ELEXON is vital to the operation of the wholesale electricity market. We compare how much electricity generators and suppliers said they would produce or consume with actual volumes. We work out a price for the difference and transfer funds accordingly. This involves taking 1.25 million meter readings every day and handling £1.5 billion of our customers’ funds each year.
The rules are set out in the Balancing and Settlement Code (BSC). We administer the Code and provide and procure the services needed to implement it. Our expertise and impartiality give our customers the confidence that the BSC operates efficiently and accurately.
Our first decade
In March 2001, the Balancing and Settlement Code (BSC), which we manage was launched as part of NETA (New Electricity Trading arrangements). For the first time, electricity was treated as a tradeable commodity, the way that suppliers and generators did business changed fundamentally and the market was opened to new kinds of players. While NETA and the BSC weren’t without their critics, the new market arrangements were successful in helping to reduce wholesale electricity costs in England and Wales, so in 2005 ELEXON extended the BSC arrangements to the Scottish market under the BETTA (British Electricity Trading and Transmission Arrangements) programme.
Bringing down costs
Our customers have also seen the cost of administering the BSC fall over the decade, from £71.7m in 2001/2 to £29.4m in 2011-12. And we’ve continued to drive down costs for our customers through expertly managing and reprocuring our key contracts, appointing CGI as our Business Process Outsourcing/Hosting partner in 2009 and Cognizant as our application maintenance and development partner in March 2010.
Our ambition to do more
In our 2011-12 business plan, we started to look at how we might do more in the industry, as we believe we have the skills and capabilities to undertake a wider role beyond the BSC. Ofgem has now approved a change to our constitution to allow us to pursue our ambitions, and we’re currently negotiating a contract to continue to supply BSC services but empower ourselves to explore new opportunities.
August 2000 – Pool members become BSC signatories. ELEXON created.
March 2001 – NETA go-live
April 2005 – BETTA go-live
April 2009 – CGI goes live as Business Process Outsourcing/Hosting (BPO/Host) partner
March 2010 – Cognizant goes live as application maintenance and development partner
March 2011 – Business plan announces our ambition to do more beyond the BSC.
April 2014 – Appointed by Department of Energy & Climate Change (DECC) as Electricity Market Reform (EMR) Settlement Services Provider for the Contract for Difference and Capacity Market.