The Regulatory Authorities have published a note regarding consultation on the appropriate charging basis for supplier charges in I-SEM
The Single Electricity Market (SEM) is currently undergoing change to capture the benefits of increased harmonisation with European electricity markets. The improved market will be known as the Integrated Single Electricity Market (I-SEM). The Utility Regulator in Northern Ireland and the Commission for Energy Regulation in Ireland are leading the programme for I-SEM delivery.
Three policy papers were published on Energy Trading Arrangements in the I-SEM in September 2015. The first decision paper on the arrangements for the Capacity Remuneration Mechanism (CRM) was published in December 2015. The policies described in these papers are being drafted into formal market rules though a Market Rules Working Group. The Market Rules Working Group is chaired by the Regulators and allows key industry stakeholders to review the market rules as they are being developed.
In late May, a number of participants escalated the issue of the treatment of supplier capacity charges to the RAs through the Market Rules Working Group escalation process. In July, a response to these escalations was provided to the Working Group by the RAs which proposed that the legal drafting of the TSC to be consulted upon would include text on the basis of supplier capacity charges being on a ‘net demand’ basis (allowed to go negative) until such time as an enduring solution based on ‘gross demand’ was available.
The RAs subsequently received considerable comment from stakeholders regarding this response. The RAs also received escalations on the charging basis for supplier Imperfections charges and Market Operator charges through the Market Rules Working Group escalation process around this time. In light of the significant comment received from industry and the complexity and range of issues raised, the SEM Committee decided that a dedicated consultation on the charging basis for all supplier charges in I-SEM should be held.
Since the SEM Committee’s decision to hold this separate consultation process, the RAs have received a number of pieces of correspondence querying the status of the RAs' response to the escalation. To clarify, this consultation process will consider and clarify the most appropriate charging basis for the recovery of all supplier charges in I-SEM, including inter alia, capacity, imperfections and Market Operator charges. The outcome of this consultation and SEM Committee decision will supersede the RAs’ response to the escalation received in May. This consultation paper will be published in the coming days.