Consultation on changes to reduce Collateral Requirements in the Balancing Market

The SEM Committee is today, 25 May 2022, publishing a consultation paper on changes to reduce collateral requirements in the balancing market.

The collateral requirements on Participants in the balancing market have increased significantly over the course of the last year as increasing electricity prices have meant that Participants have been required to post higher amounts of Credit Cover. 

Combined with the increase in electricity prices themselves, this increased collateral burden may pose challenges to suppliers in particular.

This consultation paper proposes to reduce the collateral burden on Participants in the balancing market by reducing the Undefined Exposure Period, a parameter that is used to calculate a Participant’s Required Credit Cover. The SEM Committee seeks the views of interested parties on this proposal.

This SEM Committee is also asking for views regarding the extra collateral that many Participants are posting, over and above their Required Collateral, and the approval times for Letters of Credit.

The SEM Committee considers that in the context of current high and volatile prices, this issue warrants prompt consideration and the consultation period for this paper is therefore being set to two weeks to facilitate swift decision-making. Interested parties should respond via email to TSC@cru.ie and Karen.Shiels@uregni.gov.uk by COB on 08 June 2022.