Chapter 3 - How does pricing work?

Question 1

What are the 5 types of balancing actions?

Answer 1

1. Bid offer acceptances (BOA)
2. Volume of GB Need Met (VGB) - TERRE
3. Replacement Reserve Aggregated Unpriced System Buy and Sell Actions (RRUASB and RRAUSS) - TERRE
4. Balancing Services Adjustment Actions (BSAAs)
5. Demand Control Actions

Question 2

What are the 3 actions taken to minimize system balancing interference?

Answer 2

1. Flagging
2. Classification
3. Tagging

Question 3

What is Flagging?

Answer 3

Identifying balancing actions that are potential system balancing actions

Question 4

What is Classification?

Answer 4

Classifying tagged actions to determine if they are indeed system balancing actions (or energy balancing)

Question 5

What is Tagging?

Answer 5

Completely removing both the price and volume of a balancing action so no part of it is used in the final price calculation

Question 6

What two actions can be repriced?

Answer 6

• Demand control actions

- BOAs or BSAAs from STOR (during availability window)

Question 7

What are the 4 Flagging actions?

Answer 7

1. CADL Flagging
2. SO Flagging (physical constraint related actions)
3. STOR Provider Flagging
4. Emergency Instruction Flagging

Question 8

What are the 4 Tagging actions?

Answer 8

1. DMAT tagging (De Minimis Acceptance Threshold 0. MWh)
2. Arbitrage Tagging
3. Net Imbalance Volume (NIV) Tagging
4. Price Average Reference (PAR) Tagging

Question 9

What are the 7 pieces of balancing info does the SO send to the BSC?

Answer 9

1. FPN
2. Bid Offer Data
3. Bid Offer Acceptance Data
4. Quarterly Hour Volume of GB Need met (VGB)
5. Quarter Hour Interconnector Schedule
6. Balancing Services Adjustment Data (BASD)
7. Demand Control Instructions

Question 10

When submitting a BSAA as part of the BASD, what 4 pieces of info are required?

Answer 10

1. Balancing Services Adjustment Cost ( can be NULL)
2. Balancing Services Adjustment Volume (MWh)
3. SO-Flag (T/F)
4. STOR Provider Flag (T/F)

Question 11

How is the Balancing Services Adjustment Price calculated?

Answer 11

Dividing the Balancing Services Adjustments Cost by the Balancing Services Adjustments Volume

Question 12

What are the 3 types of TERRE actions?

Answer 12

1. Volume of GB Need Met (VGB - energy balancing)
2. Replacement Reserve Aggregated Unpriced System Buy Actions (RRAUSB - system balancing)
3. Replacement Reserve Aggregated Unpriced System Sell Actions (RRAUSS - system balancing)

Question 13

What is the Loss of Load Probability?

Answer 13

A measure of system reliability between 0 and 1

Question 14

What does the Reserve Scarcity Price (RSVP) represent?

Answer 14

It represents a measure of scarcity in available generation capacity at Gate Closure (calculated by SO)

Question 15

How is the Reserve Scarcity Price calculated?

Answer 15

Multiplying the Loss of Load Probability (LoLP) by the Value of Lost Load (VoLL)

Question 16

What 2 prices are available to STOR actions for repricing (within STOR Availability Window)?

Answer 16

1. Utilization price

2. Reserve Scarcity Price

Question 17

How is the Loss of Load Probability calculated?

Answer 17

Via the Loss of Load Probability Calculation Statement

Question 18

What is an Intertrip?

Answer 18

A circuit breaker that disconnects a generator or demand from the Transmission system

Question 19

Why do BSAAs from intertrips have a NULL price?

Answer 19

They do not have a cost/price available on the required time scales

Question 20

What are NULL priced BSAAs classified as?

Answer 20

Second Staged Flagged Balancing Actions - they will be subject to replacement price is they enter the NIV

Question 21

When are actions SO Flagged?

Answer 21

1. BOAs - when these may be impacted by a transmission constraint
2. BSAAs - when these may be impacted by a transmission constraint and/or system-to-system balancing service over an interconnector (whether to GB or connecting country)

Question 22

What is a Transmission Constraint?

Answer 22

Any limit on the ability of the Transmission System

Question 23

What are some examples of Transmission Constraints?

Answer 23

1. Exceeding thermal rating of an asset
2. Maintaining voltages
3. Maintaining transient and dynamic stability of electricity plant, equipment or systems (direct or indirect connection to Transmission system)

Question 24

What is emergency Flagging?

Answer 24

When SO issues Emergency Instructions to cope with unexpected event, these will be flagged as such
(Treated same as SO-Flagged BOAs)

Question 25

What are the 2 types of Emergency Instructions?

Answer 25

1. Emergency Flagged (First stage flagged) | 2. Emergency Acceptance (First stage unflagged)

Question 26

What is the time limit for the Continuous Acceptance Duration Limit (CADL) Flagging?

Answer 26

10 mins

Question 27

What is the De Minimis Acceptance Threshold set at for De Minimis Tagging?

Answer 27

0.1 MWh

Question 28

When does Arbitrage Tagging apply?

Answer 28

When a Bid is higher than or equal to an equal volume Offer.

Question 29

During Classification, if there are no First Stage unflagged balancing actions what happens?

Answer 29

All balancing actions become Second Stage Flagged Balancing Actions

Question 30

During NIV tagging a positive NIV denotes what about the system?

Answer 30

System is short, as the SO needs to buy more generation

Question 31

How is the Replacement Price calculated?

Answer 31

Using a volume weighted average of the most expensive 1MWh of unflagged actions

Question 32

What is the most expensive 1MWh of unflagged action referred to?

Answer 32

The Replacement Price Average Reference Volume (RPAR)

Question 33

What is the purpose of PAR tagging?

Answer 33

To align the energy imbalance price with the price of the marginal energy balancing action

Question 34

When is the Sell Price Price Adjustment used (SPA)?

Answer 34

When the system is long (NIV -'ve)

Question 35

How many zones are there?

Answer 35

14

Question 36

How many TLMs are calculated per zone and what are they?

Answer 36

2 per zone a. Delivering TLM (net exporter in a zone) b. Offtaking TLM (net importer in a zone)

Question 37

What makes up a Zone in the geographic area?

Answer 37

1. No more than 1 GSP Group per zone 2. any part of an Offshore Transmission System directly connected to GSP Group 3. any part of an Offshore Transmission System which connects to the onshore AC Transmission system at a point within the geographic area of the GSP Group

Question 38

What TLM value are Interconnector BM Units assigned?

Answer 38

1 - they are exempt from losses

Question 39

Are Metered Volumes of Interconnector BM Units scaled for losses?

Answer 39

No

Question 40

What happens to the final imbalance price when there are no Second Stage Unflagged Actions?

Answer 40

The replacement price will be calculated using the Market Price (for that settlement period)

Question 41

What happens when there are no actions left in the NIV?

Answer 41

The energy imbalance price will be set to the Market Price

Question 42

What happens when the SO doesn't have a Gate Closure De-Rated Margin Value to produce a Final LoLP?

Answer 42

It will use the next available De-Rate Margin value (two hours ahead forcast) - If that's not available then LoLP will be NULL

Question 43

What is Applicable Balancing Services Volume Adjustment Data?

Answer 43

These are volume adjustments to BM Units that are instructed by the SO to provide automatic frequency response and other non-BM balancing actions which are not accounted for elsewhere

Question 44

What are the 10 steps of the Energy Imbalance Price Calculation Process?

Answer 44

1. Receive Balancing Actions (Includes SO-Flagging, CADL Flagging, Emergency Flagging) 2. Determine STOR Price 3. Rank Buy and Sell Sets 4. DeMinimis and Arbitrage Tagging 5. Classification 6. Net Imbalance Volume (NIV) Tagging 7. Replacement Price 8. Price Average Reference Volume (PAR) Tagging 9. Buy/Sell Price Price Adjustment 10. TLM and Energy Imbalance Price Calculation