost base for reserves. It is calculated per hour for BRP s actual consumption during the operation hour. Consumption fee is calculated per hour for BRP s consumption during the operation hour as EUR/MWh (per MBA per country) Production Fee The production fee is for financing the national cost base for reserves. It is calculated per hour for BRP s production during the operation hour. The production fee is calculated per hour for BRP s actual production during the operation hour as EUR/MWh (per MBA per country) Consumption Imbalance Fee The consumption imbalance fee will function primarily as an incentive for the BRPs to plan their balance. The fee also contributes to the national financing of the cost base for balance regulation and settlement). The fee is levied on consumption imbalances in each market balance area. The consumption imbalance fee is calculated per hour based on the sum of consumption imbalance sold by ISR to BRP or bought by ISR from BRP (per MBA and country) Weekly Fee The weekly fee contributes to financing the balance settlement performed by the ISR. Weekly fee is applicable for all BRPs active in the week for which the invoice is sent. The fee is calculated per country (EUR/Week). Maximum fee for one BRP active in all market balance areas in the Nordics will be three times the weekly fee. (I.e. weekly fee: 50 EUR; maximum weekly fee for BRP operating in Finland, Norway and Sweden 150 EUR) Currency Fee Euro is the base currency and settlement is done in Euro. However it is possible for the BRPs to choose settlement in NOK or SEK by paying an additional fee. This fee covers ISR's currency risk. A BRP which is operating in several countries needs to select one currency to be used for his invoices for all markets. When the settlement is done in Euro there will be a currency risk for BRPs and the TSOs who do not use Euro as their main currency. This is because the BRPs settle their customers in local currency and the TSOs buy reserves in local currency. When the settlement is done in Euro it will be up to the TSO and BRPs to handle the currency risk themselves. 46

53 6.4.6 Peak Load Fee (Sweden) In addition to the harmonised fee structure there will remain one additional fee related to financing the Swedish peak power reserves. These are levied on BRPs active in the Swedish balancing areas and will be invoiced by ISR on behalf of Svenska Kraftnät. A supplementary fee for the Peak Power Reserve (EUR/MWh) will be charged on the BRP s consumption balance, excluding network losses for networks requiring licenses. The fee is charged on working days between CET, between 16 th of November and 15 th of March. If the supplementary fee generates a surplus compared with Svenska Kraftnät s costs for the Peak Power Reserve during the winter period, a settlement will be made subsequently, no later than 30 th of June. Payment of any surplus will be made in proportion to how large a share of the supplementary fee the BRP has contributed. If Svenska Kraftnät produces a trading profit as a result of the activation of the Peak Power Reserve for balance-related reasons, this profit will be settled retroactively, no later than 30 th of June. The settlement of the surplus will be done in proportion to how large a share of the supplementary fee for the Peak Power Reserve the BRP has paid, up to the said amount. 6.5 Invoice The BRP will receive only one invoice from the ISR although the BRP is active in several balancing areas. The invoice is sent electronically. The invoice will contain the volumes (MWh) and amounts (EUR) per market balance area. The invoice is a combination of fees and amounts, illustrated in Figure 13. Additionally, the invoice contains invoice number, recipient and invoiced time period, due date, and total invoiced amount including taxes. The procedure according to which the due date is set will be described later. 47

54 Figure 13. Invoice structure. 6.6 Incorrect Invoices If an incorrect invoice is sent out the BRP must pay the incorrect invoice or receive it if it is negative. ISR then creates a new invoice/credit note with corrected volumes and amounts and sends the new invoice/credit note to the BRP in question within X days. 6.7 Taxes Procedure for handling VAT is under investigation and will be clarified later. 48

55 7. Communication This chapter presents how the communication between stakeholders in the Nordic Balance Settlement is arranged. The different communication channels with ISR and the reporting provided by the ISR are presented. The communication between market participants and ISR is enabled largely by the ISR balance settlement system which is at the core of the ISR s activities. The main communication channels to and from ISR are the market messaging service, NBS Online Service and the NBS Information Service. Content-wise the communication is mainly of sharing settlement data between required stakeholders, but also of various reports with information on the imbalance settlement and the performance of the market. A common data communication standard for the market messaging has been developed for the NBS. (Data communication standard is not finalised and specific information of it will be added at a later stage.) The purpose of the common messaging standard is to ensure that imbalance settlement information exchange of plans, trades, deliveries and meter readings is based on the same communication technology and formats in order to distribute the settlement information fluently between all market participants in the Nordic countries. ISR offers BRPs and MPs the possibility to upload and download new or updated settlement data and structure information from the imbalance settlement system directly from/to their own systems through NBS information service. The NBS information service is established as a machine-to-machine connection between market participant s and the ISR s system. To be able to utilise the NBS Information Service, the market participants must first be authorised, according to ISR requirements, to use the service. The market participants can download only time series data through the NBS information service and only such data that the market participant is entitled to view. The NBS Online Service is the primary interface towards BRPs and other market participants. Settlement information from ISR is published to the Service, in order for market participants to view and download the information they are entitled to. The NBS Online Service consists of both a public part, where public settlement information is published, and a restricted part that requires login and contains settlement information that only the respective market participants can view. BRPs can also send information to the ISR via the Online Service and for example manage their collaterals and invoice information. In addition, it is possible to extract published data and order data packages from the service. 7.1 Data Communication Standards The purpose of the common data communication standard is to ensure that imbalance settlement information exchange (i.e. sending and receiving plans, trades, deliveries, meter readings etc.) is based on the same communication technology and formats so that imbalance settlement information can be sent between all parties in the Nordic countries. 49

56 The common file format syntax will be based on ENTSO-E and ebix and the communication is done via e.g. SMTP, FTP, or web services. A set of detailed user guides give detailed descriptions of the messages for the market participants. These guides will be published later. Market participants must use the common standard. In Sweden and Norway all parties must sign an agreement with respective TSO in order to act on the market. Detailed and market participant role specific information on the data communication will be added later. 7.2 Information Services The Imbalance Settlement Responsible gives stakeholders the possibility to transfer settlement data (time series data) between the ISR s imbalance settlement system and their own systems through an Information Service. The NBS Information Service is established as a system-to-system connection between market participant s system and the ISR s imbalance settlement system. The service is established as a web service, which provides the possibility for data requesting and transfer but also capabilities for information security; secure connection between two system and tools for market participant s authentication and authorisation. If the market participant wants to use the NBS information service it needs to set up the connection with ISR. User guide for information service will be available later. The market participants must first be authorised to use the NBS Information Service. After authorisation a market participant can fetch time series data through the NBS Information Service. Market participant can only fetch data that the party is entitled to view, as instructed in the regulations. The market participant s system can send a request for MEC data to the NBS information service in order to receive it. A market participant can for example order MEC data, detailed production plans, detailed reserves data, settlement calculation data, settlement calculation results or imbalance prices. The NBS information service provides the requested data to market participant s system if the requested data is available. The information that can be sent and received via the NBS Information Service is shown in Table 17. Market participant NBS Information service tasks Task BRP Send settlement data Receive settlement data (e.g. time series data for MEC data, detailed production plans, detailed reserves data, settlement calculation results, imbalance prices) DSO, TSO, NPS Send settlement data Receive settlement data (e.g. time series data) Table 17. Available information service tasks per market participant. 50

57 7.3 NBS Online Services The NBS Online Service is the ISR s main communication tool and primary interface to market participants and other stakeholders. Settlement information from the imbalance settlement system is published at the online service, so that market participants and other stakeholders can view and download the information they are entitled to see. The data received via online service is sent to the imbalance settlement system to be used in the imbalance settlement. The market participants and their service providers can also send / update information to the ISR s imbalance settlement system (e.g. time series data) via the online service as well as manage their collaterals and invoice information through the online service. It is also possible to download data files from the Online Service. The tasks that market participants can perform in the Online Service are presented in Table 19. The online service consists of a public part, where public settlement information is published and viewed without login or authentication, and a restricted part that requires login and contains settlement information that only the respective market participants can view. The public part contains information presented in Table 18. List of active market participants and their roles Market participants contact information The BRPs of REs and DSOs in different MGAs List of MEC types and their respective description Table 18. Information in public online service. Information in the public part of the online service 51

58 NBS Online Service features Market participant Task RE Manage contact information View current and historical structure information View and download settlement data (time series, balance report, production plans, reserves and) BRP Register, update, close structure information View current and historical structure information Upload, change and view settlement data View invoice information (fees, prices, amounts) View and update collateral management information Report and update bilateral trade within given timeframe View imbalance, planned production & consumption data View and download settlement data (time series, balance report, production plans, reserves and MGA imbalances) View monitoring and KPI information DSO Register, update, close structure information Upload, change and view and settlement data View current and historical structure information Report and update MGA exchange within given timeframe View MGA imbalances View and download settlement data (time series, balance report, production plans, reserves and MGA imbalances) View monitoring and KPI information Register, update and close settlement information Upload Elspot & Elbas trade data View current and historical structure information Table 19. Tasks in the online service Online Service User Account Each online service user must have a personal user account with login and password information to access the restricted part of the service. The access rights are determined on a company-level and each user in that company inherits the company s access profile. On user level it is decided whether the user has read or read and write rights to the information. After the user account is created, an automatic invitation is sent to the new online service user with a password. The access rights to the settlement information are strictly regulated by the Nordic regulators and the system s access management rigorously supports the regulation on this point. In order to get an online service user account, the user fills in a request in the online service. Following information must be filled in: 52

59 Name and title Contact information ( , mobile, instant messaging address, address) Company: market participant or service provider Task of online service User Which market participants information the user requests to see (can be e.g. multiple BRPs) Each market participant (company) has an administrator user who represents the company and receives the requests to assigns the role for other users in the same company. Administrator can then assign users to normal user or administrator and grants read or write rights to the user. The online service administrator can only create new user accounts for the market participant he/she represents. 7.4 Imbalance Settlement Responsible s Reporting ISR provides both public and restricted reports in accordance with the reporting responsibility. The market participants can also order so called data packages from ISR. The orders are managed through the online service and the available data packages will be added to this handbook when they have been defined. There will probably be four different versions of each data package: Preliminary (containing data from an open period) Final (containing data from a closed period) Invoiced (containing data from an invoice period) Corrected (with corrections done after invoicing) Reports available for market participants are statistics report to externals, KPI reports, transparency reports, reports to regulators, financial reports and settlement data packages (presented above). The reports are either one-time reports or regularly compiled and distributed reports. If the report is compiled and distributed regularly, ISR defines the frequency for that. Some of the reports are not stored in the system after they have been compiled. Report s distribution channel can be; manual retrieval and/or distributed automatically (sent and/or published). 53

60 8. Collateral Management This chapter provides an overview to financial risk management in the Nordic Balance Settlement model; description of the utilised collateral management regulations, calculation of collateral demands, follow-up of deposits and requirements towards BRPs for collaterals. The ISR holds extensive financial risk towards BRP. To manage this financial risk, sufficient collaterals are needed. Collaterals are identified as economic security and it can be either a deposit on a pledged account or a bank guarantee. The collateral model is agreed in the balance agreement between the ISR and BRP. Sufficient collaterals must at all times be posted in order to be granted access to the power market. Failing to fulfil collateral requirements is considered a breach of the balance agreement and ISR will have the right to terminate the agreement with the BRP, i.e. exclude the BRP from the power market. The ISR also monitors the deposit banks. Risk reviews for the banks are performed in order to verify the list of approved banks, the BRPs can use in placing their deposits. The list of banks approved, not approved and under consideration is published at the NBS Online Service and is publicly available. The Nordic Balance Settlement model uses a dynamic collateral model, which means that the collaterals will be recalculated weekly. However, daily calculations and continuous monitoring will be performed and extraordinary collaterals are demanded when necessary. The dynamic model is used as it gives a correct collateral level related to the risk over time. Also, less capital must be locked up during long periods. The dynamic model is flexible when it comes to handling extreme situations. Calculation is done by the ISR and updated collateral demands are automatically submitted to the BRP via the NBS Online Service. In case there is a wish to reduce the deposited collateral the BRP can send a request to ISR. Information about deposited collateral is updated electronically via files sent by the deposit bank. 8.1 Collateral Management Model Collateral is a deposit on a pledged account or a bank guarantee. The collateral management is the ISR s function for defining how collateral demands are calculated and how the collateral deposits are administered. ISR is the financial counterpart in the imbalance settlement towards all BRPs. This implies a significant counterpart risk. Sufficient collaterals need to be put up for the security of the ISR's activities and financial situation in the imbalance settlement. BRPs responsibility is to make sure that their collaterals cover the collateral requirement continuously. If the collateral demand is not fulfilled it is considered a breach of the balance agreement and ISR will have the right to terminate the agreement with the BRP. 54

61 The counterpart risk for ISR will vary substantially during a year, depending on price levels and imbalance volumes. To be able to guarantee the financial settlement, ISR needs sufficient collateral at any time, and collateral to cover both normal situations and possible speculative behaviour. High collaterals constitute a threshold for becoming a BRP. Therefore the collateral level is kept as low as possible, though within acceptable limits. In the imbalance settlement the ISR unit has a significant time period with uncertain exposure. Continuous surveillance of trades in relation to expected obligations is essential, as well as keeping a close eye at other market development, especially the price levels. The collateral demands are calculated, verified and published. After publication the BRPs must determine if more collateral is required to be deposited and arrange this with the deposit bank. The deposit bank will inform esett about the changes. A reduction of collateral must be granted by esett before the deposit bank may perform the transaction. ISR verifies the approved banks which the BRPs can utilise in placing their deposits. The list of approved banks is published on the NBS Online Service The Collateral Management Tasks There are three different tasks in the collateral management; calculating the collaterals, administering collaterals and monitoring deposit banks. In calculating the demands, the following process applies: 1. The ISR defines which BRPs have a collateral obligation (= valid BRPs). 2. The imbalance settlement system determines the collateral demands for each of the valid BRP 3. The ISR verifies and, if needed, modifies the collateral demands. 4. The verified demands are published on the online service so that the BRP can retrieve and check their demand levels. In administering collaterals, the following process applies: 1. The BRP reviews given collateral demands and takes action to meet the collateral demand or file a request to reduce the collateral deposit. 2. The ISR reviews the request to reduce the deposited collateral and informs the BRP about the acceptance/rejection. The deposit bank performs the needed transactions. 3. The deposit bank give notice about the change in deposited collateral which is then updated in the system and published at the Online Service. 4. The ISR follows up on BRPs whose collateral deposits are on insufficient level and if not corrected in given time, ISR may terminate the balance agreement with the BRP in question. 55

62 8.1.2 Dynamic Collateral Model In the dynamic model BRPs collaterals are calculated on a weekly basis. However, daily calculations and continuous monitoring will be performed and the collateral demand adjusted when necessary. The dynamic model gives a correct collateral level related to the risk over time and less capital must be locked up during long periods. The dynamic model is also more flexible when it comes to handling extreme situations. 8.2 Calculating Collaterals All BRPs must post security for the settlement risk. The collateral demand is calculated with a formula described below. Thereafter trading and solidity is evaluated and ISR can, if the conditions require it, increase the security requirement further than the formula indicates. Satisfactory security must be in place before the trading can begin. Calculation formula and example will be added in later stage. 56

63 9. Market Behaviour Reporting This chapter describes how ISR monitors the electricity market and market participants, by collecting settlement information and utilising Key Performance Indicators (KPIs) to followup and to enhance the quality of different aspects of the electricity market. The monitoring and control of market (and market participant) behaviour is one of the key responsibilities of the ISR, for which there are three main objectives; firstly to monitor that BRPs' imbalances are kept as low as possible, secondly to monitor possible market abuse and thirdly to mitigate the counterpart risk which ISR has towards each of the BRPs. To perform above tasks ISR collects required settlement information and calculates key performance indicators (KPI s) which evaluate the market performance of different market participants (mainly BRPs and DSOs). After data is collected it is compiled and presented to the public in a transparent and equal way; by publishing a list of public KPIs and company specific KPIs. If the performance is insufficient, ISR takes actions by dialogue with the respective market participant to investigate the reason and seek out possibilities for enhancement. If the dialogue ends in a state where the performance is still found unacceptable, other actions and possible sanctions can be placed for the market participants, for example termination of the balance agreement in case of a BRP. Regulators, national TSOs and ISR work in collaboration to impose sanctions on BRPs who have systematic imbalances and DSOs who fail to deliver quality data within applied reporting time frames. The difference between AMR and non-automated metering is taken into account in calculation of the KPIs, depending on the settlement structure. 9.1 Monitoring The ISR is responsible for monitoring BRPs' performance. In the monitoring process data is gathered for calculating KPIs and evaluating the BRPs' and DSOs performance. ISR evaluates the outcome and identifies which market participants are either underperforming, misusing the market power or conducting other unprofessional misbehaviour e.g. in the regulation power market If KPIs show that, for example, certain BRP s imbalance is constantly on an insufficient level, ISR can take action to terminate the balance agreement of respected party. All KPIs are published at the NBS Online Service for BRPs, DSOs and other market participants to review and compare their position anonymously with other participants. 9.2 Key Performance Indicators KPIs are utilised to measure the performance of different market participants. KPIs are a transparent way to display how TSOs, DSOs, BRPs and REs carry out their respective responsibilities. 57

64 The following KPIs will be published: DSO reporting behaviour; a comparison between required time series DSO should report and how many data series are missing (quality of reported metering data) Retailer behaviour; follow-up of when retailer stops buying energy standard deviation to Spot trades and bilateral trades BRP imbalances; imbalance index for each BRP of the calculated imbalance volumes per interest period (see section 9.2.1) Imbalance Index BRP has physical obligations and rights to achieve a planned balance at the latest when Elspot closes for bids (to trade into balance). Through bilateral trades and Elbas trades the BRP can, until the trading deadline, restore his balance if prognosis errors are discovered. BRPs' imbalance index shows how the BRP managed their imbalances in the last reporting period. Monthly net imbalance should be near zero and thus not show a skewed distribution of positive and negative imbalances. As a result of the analysis the imbalances are diversified by generation and consumption imbalance and the BRPs are classified into three categories red, yellow and green. Based on the category (see Table 20) ISR can impose actions towards a specific BRP in analysing the causes for imbalances and in finding the ways to enhance the index (i.e. to minimise imbalance volumes). In the long run not acceptable In the short run acceptable Acceptable BRPs in this category might be breaching the balance agreement. The BRP is urged to improve its balance. A continued classification into this category can result in exclusion from the market. BRPs in this category are not performing as well as they could regarding imbalances. Although they during the reporting period are not breaching the balance agreement a continued classification or worsening imbalance in the future periods can justify a classification as In the long run not acceptable. BRPs in this category are achieving a good balance. Although the balance is classified as acceptable the BRP can still reduce imbalance costs by improving balance. Table 20. Imbalance index categories. Detailed descriptions of other KPIs will be added later. 9.3 Sanctions and Controls The main objective for BRPs is to stay in balance and keep their imbalances on a minimum level. For a BRP who has systematic imbalances it is possible to impose sanctions and finally terminate the contract. Bad data quality makes it difficult for BRPs to make dependable forecasts, which is why DSOs are being monitored by the ISR. However it is not legally possible for any of the involved TSOs or the ISR to impose sanctions on the DSOs. KPIs calculated by the ISR are used by the national regulators to issue economic sanctions for those DSOs which do not live up to predefined minimum levels. 58

65 ISR therefore only has the possibility to terminate the contract between the BRP and ISR. The control process has three steps: 1) ISR evaluates the BRP performance with the help of the market surveillance data and KPIs. 2) If the BRP performance is not at an acceptable level, ISR initiates a dialogue in order to investigate the reason and possibilities to enhance performance. 3) If the dialogue ends in a state where the BRP performance is still found too low, the process to terminate the balance agreement is started. 59

66 10. Appendices 60

67 Appendix 1 Instructions on Becoming a New BRP 61

68 Instructions on becoming a new BRP In order to be accepted as a Balance Responsible Party the applying company must show that it is financially stable and that a collateral deposit, which is in relation to the size and risk of the balance responsibility (i.e. balance size), has been placed to an approved deposit bank. Before applying the company must verify that following requirements in becoming a BRP are fulfilled: [requirement 1] [requirement 2] [requirement n] A process for company to register as a BRP takes up to three (3) months. During this period, following activities are carried out: The applicant registers to ISR as a BRP and provides required background information The applicant tests the data communication capabilities with ISR The applicant sets the required collateral deposit to a deposit bank The applicant signs the balance agreement with ISR The table below describes in detail the required steps in Table 21: Registering company as a BRP How to become a new BRP Step Task Handbook chapter The applicant contacts the ISR via Online Service or ISR personnel directly and provides background information required from the applying company and required for the BRP role. The information in the NBS Online Service is updated with the information provided by the party Online Service User Account 62

69 Testing data communication The applicant tests the data communication access and link in the NBS test environment in accordance with instructions given by ISR When the tests are completed, ISR sends a signed version of the data communication agreement to the applicant. The applicant signs the agreement and sends one version back to ISR 7.1 Data Communication Standards Placing collateral deposit ISR performs a risk assessment of the applicant, which defines the amount of the initial collateral deposit required from the applicant. Collateral deposit must be in place before trades can be performed The Collateral Management Tasks Collateral demand, required as a deposit by ISR, is being constantly monitored and updated during the course of operation, which is the minimum deposit the BRP must keep in deposit banks during the term of the balance agreement. Signing balance agreement Balance agreement must be signed between ISR and the applicant to become a BRP (and must remain valid during the whole period of operation as a BRP). ISR informs the applicant when the balance agreement can come into effect and sends two signed copies of the balance agreement to the applicant. The agreement is signed by the new BRP and sent back to ISR. 2.3 Balance Responsibility and Agreements Table 21. Steps to become a BRP. 63

70 Appendix 2 Handling of Balance Errors after the balance settlement reporting is closed 64

71 Handling of Balance Errors after Gate Closure Errors in imbalance settlement (i.e. missing metering data caused by reading faults) after gate closure have to be corrected afterwards bilaterally between market participants in the MGA in question. When correcting imbalance errors, the actual imbalances are no longer corrected, only the errors remaining in the imbalances are compensated with money between the parties. DSO acts as counterpart for the suppliers in the balance error correction. Both billing and compensation of imbalance errors should always be carried out between suppliers and DSOs. From the end customer s point of view, the objective is to receive straight away a correct bill that will need no rectification or supplementing at a later date. However, in most cases, readings that are missing after the balance window has closed will probably be obtained at a sufficiently early stage regarding end customer billing. All hourly metered metering points, regardless of the size of the site s main fuse or the reason that caused the balance error, will be treated in the same way. Correspondingly, separate correction rules will be used for metering points for meters from which data is collected less often than weekly (load curve sites). The principle in the bilateral correction is that the latest supplier of the customer will refund or charge the customer only for the period when they had a valid contract with the customer. Thus, the errors for deliveries by the customer s previous suppliers will be corrected by the DSO. Roles and Responsibilities in Management of Imbalance Errors Tasks of the DSO: Forward all metering data that has altered after the closing of the imbalances to the RE Carry out correction calculations of errors remaining in the imbalances including regular billing, with appendices in a specified form, on schedule Deliver the information needed in the revision calculation on the REs request Refund or charge the customer with respect to an error if the RE is no longer entitled/obliged to do so Tasks of the supplier: Receive the metering and imbalance settlement data sent by the DSO For its own part monitor that the metering data received from the DSOs correspond with the imbalance settlement data received from the BRP Receive and carry out the correction invoices or refunds for imbalance errors calculated by the DSO 65

72 Invoice or refund the customer for incorrect invoicing resulting from an imbalance error Timetable DSO and the customer's current supplier will correct the error to the customer with respect to their own proportion of the invoice. The DSO will correct the share of network services for the entire period of error, and the customer s current electricity supplier will correct the share of electricity for its own contract period. If the customer has switched supplier within six weeks of when the error was noticed and the customer was notified of it, the customer s current and previous supplier will correct their own share of the error in invoicing for their own contract period. This will also be carried out in situations where the customer of a metering point has moved out of the site in less than six weeks of when the error was noticed and the customer was notified of it. Thus, the suppliers of both customers (the current customer at the metering point and the customer that moved out) will correct their own share of the error in invoicing for the period of their own contract. If the error has lasted longer than the latest or preceding electricity sales (on the terms described above) contract for the customer/metering point, the DSO shall also correct the customer s invoicing with respect to sales for the period prior to the current/preceding contract. This will also be carried out with errors that have lasted longer than three years for the period exceeding three years. The customer cannot be charged for metering errors lasting longer than three years. Each party may deviate from the customer s correction invoicing for their own part for the benefit of the customer. The length of the correction period of imbalance errors for each metering point is three years, which is the same as the correction period of customer invoicing. The parties may also demand their receivables based on metering or invoicing errors for the past three years. The three-year period is calculated retrospectively from the moment when the customer has been informed of the detected error. Moreover, this period will take into account sites that are billed only once a year. Three-year calculation method must be taken into account in imbalance correction calculation so that the suppliers maximum total period to be corrected is three years from the moment when the customer has been informed of the error. Corrections of imbalance errors between suppliers of hourly metered sites are made regularly three times a year. The days when the correction periods end are 30 th of April, 31 st of August and 31 st of December. Correspondingly, the materials for corrections are obtained on 15 th of May, 15 th of September and 15 th of January or the next working day. Correction periods that progress in a sliding way, overlap with each other to a great degree. This enables a long correction period, as well as regular and sufficiently frequent financial corrections of imbalance errors between market participants. 66

73 In accordance with the above, the maximum total correction period to be calculated is three years and four months. This is described in the following picture in which the arrow describes the date of sending the imbalance bill concerning the period. This time schedule is not applied in the handling of load curve sites. Figure 14. Timing of the imbalance correction periods. The current supplier of the customer of the metering point with a contract with the customer at the time of observing the error will refund or invoice the customer due to any incorrect invoicing with respect to electricity for the period of its contract. For this period, the monetary compensation of imbalance errors between market participants takes place between the supplier/s in question and the supplier with the delivery obligation while the DSO carries out the necessary calculations and billing. If the previous customer relationship of the metering point has ended as a result of a supplier switch or move during the past six weeks, calculated from the moment the error was noticed and the customer was notified of it, both of the electricity suppliers of the metering point will refund or bill the customer/s due to any incorrect invoicing with respect to electricity for the period of their own contract. The consumer may, however, present a claim for receivables based on metering or billing errors for the entire period during which the error has affected invoicing, but not for longer than ten years if the moment the error took place and the effects of the error on invoicing can be verified afterwards. If the error with a consumer has continued for more than 3 years or it is not noticed until after three years, the DSO instead of the supplier shall be responsible for the payment of the refund to the customer for the period exceeding three years. The division of responsibilities is described in the appendix 1 and 2 (Figure 15 and Figure 16). If the invoicing for electricity sales is corrected by the customer s electricity supplier, the price of the contract valid at the time when the error took place shall be used as the sales price. If the invoice for electricity sales is corrected by the DSO, the DSO shall use the most suitable public product or tariff of the RE who has the delivery obligation in the area of responsibility in the distribution network as the sales 67

74 price. However, if the user presents the DSO with an account of the prices applied to its electricity acquisition at the time in question, these prices shall be used. No interest is payable on the determined extra charge or refund for the period of its accrual. The user must be granted a reasonable payment period for the extra charge. If the user will not pay the invoice for the extra charge within the payment period, a penal interest on delayed payment in accordance with the can be charged for it after the due date. If the DSO carries out the correction of customer invoicing, the customer invoicing already carried out by the RE will not be corrected, but the supplier has invoiced the customer according to the energy consumption reported to the supplier by the DSO in due course. In this respect, an imbalance error remaining in the original imbalance calculation has remained in the imbalance (residual curve) of the supplier with a delivery obligation in the network. For this period, the monetary refund of balance errors between the market participants takes place between the DSO and the supplier with a delivery obligation in the network. With respect to errors dating back over three years, no corrections are made to the imbalance errors between the market participants, and the refund paid to the customer will remain as a loss for the DSO. The suppliers will be sent the changed metering data on a regular basis throughout the customer contract. The DSO must note that the data changed during the imbalance correction period must be sent to all the suppliers that carry out customer s correction billing. Therefore, if necessary, the data must also be sent to the previous supplier of the customer/metering point even if the customer contract in question has ended at the time of noticing the error. This information must be sent at the latest by the stage when the concerned correction material for imbalance errors is calculated and sent to the supplier. See calculation examples from Appendix 1 and 2. As in the sending of hourly series and in the balance settlement on the electricity market in general, the official local time is always complied with also in the correction of balance errors. Calculation of Hourly Metered Sites The calculation for hourly metered sites is composed at the metering point level and the information is processed only with respect to the metering points whose metering data has changed after the imbalance notice or the calculation of the previous correction material. Therefore, the metering points and time series that have any changes must be taken from the database. From these time series, the DSO compares the values entered in the imbalances to the final values with respect to each metering point and then calculates the hourly imbalance error energies. These values are multiplied by the previously agreed price for the corresponding hour. Metering point-specific corrections are added up into a supplier-specific sum, which the DSO refunds or charges to the supplier. Further, the DSO will refund or charge a sum of an equal amount but an opposite sign to the supplier with a delivery obligation. The changed metering data is transmitted to the supplier with immediate effect and the imbalance errors are corrected in an integrated way. As a result, the correction of imbalance errors and customer billing will not necessarily take place simultaneously. 68

75 On site by site handling, actual corrected metering data is compared hourly with the data that have been notified in the imbalances for the corresponding period or in the previous correction material. Hourly imbalance error energies are obtained as a result of the comparison. These values are multiplied by the Elspot price for the spot price area for the corresponding hour. The total sum provides a supplier-specific imbalance correction invoice, which is either charged or refunded to the supplier by the DSO. Further, the DSO will refund or charge a sum of an equal amount but an opposite sign to the supplier with a delivery obligation. The above-mentioned calculation can also be carried out non-recurrently for justified reasons at other times than those specified above. This kind of reason may be, for example, a separate request by the supplier or customer to correct an error they have detected, or a change of system. In connection with a change of system, it must be ensured that the necessary historical data (the material of previous correction) will remain or is transferred to the new system. Imbalance errors are invoiced every four months after 2 months from the end of the imbalance correction period. An example of the time schedule for billing is presented in the following Figure 15. Figure 15. An example of the time schedule for imbalance correction billing. Calculation of the Balance Correction in Load Curve Sites If a metering or other error has caused an imbalance error in a load curve site, the method of correcting the imbalance error depends on whether or not reconciliation has already been carried out on the site. 1) Metering error is detected before reconciliation of the metering period If the billing readings can be corrected and the consumption can be adjusted directly into the systems, the metered (actual) consumption and imbalance energy are reported in reconciliation according to the normal process. In such a case, the DSO must only make sure that the incorrect reading will not be included in reconciliation by mistake. If it is not possible to correct the invoice readings into the systems, 69

76 reconciliation for the metering point must be carried out manually, taking into account the correction of the metering error. 2) Metering error takes place at a time when reconciliation has already been carried out on the metering period or a part of it before the metering error was detected If the metering error takes place at a time when reconciliation has already been carried out on the metering period or on a part of it before the metering error was detected, the DSO refunds/charges in full the reconciliation fee refunded/charged in earlier reconciliation due to incorrect metering data with respect to the metering point in question to the supplier participating in the metering period and a corresponding balancing fee but with an opposite sign to the supplier with a delivery obligation. After that, the DSO will carry out reconciliation again using the correct metering data and then report the difference of the metered consumption for the metering period on the basis of the corrected metering data and the imbalance energy, and refunds/charges the balancing fee to the parties participating in the metering period (supplier and the supplier with a delivery obligation). The above stages are difficult to manage in any other way than by calculating them manually. For that reason, the corrections of imbalance errors in load curve sites are calculated and reported separately for each metering point, and the time schedule presented in Figure x will not be complied with. If the DSO does not have the initial meter reading for the correction period, it can be estimated on the basis of the latest metered reading. Taking Incorrect Supplier Data into Account in Balance Corrections The correction method for imbalance errors must take into account the ET policy on cancellations of supplier switching in situations where, due to an error made by a party registered as the new supplier, the change of supplier has taken place on an incorrect metering point and the error is not noticed until much later. The supplier that has made the error is responsible for the energy entered in the imbalances for the duration of the error. However, the right to bill the customer remains with the correct supplier with whom the customer has had a contract all along. In this situation, the DSO enters the correct supplier information in its customer data system for the entire period. Therefore, after that, the system will not necessarily have any trace of the old (incorrect) supplier information. However, it is not possible to completely delete the information about an incorrect supplier from the systems. Therefore, the DSO must ensure that its systems always have the correct supplier information in terms of message traffic, billing, imbalance settlement, as well as imbalance calculation and imbalance corrections. The following Figure 16. presents a case where a metering error and an undue supplier change have taken place within the same period of time. As a result, there is a different supplier in the imbalance and customer information. Although Supplier C has been responsible for the energy entered in the imbalances for the period of incorrect supplier information, the metering and imbalance errors will, however, be corrected in view of the original supplier (Supplier B) who has had the right to bill the customer throughout the period in question and therefore also an obligation to make corrections in billing. In this kind of a situation, there is no need to send the corrected metering data to Supplier C. During Supplier B, an error 70

77 by Supplier C takes place, as a result of which the DSO has incorrect supplier information for the metering point. The customer has had a contract with two suppliers (A and B) during the metering error. However, the information for three suppliers (A, B and C, and again B) must be recorded in the balances. Figure 16. A metering error in the metering point. Notifying the Customer of an Error The DSO must notify the customer of the metering error without delay if the metering error gives rise to a change in the network invoice. In connection with the notification, the DSO should state the start and end dates of the period which the correction applies to. In addition to the start and end dates of the error, the notification must also state the amount and direction of error. With respect to errors whose duration is approaching three years, i.e. the supplier's correction invoicing right is coming to an end, the DSO must also notify the above-mentioned data to the supplier. The supplier is obliged to notify its customer of any invoice correction for its own part. 71

78 Handling of Balance Errors Lasting Less Than Three Years Figure 17. Handling of a long-term error lasting less than 3 years. Correcting a long-term error depends on the duration of the error, the time when it was noticed and the length of customer contracts. The above example concerns the correction of an error that lasted for less than three years (Figure 17). In this case, the error was noticed on 15th of September It is corrected between market participants in the correction material that will end on 31st of December The metering error has taken place between 10th of February 2008 and 15th of September Four different examples are presented in Figure 19. In example A, the customer has had three suppliers during the metering error. The contract with the current supplier (= supplier 1, in red) started on 15th of August The preceding contract (= supplier 2, in blue) was valid between 1st of September 2008 and 14th of August Before that, the customer had a contract with a third supplier (= supplier 3, in yellow). In this example, the customer s latest change of supplier took place during the last six weeks, and therefore the customer s current and previous supplier will correct the customer s billing with respect to electricity for the period of their own contract. Naturally, the DSO will correct the customer s transmission billing correspondingly for the entire period. In addition, the DSO will also correct the customer s billing with respect to electricity on behalf of supplier 3 for the time before 1st of September Between market participants, imbalance errors are corrected by the DSO (i.e. the DSO is the counterpart of a financial settlement for each supplier) in money for the period between 15th of August 2010 and 15th of September 2010 between supplier 1 and the supplier with a delivery obligation in the network area in question, for the period between 1st of September 2008 and 14th of August 2010 between supplier 2 and 72

79 the supplier with a delivery obligation, and for the period between 10th of February 2008 and 31st of August 2008 between the DSO and the supplier with a delivery obligation. Example B is otherwise the same as described above, but the customer has only had two suppliers during the period of metering error. The contract with the current supplier (= supplier 1, in red) started on 15th of August The preceding contract with supplier 2 (in blue) was valid before that. In this example, too, the customer s latest change of supplier has taken place during the last six weeks, and therefore the customer s current and previous supplier will correct the customer s billing with respect to electricity for the period of their own contract. Naturally, the DSO will correct the customer s transmission billing correspondingly for the entire period. In this example, the DSO has nothing to correct with respect to electricity. Between market participants, imbalance errors are corrected by the DSO in money for the period between 15th of August 2010 and 15th of September 2010 between supplier 1 and the supplier with a delivery obligation in the network area in question, and for the period between 10th of February 2008 and 14th of August 2010 between supplier 2 and the supplier with a delivery obligation. In example C, the customer has had two suppliers during the period of metering error. The contract with the current supplier (= supplier 1, in red) started on 15th of June The preceding contract with supplier 2 (in blue) was valid before that. In this example, the latest supplier change took place some time ago, and therefore only the customer s current supplier will correct the customer s billing with respect to electricity for the period of its own contract. The DSO will correct the customer s billing with respect to electricity for the customer on behalf of supplier 2. Naturally, the DSO will correct the customer s transmission billing correspondingly for the entire period of error. Between market participants, imbalance errors are corrected by the DSO in money for the period between 15th of June 2009 and 15th of September 2010 between supplier 1 and the supplier with a delivery obligation in the network area in question, and for the period between 10th of February 2008 and 14th of June 2009 between the DSO and the supplier with a delivery obligation. In example D, the customer has only had one supplier during the period of metering error, and therefore the current supplier of this customer will correct the customer s billing with respect to electricity for the entire period of error. Correspondingly, the DSO will correct the customer s transmission billing for the entire period of error. Between market participants, imbalance errors are corrected by the DSO in money for the entire error period between 10th of February 2008 and 15th of September 2010 between supplier 1 and the supplier with a delivery obligation in the network area in question. 73

80 Handling of Balance Error Lasting Longer Than Three Years Figure 18. Handling of a long-term error lasting over 3 years. In the second example, the situation is otherwise the same as described above, but the error has lasted over three years (Figure 18). According to the nature of the error, the customer has been billed too much by error, and the excess is refunded to the customer. In example A, the customer has had three suppliers during the metering error. The contract with the current supplier (= supplier 1, in red) started on 15 th of August The preceding contract (= supplier 2, in blue) was valid between 1 st of September 2008 and 14 th of August Before that, the customer had a contract with a third supplier (= supplier 3, in yellow). In this example, the customer s latest change of supplier took place during the last six weeks, and therefore the customer s current and previous supplier will correct the customer s billing with respect to electricity for the period of their own contract. Naturally, the DSO will correct the customer s transmission billing correspondingly for the entire period of error. In addition, the DSO will also correct the customer s billing with respect to electricity on behalf of supplier 3 for the time before 1 st of September Between market participants,imbalance errors are corrected by the DSO in money for the period between 15 th of August 2010 and 15 th of September 2010 between supplier 1 and the supplier with a delivery obligation in the network area in question, for the period between 1 st of September 2008 and 14 th of August 2010 between supplier 2 and the supplier with a delivery obligation and for the period between 16 th of September 2007 and 31 st of August 2008 between the DSO and the supplier with a delivery obligation. For the period before that, the DSO will also refund the customer with respect to electricity and 74

81 no corrections of imbalance errors are made between the market participants, but the refunded sum will remain as a loss for the DSO. Example B is otherwise the same as described above, but the customer has only had two suppliers during the period of metering error. The contract with the current supplier (= supplier 1, in red) started on 15 th of August The preceding contract with supplier 2 (in blue) was valid before that. In this example, too, the customer s latest change of supplier has taken place during the last six weeks, and therefore the customer s current and previous supplier will correct the customer s billing with respect to electricity for the period of their own contract, however, for a maximum of three years in total. For the preceding period, i.e. before 16 th of September 2007, the DSO will refund the customer also with respect to electricity on behalf of supplier 2. Naturally, the DSO will correct the customer s transmission billing correspondingly for the entire period of error. Between market participants, imbalance errors are corrected by the DSO in money for the period between 15 August 2010 and 15 September 2010 between supplier 1 and the supplier with a delivery obligation in the network area in question, and for the period between 16 September 2007 and 14 August 2010 between supplier 2 and the supplier with a delivery obligation. For the period before that, the DSO will also refund the customer with respect to electricity and no corrections of imbalance errors are made between the market participants, but the refunded sum will remain as a loss for the DSO. In example C, the customer has had two suppliers during the period of metering error. The contract with the current supplier (= supplier 1, in red) started on 15 June The preceding contract with supplier 2 (in blue) was valid before that. In this example, the latest supplier change took place some time ago, and therefore only the customer s current supplier will correct the customer s billing with respect to electricity for the period of its own contract. The DSO will correct the customer s billing with respect to electricity for the customer on behalf of supplier 2. Naturally, the DSO will correct the customer s transmission billing correspondingly for the entire period of error. Between market participants, imbalance errors are corrected by the DSO in money for the period between 15 th of June 2009 and 15 th of September 2010 between supplier 1 and the supplier with a delivery obligation in the network area in question, and for the period between 16 th of September 2007 and 14 th of June 2009 between the DSO and the supplier with a delivery obligation. For the period over three years ago, no corrections of imbalance errors are made between market participants, but the refunded sum will remain as a loss for the DSO. In example D, the customer has only had one supplier over the past three years (calculated backwards from the moment of noticing the error), and therefore the current supplier of this customer will correct the customer s billing with respect to electricity for this period. For the preceding period, i.e. before 16 th of September 2007, the DSO will refund the customer also with respect to electricity instead of the supplier. Correspondingly, the DSO will correct the customer s transmission billing for the entire period of error. Between market participants, imbalance errors are corrected by the DSO in money for the period between 16 th of September 2010 and 15 th of September 2010 between supplier 1 and the supplier with a delivery obligation in the network area in question. For the period over three years ago, no corrections of imbalance errors are made between market participants, but the refunded sum will remain as a loss for the DSO. 75

82 Appendix 3 National Changes Compared to NBS Model 76

83 National Changes Compared to NBS Model Major national changes are described in the Table 22 below. Item NBS Model Finland Norway Sweden Changes in the settlement structure management RE s BRPs in MGAs Retailer can use different BRPs in different MGAs One BRP in all MGAs One BRP in all MGAs One BRP in all MGAs Retailer can use different BRPs for production and consumption in an MGA Reporting structure for the imbalance settlement Reporting of metered data on RE level Reporting on RE level Report mainly on RE level (else BRP level) Reporting on BRP level. Metering data updated by DSO in master database Master database updated in the control room on plans etc. BRP update bilateral trade in master database Changes in the data reporting schedules and responsibilities Imbalance power calculation Calculation on BRP level Daily calculation on BRP level Continuous calculation on BRP level Calculation on BRP level Daily calculation until 13 days after delivery day Final calculation after 1.5 months Final calculation done Thursday for the delivery week Daily calculation until correction of balance settlement (10 months) Invoice period is frozen Corrections to imbalance settlement No corrections to balance settlement after 13 days No corrections after 1.5 months No corrections after final balance settlement (weekly) Correction is made 1.5 month after delivery period plus if asked for 10 months after delivery period Reporting of individual meter data for hourly metered production and consumption to RE 2-13 days Next day after delivery day, final 14 days after delivery day 3 working days after delivering week Five days after delivery day 77

84 Reporting of meter data to RE, included in the profiled consumption 2-13 days Next day after delivery day Maximum 3 weeks after meter reading Monthly and 5 working days after delivery month Reporting of MGA aggregated metered data for production and consumption Before 10:00 AM the second day after delivery day, update within 13 days by 12:00 AM Preliminary consumption data first day after the delivery day and final consumption data after 14 days after the delivery Weekly reporting and settlement Before10:00 AM the day after delivery day, updates within five days after delivery day day. Preliminary production data second day after the delivery day and final production data after one month after delivery month. Changes in the imbalance settlement Settlement of reserves Summary of reserves data such as Frequency containment reserves (FCR), Frequency restoration reserves (FRR) and Replacement reserves (RR) are calculated of production imbalance A combination of the Norwegian and the Swedish model has been utilised from 2011 The calculation itself is made as in Sweden, but the estimated volume is kept out of the imbalance settlement as in Norway Activated volume of primary reserves are estimated and used in the calculation of the production imbalance The activated volumes are taken out of the imbalance and settled as regulation power, not as an imbalance Contribution from the primary reserves is settled as a production imbalance, but a separate economical compensation for the regulation is calculated which also ensures that the activation is not punished by the two-price model 78

85 Reconciliation No harmonised model in NBS Reconciliation is done annually in RE level Annual or quarterly meter reading Actual metered data Performed on BRP level Final profiled Meter reading are on DSOs responsibility is distributed in daily resolution by DSO per metering point DSO calculates REs reconciled energy per MP in daily resolution consumption is done in monthly resolution two months after delivery month by DSO per MGA SVK calculates BRPs reconciled energy in monthly resolution three months after delivery month, BRPs settle their REs Changes in the invoicing Invoicing schedule Weekly invoicing (electronic, and paper) Monthly electronic invoice Weekly (pdf file based invoicing) Half monthly (two times in a month, paper invoice) Changes in the collateral management Collateral model Dynamic model, Static model Dynamic model Fixed basic collaterals calculated weekly where collaterals are calculated yearly, based on the maximum monthly average (MWh/h) security set ( SEK) is based on BRP s own assessment of the balance responsible corporate credit rating and possible variations in credit exposure to national grid Changes in the market behavior monitoring Monitoring of imbalances and publishing KPI s Imbalance index reporting with KPIs, published relative positions between BRPs No publications of KPIs Monthly public report on imbalances Statistics on missing data series from DSOs, imbalance index for BRPs in anonymous basis Table 22. National changes compared to NBS model. 79

86 Change log 80

87 Version Date Changes Handbook Draft for Discussion Initial version of the Nordic Balance Settlement Handbook for Market Participants for reference group review. 81

88 CONTACT INFORMATION Project Leader Minnakaisa Ahonen Phone: (+358) Steering group Pasi Aho Phone: (+358) Tania Pinzón Phone: (+46) [email protected] Tor Heiberg Phone: (+47) [email protected] Project group Pasi Lintunen Phone: (+358) [email protected] Mats Elmér Phone: (+46) [email protected] Morten Torgalsbøen Phone: (+47) [email protected] FINGRID OYJ Läkkisepäntie 21 P.O.Box HELSINKI Finland Phone: (+358) STATNETT SF Husebybakken 28 B PO Box 5192 Majorstuen 0302 OSLO Norway Phone: (+47) SVENSKA KRAFTNÄT AB Sturegatan 1 Box Sundbyberg Sweden Phone: (+48)