Introduction to EMR for New Suppliers. Wednesday 22 July 2015

Transcription

1 Introduction to EMR for New Suppliers Wednesday 22 July 2015

2 Health & Safety 2 Introduction to EMR for New Suppliers 22 July 2015

3 Welcome

4 What we will cover? Agenda Time Welcome 9.30 Overview of EMR 9.40 Key dates in the CM Calendar for Suppliers The LCCC Forecasting Team Break Suppliers Charges and Calculations Lunch What you will receive from EMRS? What should you be aware of for the future? Stakeholder Engagement Session What s coming up? Plenary and Close 14.05

5 Electricity Market Reform introduction for electricity suppliers Ruth Herbert 22 July 2015

6 Agenda 1. Electricity Market Reform 2. EMR Companies 3. CFD Overview 4. Timeline 5. Further information 6

7 The trilemma Affordability Electricity Market Electricity Market Security of supply Decarbonisation 7

8 What is EMR? The Government s Electricity Market Reform programme is aimed at attracting up to 100bn investment needed to transform the sector. EMR includes: Contracts for Difference (CFD) scheme to support investment in new low carbon generation (replacing the existing Renewables Obligation) and Capacity Market scheme to facilitate security of supply. DECC created two companies to help deliver these schemes: Low Carbon Contracts Company Ltd (LCCC) and Electricity Settlements Company Ltd (ESC) 8

9 Agenda 1. Electricity Market Reform 2. EMR Companies 3. CFD Overview 4. Timeline 5. Further information 9

10 About LCCC Low Carbon Contracts Company is a governmentowned company established to be the independent counterparty to private law contracts known as EMR CFDs. CFD Counterparty LCCC is also committed to working in partnership with EMR delivery partners and industry to oversee the delivery of the end-to-end CFD scheme, facilitating: - Delivery Partner Cooperation and - Industry Readiness LCCC also runs Capacity Market settlement operations on behalf of the Electricity Settlements Company. CFD Implementation Coordinator Service provider to ESC 10

11 Who we are Senior Team Board Martin Read (Chair) Jim Keohane (Senior Independent Director) Neil McDermott Helen Turner Non-executive directors: Anne Baldock Tony Bickerstaff Marion King Jonathan Mills Anthony Odgers Dr Simon Orebi Gann Tony White Our non-executive directors bring a wide range of expertise covering energy markets, finance, law, construction, settlement systems, regulatory oversight and government policy. Martin Read, Chair 11

12 Agenda 1. Electricity Market Reform 2. EMR Companies 3. CFD Overview 4. Timeline 5. Further information 12

13 CFDs designed to provide long-term price certainty for low-carbon technologies CFDs pay a variable top-up to developers, based on: Strike Price: Estimate of the cost of investing in each technology Reference Price: Measure of the average price of electricity Source: DECC Introduction to EMR for New Suppliers 22 July

14 Stages of CFD process Key feature of a CFD is that it is allocated early in the project development life-cycle CFD process reflects this. Source: DECC 14

15 Roles and Responsibilities under the CFD scheme DECC sets policy, auction rules, terms, key parameters (e.g. budget, qualification criteria etc) and the operational costs levy rate for the Low Carbon Contracts Company National Grid (EMR Delivery Body) runs application and allocation processes, and provides analysis to support the setting of strike prices Ofgem Ensures Delivery Body activities are efficient, cost effectively and timely, and determines eligibility disputes Low Carbon Contracts Company is the CFD Counterparty, managing contracts and the Supplier Obligation that funds CFD payments EMR Settlement Ltd manages settlement operations on LCCC s behalf. Other Outsourced Delivery e.g. meter verification and fuel monitoring. 15

16 CFD Counterparty role Forecasting CFD payments, and setting Supplier Obligation interim rate and reserve Signing and managing the lifecycle of CFDs and Investment Contracts Managing settlement process including collecting payments from Suppliers to pass on to Generators and viceversa when required. Established as an independent counterparty to increase investor confidence in CFDs LCCC s Guiding Principle is to maintain investor confidence in the CFD scheme and minimise costs to consumers 16

17 Agenda 1. Electricity Market Reform 2. EMR Companies 3. CFD Overview 4. Timeline 5. Further information 17

18 Timeline Now 30 June 30 Sept CFD and Capacity Market operational costs being collected CFD SO levy set to zero (as no CFD generation payments required yet) No Capacity Market supplier charge prior to first delivery year CFD SO levy set for Q month forecast published (by end July) CFD SO levy set for Q and 15-month forecast updated LCCC approval of relevant arrangements for suppliers to implement EIIs exemption 31 Dec Q Q Q CFD SO levy set for Q and 15-month forecast updated First biomass payments expected Green Excluded Electricity exemption applies once CFD payments start CFD SO levy set for Q and 15-month forecast updated (by 31 March) Negative pricing provisions apply Implementation of Northern Ireland settlement system begins (if required) First solar PV payments expected CFD SO levy set for Q and 15-month forecast updated (by 30 June) SO Forecasting Model changes to accommodate Northern Ireland (if required) CFD SO levy set for Q and 15-month forecast updated (by 30 Sept) Q Q First Capacity Payments expected to be made to successful Transitional Auction participants (from 1 October to 31 March) CFD SO levy set for Q and 15-month forecast updated (by 31 Dec) First onshore and offshore wind payments expected CFD SO levy set for Q and 15-month forecast updated (by 31 March) 18

19 CFD Round 2 Milestones Milestone / Activity Indicative date Responsible Lay Negative Amendment Regulations (-ve pricing) Lay Affirmative Amendment Regulations deemed necessary following the CFD consultation (double subsidy, UJVs etc.) In force from 20/07/ /07/2015 but not yet laid due to Parly time DECC DECC Publish Non Delivery Disincentive Guidance July 2015 DECC Publish 2015 CFD Allocation Round Notice, Amended CFD, Standard Terms Notice & CFD Counterparty Costs Notice tbc DECC Publication of 2015 Indicative CFD Budget and Strike Prices for Pot 2 Technologies for tbc DECC Publication of 2015 Supply Chain guidance tbc DECC Publication of draft 2015 Allocation Framework Allocation rules tbc DECC Please note that timings are subject to Government and Parliamentary process. Low Carbon Contracts Company will endeavour to provide any updates to milestones in a timely manner. 19

20 Agenda 1. Electricity Market Reform 2. EMR Companies 3. CFD Overview 4. Timeline 5. Further information 20

21 Current website 21

22 New website is coming soon Photos and info on CFD Projects Event Booking Online Engage with Us Introduction to EMR for New Suppliers 22 July

23 22 July 2015 Key Dates in the CM Calendar

24 CM 2015/16 & Transitional Arrangements Supplier Overview Milestone / Activity Indicative date Impacts CM Settlement Cost Levy invoicing ESC costs Demand Side Response TA auction prequalification process Demand Side Response TA auction Started Apr 2015 Begins 20 July 2015 Begins 26 Jan 2016 Suppliers National Grid & Capacity Providers National Grid & Capacity Providers Auction Results Published 10 Feb 2016 National Grid & Capacity Providers Suppliers to provide forecast volumes of demand for winter peak periods Before 1 June 2016 Suppliers Suppliers to lodge Credit Cover for TA Supplier Charge Sep 2016 Suppliers First CM TA Supplier Charge 1 Oct 2016 Suppliers First Payment to 1 st Round TA agreements Dec 2016 Capacity Providers 24

25 CM Beyond 2016 Supplier Overview Milestone / Activity Indicative date Impacts CM Settlement Cost Levy invoicing ESC costs Continues Suppliers Annual demand forecast Continues Suppliers Credit Cover process to cover CM Supplier Charges Continues Suppliers CM Supplier Charge Continues driven by below dates CM Supplier Charge for 2 nd round TA agreements Oct 2017 Suppliers CM Supplier Charge for 2017 T-1 auction and 2014 T-4 auction (49.26GW at per KW circa 1bn) CM Supplier Charge for 2018 T-1 auction and 2015 T-4 auction (plus any 2014 T-4 agreements that are still effective) Oct 2018 Oct 2019 CM Supplier Charge continues based on level of purchased capacity 2020 and Beyond 25

26 Forecasting the Supplier Levy Supplier Stakeholder event 22 July 15 Andrew Miller and Harold Anuta, LCCC Forecasting Team

27 Agenda 1. Introduction Meet the team Overview of Supplier Obligations Overview of LCCC Forecasting Team 2. More about the Supplier Obligation 3. The Transparency Tool 4. Key dates 5. Longer Term Outlook 22/07/

28 Introduction: Meet the team Andrew Miller Head of Forecasting 20+ years in electricity industry MSc Renewables & PhD plasma physics Harold Anuta, Forecasting Analyst PhD candidate in energy storage Industry consultancy background Emily Lewis, Forecasting Analyst MSc in finance Previously at Centrica mid and downstream roles 22/07/

29 Introduction: Overview of Supplier Obligations Contracts for Differences key part of Electricity Market Reform designed to support low carbon generators Paid for by a levy on suppliers Based on initial payments (reserve and interim rate) and later reconciliations Rate set quarterly, 3 months in advance, with ability for LCCC to raise in period adjustments if required Supplier payments: Interim levy rate & Reserve payments Supplier levy reconciliation LCCC Credit requirements (cash or letter of credit) Payments to generators with CFDs Note in some cases generators pay us 22/07/

30 Introduction: Role of forecasting 1. Regulations require we set an Interim Levy Rate and Total Reserve Amount each quarter, at a level giving a 19 in 20 confidence that LCCC will have sufficient money to pay 2. Regulations therefore imply we must make probabilistic forecasts taking into account the uncertainties regarding CFD payments Levy setting 3. Also need to take into account the flow of cash considering the payment timing Cash monitoring 4. We need to continually re-forecast within period to check we are still likely to be able to pay 5. We also plan to produce longer term forecasts to give suppliers a longer term view of likely obligations in future quarters Advanced warning 22/07/

31 Agenda 1. Introduction 2. Supplier obligation (SO) Main drivers of uncertainty How we deal with uncertainty Process Forecasting The reserve 3. Transparency tool 4. Key dates 5. Longer term outlook 22/07/

32 SO: What are the main drivers of uncertainty? SO Levy ( /MWh) = (StrikePrice ( /MWh) MarketReferencePrice /MWh ) Generation (MWh) Total Eligible Demand (MWh) Market reference prices: 1. Baseload (eg biomass) 2. Intermittent (eg wind or solar) both dependent on market prices Generation 1. Wind very uncertain day to day 2. Solar uncertain hour to hour 3. Biomass reasonably certain unless there is an unplanned outage 22/07/

33 SO: Dealing with uncertainty Market reference prices Spectron* power prices Industry standard volatility model Wind generation Sampled from historic wind speeds Use NASA MERRA** data set for UK Solar data Sampled from historic sunshine hours Use met office data from across UK All input into Supplier Obligation Forecasting Model (SOFM) Montecarlo*** Simulation Model Typically run with simulations *Spectron is a leading commodities broker and has a leading position in GB power market ** The MERRA data includes worldwide wind speeds at defined longitude latitude and height and is made available free of charge by NASA *** Montecarlo simulation is a standard industry approach to assessing the impact of uncertainty 22/07/

34 SO Process Explained An overview of the levy rate/reserve setting process Forecast for ILR and TRA ILR and TRA recommends Board approves Start of 3 rd month in quarter (Dec/Mar/June/Sept) ILR and TRA sent to EMRS Notices to suppliers By end of Dec/Mar/June/Sept EMRS calculates Reserve share ILR and supplier reserve LCCC will updated the transparency tool and may well also issue a supplier briefing at this time 22/07/

35 Agenda 1. Introduction 2. More about the supplier obligation 3. The Transparency Tool Purpose of the tool View of current tool Intended development 4. Key dates 5. Longer Term Outlook 22/07/

36 Transparency Tool Remit 1. We have developed this Transparency Tool, consulting closely with experts from our Working Groups, in order to provide our stakeholders with insight into our assumptions and calculations. Requires access via LCCC Site 2. Purpose is to give visibility of the calculations supporting the Interim Levy Rate and Total Reserve Amount Confidence for suppliers that the calculations are correct Understanding of the generation assumptions in the model Understanding of the uncertainty 3. We intend to add additional functionality further to the aims of transparency in the near future 22/07/

37 Transparency Tool: current view 22/07/

38 Agenda 1. Introduction 2. More about the supplier obligation 3. The transparency tool 4. Key dates 5. Longer Term Outlook 22/07/

39 Key dates in 2015 Date Next 2-3 weeks Event Forecasts of ILR and TRA for Jan-Mar 2016, Apr-June 2016 and July-Sept 2016 and reconciled (zero) rates for Apr-June 15 published (anticipated) By 30 September Set ILR and TRA for Jan-Mar 2016 Forecasts of ILR and TRA for Apr-June 2016, July-Sept 2016 and Oct-Dec 2016 (anticipated) 7 October Suppliers receive reconciliation payment from Apr-June 2015 (return of reserve amount); 9 October Reconciliation statement from July-Sept 15 (zero anticipated) Reconciled (zero) rates for Apr-June 15 published By 31 December Set ILR and TRA for Apr-June 2016 Forecasts of ILR and TRA for July-Sept 2016 and Oct-Dec 2016, Jan-Mar 2017 (anticipated) 22/07/

40 Agenda 1. Introduction 2. More about the Supplier Obligation 3. The Transparency Tool 4. Key dates 5. Longer term outlook Why forecast? Principles of forecasting Way forward 22/07/

41 Longer term outlook: way forward 1. Forecasting refresh intend to refresh forecasts quarterly in line with setting the rate and reserve for a new quarterly obligation period Look at appropriate base case and sensitivities on a case-by-case basis 2. Looking for feedback on how we present the forecasts Transparency expert group 10 September 3. Welcome feedback on whether suppliers would appreciate a webinar once we start to get more certainty around CFD start dates for some generators 4. Also looking for feedback on other transparency issues 5. Feedback! Please us at [email protected] 22/07/

42 Break

43 Supplier Charges and Calculations 22 July 2015

44 What will we cover? Before lunch Metered data used in EMR settlement The first payment you will be required to make What are the Supplier CFD calculations? What are the Supplier CM calculations? After lunch What you will receive from EMRS? What should you be aware of for the future? 44 Introduction to EMR for New Suppliers 22 July 2015

45 What does our role involve? For Suppliers, CFD Generators and Capacity Providers Receive metered data Calculate payments and charges Invoice and monitoring payments Manage reconciliations of payments Hold and manage reserve amounts and credit cover 45 Introduction to EMR for New Suppliers 22 July 2015

46 What metered data are we using? From the BSCCo Settlement Period level metered volumes Received on a daily basis 7 Settlement Run Types from II to DF Later run types contain more actual data Run Type II SF R1 R2 R3 RF DF When is it run 5 WDs ~16 WDs ~35 WDs ~85 WDs ~ 150 WDs ~15 months Up to 28 months 46 Introduction to EMR for New Suppliers 22 July 2015

47 Gross Demand vs Net Demand? Scheme Net or Gross Losses Applied File CM Net Distribution SAA-I0142 CFD Gross Distribution and Transmission SAA-I042 Gross Demand does not include embedded generation Net Demand does include embedded generation 47 Introduction to EMR for New Suppliers 22 July 2015

48 What is the first payment I need to make?

49 Supplier Payment Timeline CFD Payments Daily Quarterly Operational Cost Payment Interim Rate Payment Reserve Payment & Reconciliation CM Payments Monthly Annually Settlement Costs Levy Payment Capacity Market Supplier Charge Penalty Residual Supplier Amount 49 Introduction to EMR for New Suppliers 22 July 2015

50 Operational Cost Payment CFD Operational Cost Payment CM Settlement Costs Levy Payment Invoiced daily Calculated based using Gross Demand and the Operational Levy Rate Invoiced monthly Calculated using market share based on Net Demand and the Total Settlement Costs 50 Introduction to EMR for New Suppliers 22 July 2015

51 CFD: Operational Cost Payment Supplier s Operational Cost Payment Supplier s daily Gross Demand Operational Levy Rate The Operational Levy Rate is determined by the LCCC and consulted upon The Operational Levy Rate for valid from 1 April March 16 and is /MWh 51 Introduction to EMR for New Suppliers 22 July 2015

52 CFD: When s my first Operational Cost Payment? 22 Jul 2015 ~18 WD 17 Aug WD 24 Aug 2015 Billing period Calculation period Invoice sent Payment due Based on SF data only 52 Introduction to EMR for New Suppliers 22 July 2015

53 CFD: How is my refund calculated? Supplier s Operational Cost Repayment Supplier s proportion of Total Gross Demand over financial year Excess Operational Cost Payment collected LCCC determines if there is are any excess Operational Cost Payment Credit Note would be issued as soon as reasonably practicable after the end of the financial year 53 Introduction to EMR for New Suppliers 22 July 2015

54 CM: Settlement Costs Levy Payment Total Settlement Costs Suppliers Net Demand Net Demand of all Suppliers 1/12 Monthly Settlement Cost Levy for Supplier The Total Settlement Costs is determined by the ESC and consulted upon Net Demand for periods of high demand in the previous financial year Periods of high demand are 4 to 7pm during workings days, from 1 November to last day of February Total Settlement Costs for the financial year 2015/16 is 3,891, Introduction to EMR for New Suppliers 22 July 2015

55 CM: When is my first Settlement Costs Levy Payment? Supplier payment timeline Notice of amounts for every month sent 25 March 2015 Invoices issued each month of the financial year Billing period - enduring 1 Apr to 30 Apr 15 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Data period 1 Nov 14 to 28 Feb 15 Payment due 6 Apr 15 Invoice issued 1 Apr 15 Suppliers notified of monthly amounts [25 March 15] 55 Introduction to EMR for New Suppliers 22 July 2015

56 CM: What is the Settlement Costs Levy revision? Settlement Costs Levy undergoes a process similar to reconciliation Total Costs Revised Suppliers Net Demand Revised Net Demand of all Suppliers Revised Settlement Cost Levy for Supplier Total costs are calculated with respect to the financial year Net demand for periods of high demand within the financial year The revised amount for each month is compared to the initial amount and Suppliers are either invoiced or credited the difference 56 Introduction to EMR for New Suppliers 22 July 2015

57 CM: When is the revision calculated? Timeline for revised calculation for the financial year 2015/2016 First invoice issued 1 Apr 15 Last invoice issued 1 Mar 16 Invoices issued 1 WD each month 1 Apr 15 to 31 Mar 16 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Initial data period 1 Nov 14 to 28 Feb 15 Revised data period 1 Nov 15 to 29 Feb 16 Payment due and payment date [30 Mar 16] Suppliers notified of monthly amounts [25 March 15] Revised amounts issued as invoices or Credit Note [24 Mar 16] The data periods are used to calculate market share 57 Introduction to EMR for New Suppliers 22 July 2015

58 CM: How is my Settlement Costs Refund calculated? Refund calculation performed after the end of the financial year (if any excess) Excess Settlement Costs Levy Settlement Costs Levy received from Supplier Settlement Costs Levy received from all Suppliers Settlement Cost Levy Refund for Supplier Calculated using a payment share based on the amount of paid Settlement Costs Levy Payments 58 Introduction to EMR for New Suppliers 22 July 2015

59 CFD Calculations

60 What do I need to pay? Payment Types Operational Cost Payment CFD Payments Interim Rate Payment Reserve Payment and Reconciliation Settlement Costs Levy Payment CM Payments Capacity Market Supplier Charge Penalty Residual Supplier Amount 60 Introduction to EMR for New Suppliers 22 July 2015

61 Electricity Price ( /MWh) CFD: Generator Payments CFD Generator Payments are calculated based on the difference between the Strike Price and the Market Reference Price Generator toppedup to strike price Strike price Generator pays back 24hrs CFD Payment ( /MWh) Market Revenue ( /MWh) Market reference price ( /MWh) 61 Introduction to EMR for New Suppliers 22 July 2015

62 CFD: How are CFD Generator Payments funded? Daily CFD Interim Rate Payment is invoiced 7WD after the relevant date 62 Introduction to EMR for New Suppliers 22 July 2015

63 CFD: How is my Interim Rate Payment calculated? Daily Interim Rate Payment Supplier s Gross Demand Interim Levy Rate Interim Levy Rate is a /MWh rate LCCC forecasts the expected CFD Generator Payments and demand over the quarterly obligation period Adjusted Interim Levy Rate LCCC has the discretion to perform an in-period adjustment to the Interim Levy Rate 63 Introduction to EMR for New Suppliers 22 July 2015

64 CFD: When will I first pay my Interim Rate Payment? 22 Jul 2015 ~7 WD 31 Jul WD 07 Aug 15 Billing period Calculation period Invoice sent Payment due The LCCC determined the Interim Levy Rate for Q (Oct to Dec) at 0.000/MWh 64 Introduction to EMR for New Suppliers 22 July 2015

65 CFD: What if Interim Rate Payments aren t enough? Reserve Payments are used to cover shortfalls in Interim Rate Payments Supplier s Reserve Payment Total Reserve Amount Supplier s Gross Demand Total Demand The LCCC determined the Total Reserve Amount for Q (Oct to Dec) at Introduction to EMR for New Suppliers 22 July 2015

66 CFD: When is my first Reserve Payment due? New Supplier Reserve Payment New Supplier s 1 st New Supplier s enters the market Notice for Q5 Reserve Payment Reserve Payment due Invoice for Q5 90 days Q3 Q4 Q5 Oct Nov Dec Jan Feb Mar Apr May Jun Data Reference Period for Q5 66 Introduction to EMR for New Suppliers 22 July 2015

67 CFD: What if I do not pay? Credit Cover is used for: Operational Cost Payment Interim Rate Payment Reserve Payment Mutualisation Accrued interest CFD Credit Cover = 21 days of metered volume Interim Levy Rate 67 Introduction to EMR for New Suppliers 22 July 2015

68 CFD: When would I first lodge Credit Cover? A new Supplier is required to lodge credit in an obligation period if they supplied electricity in that period Tue: 23 Jun 15 Mon: 13 Jul 15 Wed: 22 Jul calendar days ~7WD 3 Sum the most recent Gross Demand for each day in the 21 day period and multiply by the Interim Levy Rate 2 Find most recent Settlement Day for which we have metered volumes 1 Every WD calculate minimum credit required 68 Introduction to EMR for New Suppliers 22 July 2015

69 Capacity Market Calculations

70 What do I Need To Pay? Payment Types Operational Cost Payment CFD Payments Interim Rate Payment Reserve Payment and Reconciliation Settlement Costs Levy Payment CM Payments Capacity Market Supplier Charge Penalty Residual Supplier Amount 70 Introduction to EMR for New Suppliers 22 July 2015

71 CM: How are Capacity Providers funded? Monthly CM Supplier Charge will be invoiced on the first working day of the month Calculated using market share based on Net Demand applied to the Total Capacity payments that are to be paid 71 Introduction to EMR for New Suppliers 22 July 2015

72 Weighting (%) CM: Capacity Provider Payments Capacity Providers are paid monthly 29WD after the end of each month in the Capacity Year (October to September) Payments based on the capacity obligation and the relevant auction clearing price Capacity Year 72 Introduction to EMR for New Suppliers 22 July 2015

73 CM: Capacity Market Supplier Charge - Calculation Supplier Charge initial and revised calculation Total Annual capacity Provider Payments Monthly weighting factor Suppliers Net Demand Net Demand of all Suppliers Monthly CM Supplier Charge for Supplier Total Annual Capacity Payments are determined post Auction Results Net Demand for periods of high demand in the Delivery Year Net Demand is initially forecasted data and then replaced once actual data is available The monthly weighting factor profiles payment during the year 73 Introduction to EMR for New Suppliers 22 July 2015

74 CM: When will I first pay a Supplier Charge? Supplier payment timeline for Delivery Year 2016/2017 Supplier charge based on forecasted market share Oct 16 to Apr 17 Supplier charge based on actual market share May 17 to Sep 17 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Ma y Jun Jul Aug Sep Forecast of Net Demand provided [1 Jun 16] Data Period for market share 1 Nov 16 to 28 Feb 17 First invoice for supplier charge [3 Oct 16] 74 Introduction to EMR for New Suppliers 22 July 2015

75 CM: When will I first pay a Supplier Charge? If you become an active Supplier after 1 June before a Delivery Year Supplier Charge based on forecasted market share Oct 16 to Apr 17 Supplier Charge based on actual market share May 17 to Sep 17 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Ma y Jun Jul Aug Sep Data Period for market share 1 Nov 16 to 28 Feb 17 First day of supply First invoice for Supplier Charge May Introduction to EMR for New Suppliers 22 July 2015

76 CM: What if I do not pay? Credit Cover is used for: Settlement Costs Levy Capacity Market Supplier Charge Penalty Residual Supplier Amount Mutualisation Reconciliation Amounts CM Credit Cover = Monthly Capacity Market Supplier Charge 110% 76 Introduction to EMR for New Suppliers 22 July 2015

77 CM: When will I Need to Lodge Credit Cover? Example for the 2016/2017 Delivery Year Schedule of Credit Cover issued [29 Jul 16] Credit Cover based on forecasted market share Oct 16 to Apr 17 Credit Cover based on actual market share May 17 to Sep 17 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Ma y Jun Jul Aug Sep Data Period for market share 1 Nov 16 to 28 Feb 17 Forecast of Net Demand provided [1 Jun 16] Revised Schedule of Credit Cover issued [24 Mar 17] First Credit Cover lodged [15 Sept 16] First revised Credit Cover lodged [14 April 17] 77 Introduction to EMR for New Suppliers 22 July 2015

78 System Demand CM: What is the Penalty Residual Supplier Amount? During times of system stress Capacity Providers need to meet their obligations System Capacity Capacity obligations triggered If they fail they will be penalised If they over deliver they will receive an additional payment 12 am 5 pm Demand less than Capacity Penalty payments are used to fund the over delivery payments Any remainder is shared amongst those Supplier who have paid the monthly CM Supplier Charge Sufficient Capacity System Demand (GWh) 78 Introduction to EMR for New Suppliers 22 July 2015

79 What is Reconciled? CFD CM What is reconciled? Interim Rate Payments Reserve Payments Supplier Charge Settlement Costs Levy When is it reconciled? Follows BSC Settlement Calendar Fixed timeline 79 Introduction to EMR for New Suppliers 22 July 2015

80 Any questions?

81 Lunch

82 What will you receive from EMRS?

83 What will you receive from EMRS? Invoices and Credit Notes Backing Data Operational Notices Guidance and Working Practices Circulars 83 Introduction to EMR for New Suppliers 22 July 2015

84 Supplier Registration Supplier Registration Form is issued once Ofgem have granted a supply licence Form includes: Company details Interface Method Bank Account Details Contact details Working Practice 21- Supplier Registration 84 Introduction to EMR for New Suppliers 22 July 2015

85 Invoices and Credit Notes Invoices and Credit Notes will be issued as PDF files (attached to s) Invoices will contain: Contact Details Invoice number Invoice date Due date Payment Type/s LCCC or ESC Bank Account details (associated to the Payment Type) Total Invoice Amount 85 Introduction to EMR for New Suppliers 22 July 2015

86 Sample Invoices

87 EMR Interface Methods Backing Data Information Current Method Future Method Notices PDF attachment via No change Invoices PDF attachment via In addition - Portal Credit Cover Report N/A DTN Portal Backing Data TXT / CSV attachment via (CSV attachment) In addition - DTN and Portal 87 Introduction to EMR for New Suppliers 22 July 2015

88 Formats for Backing Data Three reporting channels for backing data (and daily CFD credit cover report). Data Transfer Service (DTS): Data files will comply with Data Transfer Catalogue (DTC) Pipe-separated records (not easily human-readable) One file per invoice DTC - Portal: CSV format (loadable as table of data in Excel) Normally one file per invoice, but in some cases different payment types in different files attachment: CSV format (loadable as table of data in Excel) Normally one file per invoice, but in some cases different payment types in different files 88 Introduction to EMR for New Suppliers 22 July 2015

89 CFD Backing Data Backing data will contain the same data items, regardless of which route is used: Invoice Item DTC File CSV File Interim Rate Payments Operational cost payments Reserve payments Reconciliation payments Mutualisation payment CFD Supplier Credit Cover Report D0362 file (groups 55I, 56I, 57I) D0362 file (groups 55I, 58I, 59I) D0362 file (groups 55I, 60I-64I) D0362 file (groups 55I, 65I) D0363 file T001 file T002 file (or T003 for additional payments) T004 file T005 file T018 file 89 Introduction to EMR for New Suppliers 22 July 2015

90 CSV Format T003 CSV file (as it might look if loaded into Excel) Column headers identify fields from the DTC definition e.g. J1973 is the Obligation Period Fields from different DTC groups combined into a tabular structure /BIC/N1_J1950 /BIC/N1_J1973 /BIC/N1_J0073 /BIC/N1_J0146 /BIC/N1_J1904 /BIC/N1_J2023 /BIC/N1_J1905 /BIC/N1_J SF SF SF SF SF Introduction to EMR for New Suppliers 22 July 2015

91 CM: Backing Data As for CFD, backing data will contain the same data items, regardless of which route is used: Invoice Item DTC File CSV File Settlement Cost Levy (Monthly Invoice) D0364 file (groups 71I-74I) T045 file Settlement Cost Levy (Revision Invoice) D0364 file (groups 71I-74I) T044 file Settlement Cost Levy (2014/15 invoice) D0364 file (groups 71I-74I) T078 file 91 Introduction to EMR for New Suppliers 22 July 2015

92 Suppliers Notices, Schedules, Advices and Reports CFD Interim Levy Rate Notice Reserve Payment Notice Minimum Credit Report Late Payment Advice Formal Non Payment Notice Credit Default Notice CM Settlement Costs Levy Notice Schedule of Credit Cover Late Payment Advice Formal Non Payment Notice Credit Default Notice 92 Introduction to EMR for New Suppliers 22 July 2015

93 Guidance & Working Practices Guidance Documents EMR Settlement Authorisations CFD Reserve Payments Working Practices Overview of EMR Supplier Registration Aggregation Rules Amending EMR Party Details Late Payment Procedure Introduction to EMR for New Suppliers 22 July 2015

94 Further EMRS Publications Settlement Data Key figures for Supplier payments in 2015/16 EMR Settlement Calendar EMR Circulars 94 Introduction to EMR for New Suppliers 22 July 2015

95 EMR Settlement website EMR Settlement website Keep updated via our website by checking our News and our Calendar for key dates Sign up to our EMR Circular Sign up to our ELEXON Newscast (ELEXON website) All queries Introduction to EMR for New Suppliers 22 July 2015

96 What should you be aware of for the future? Application window for Green Imported Electricity Green Imported Electricity volume taken into account in the next quarterly reconciliation Apr 2016 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan * * * * * * Energy Intensive Industries 1 Oct 2015 Operational Cost Payment revised for the Financial Year Apr 2016 Interim Rate Payment, Reserve Payment, Credit Cover and Reconciliation to commence during 2016 * LCCC determine the Interim Levy Rate and Total Reserve Amount September 2015 confirms Q4 Jan-Mar 2016 December 2015 confirms Q5 Apr-Jun 2016 March 2016 confirms Q6 Jul-Sept 2016 June 2016 confirms Q7 Oct-Dec 2016 September 2016 confirms Q8 Jan-Mar December 2016 confirms Q9 Apr-Jun 2017

97 What should you be aware of for the future? (2) Settlement Costs Levy revised for the Apr 2016 Schedule of Credit Cover issued 29 Jul 2016 Lodge Credit Cover Sep 2016 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Prequalification Results Day for TA and T Sep 2016 Auction Results Day for TA and T Settlement Costs Levy schedule for Late Mar 2016 Submit forecast of Net Demand for Capacity Market Supplier Charge 1 Jun 2016 First TA Delivery Year Capacity Market Supplier Charge commences 1 Oct Introduction to EMR for New Suppliers 22 July 2015

98 Any questions?

99 Stakeholder Engagement Session 22 July 2015

100 Perception Study for the Low Carbon Contracts Company Key Statistics LCCC conducted a snapshot stakeholder analysis in the Spring of 2015 We surveyed a wide range of stakeholder groups Positive feedback but we are on a learning curve Strong need for Delivery Bodies to identify who is responsible for what.. Employees seen as excellent, knowledgeable and great to work with NB The above table draws together a number of similar opinions within and across stakeholder groups. Introduction to EMR for New Suppliers 22 July

101 Working Together Collaborate Engage Feedback 101

102 22 July 2015 What s coming up?

103 Current website 103

104 New website is coming soon Photos of CFD Projects Event Booking Online Engage with Us Introduction to EMR for New Suppliers 22 July

105 22 July 2015 Plenary

106 Thank you for attending today s event Please fill in our feedback form! 22 July 2015

107