MHHS Supplier Charges Guidance Document |
A Guidance Document on the underlying principles of Supplier Charges post MHHS implementation |
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Document owner | Document number | Date |
Performance Assurance | Version 1.0 | 05 November 2024 |
The implementation of Market-wide Half Hourly Settlement (MHHS) will impact the principles, systems, and delivery of the Supplier Charges Performance Assurance Technique (PAT).
The purpose of this Guidance Note is to provide Suppliers with an understanding of how the Supplier Charges PAT will be levied following the implementation of MHHS.
A part of Elexon’s role as administrator of the BSC involves monitoring that BSC Parties follow rules on the accurate submission of data into Settlement. Elexon does this through the Performance Assurance Framework (PAF).
Elexon administer the PAF on behalf of the Performance Assurance Board (PAB) and confirm compliance or identify issues that may need to be addressed via PATs. One of these techniques is Supplier Charges. A more in-depth description of Performance Assurance can be found on the Performance Assurance page on the Elexon Website.
At the time of writing, the BSC and BSCP for MHHS Supplier Charges are under review as part of Elexon Modification: P478 Implementation of MHHS Arrangements and may be adjusted prior to implementation.
Who should read this guidance?
This guidance is primarily for Suppliers, Performance Assurance Parties, and Trading Parties who are interested in the implementation of the Supplier Charges PAT post-MHHS implementation.
What this Guidance Note contains:
Overview of the principles of pre-MHHS Supplier Charges
Overview of the principles of MHHS Supplier Charges
Descriptions of new rules, concepts, and terms introduced for MHHS Supplier Charges
Run-through of calculations and worked example for MHHS Supplier Charges
What this Guidance Note does not contain:
How do Supplier Charges Currently Work?
Supplier Charges are liquidated damages that Suppliers incur if they fail to meet certain performance levels. Supplier Charges are a remedial PAT that encourages high Settlement Performance with respect to the PARMS Serials outlined in Table 1, and compensate parties disadvantaged by those who are not meeting defined standards.
The relevant BSCP and BSC Annex S-1 can be found here and here respectively.
Each month, the PAB authorises Supplier Charges. These charges are then distributed among Trading Parties:
Supplier charges are incurred for underperformance against the
Performance Assurance Reporting and Monitoring System (
PARMS) ‘
Serials’ described in the table below – the charge per chargeable MWh is fixed per
Serial per
Settlement Run and can be found in Sections 3.2 – 3.4 of BSC Annex S-1
here:
Serial | Serial Description | Standard |
SP02 | Delivery of Routine Performance Monitoring Logs | Supplier provided not later than 20 Business Days after the end of each month |
SP08A | Percentage of Non-Half Hourly (NHH) Energy Settled on Annual Advances | R3 – 80% RF – 97% |
SP08B | Percentages of HH Energy Settled on Actual Readings | SF – 99% R1 – 99% |
SP08C | Percentage of non-mandatory HH Energy Settlement on Actual Readings | RF – 99% |
Table 1 - PARMS Serials that pre-MHHS Supplier Charges are based
Principles of pre-MHHS Supplier Charges:
Parties’ performance is benchmarked against fixed PARMS Serials
Parties’ performance is based on ‘Estimated’ and ‘Actual’ consumption
The charge levied against each Serial and each applicable Settlement Run is fixed
Parties’ monthly charge is capped
90% of charges are redistributed to NHH Suppliers, 10% are re-distributed to all Trading Parties
How will Supplier Charges work post-MHHS launch?
The Supplier Charges PAT will remain a key remedial process post-MHHS implementation to encourage high Settlement Performance and compensate Parties disadvantaged by those who are not meeting defined Performance Standards. Both Legacy and MHHS Supplier Charges will be applicable until such time that all meters have migrated to MHHS, or the PAB defer the charges.
This section is intended to give the reader a grasp of the rules, concepts, and terms applied to MHHS Supplier Charges. As in the legacy Supplier Charges process, there are two key elements to MHHS Supplier Charges:
The performance target for MHHS Supplier Charges will be set at 100% Accurate Volume, defined below. Any Supplier above the average Settlement Performance for a given Market Segment will receive a redistribution based on their market share and Settlement Performance. A Supplier who has met the 100% Accurate volume target will not be liable for Supplier Charges, however they will receive a Redistribution of the Supplier Charges in that Market Segment. Supplier Charges and Redistribution will be calculated per Market Segment, although the final amount will be netted across all Market Segments.
Charges will be levied per: Market Segment, Applicable Settlement Run Type, GSP Group, and Measurement Quantity. For example, if a Supplier is a participant in all Market Segments (3), for both Settlement Run Types (2), in all GSP Groups (14), for both Measurement Quantities (2), the monthly Supplier Charge will be the sum of 168 calculations for these combinations.
Volumes in MHHS Supplier Charges are labelled either ‘Accurate’ or ‘Limited’ – not to be confused with Actual and Estimates, or to be considered analogues of these terms. Whether volumes are considered ‘Accurate’ or ‘Limited’ is determined by their Consumption Component Class (CCC) which is described in more detail later in this section.
The term Accurate has been introduced to account for the most precise data that each meter category can provide as to not unduly penalise Suppliers for their customers’ arrangements.
Example – a Supplier’s customer has a meter capable of sending HH consumption, but the customer opts to only send daily readings. In this instance, despite HH consumption requiring estimation via Load Shaping, the consumption would be considered Accurate for the purpose of Supplier Charges.
The term Limited applies to all consumption that is not considered the most precise a Supplier could obtain
Example - a Smart Metering System is missing several Settlement Periods of data for a given day; the volume would be considered limited.
It is an assessment of the Limited volume that Suppliers will receive Supplier Charges for, Whist the redistribution payments are based on the Accurate volumes.
Applicable Settlement Runs
Suppliers who fail to comply with the MHHS Supplier Charges Performance Level shall be liable to Supplier Charges as identified in the table below:
Applicable Volume Allocation Run | Amount per Chargeable MWh |
Initial Volume Allocation Run (SF) | Live Credit Assessment Price when Supplier Charges Calculated |
First Reconciliation Volume Allocation Run (R1) | No Charge |
Second Reconciliation Volume Allocation Run (R2) | No Charge |
Third Reconciliation Allocation Run (R3) | No Charge |
Final Reconciliation Volume Allocation Run (RF) | Live Credit Assessment Price when Supplier Charges Calculated |
Table 2 – Charge applied to relevant Settlement Run for MHHS Supplier Charges
The charge levied to Suppliers’ in MHHS Supplier Charges is a single £ charge per chargeable MWh for each month that Supplier Charges are calculated and is identical for each applicable Settlement Run.
The charge levied is a percentage of the Credit Assessment Price (CAP) at the time of calculating MHHS Supplier Charges, with the percentage being determined by the Limited performance per day.
For example – if on a given date, 95% of total volumes for a Market Segment were Accurate, 5% of the current Live CAP would be applied.
Consumption Component Classes and Settlement Period Quality Indicators
MHHS Supplier Charges identifies eligible Settlement Data to include in the charge calculation. Consumption is first given a Settlement Period Quality Indicator (SPQI) flag by the Data Services (Unmetered Supply Data Service, Smart Data Services, or Advanced Data Service). This consumption is then sent to the Market Wide Data Service (MDS), who then aggregate the volume into (CCCs), with each CCC ID indicating whether the consumption can be considered Accurate, or Limited, for the purpose of Supplier Charges.
Market Segment is a term introduced during the MHHS programme, the three segments are:
Advanced: The Market Segment where Settlement Level Period data is collected for Settlement purposes from Advanced Meters
Smart: Covers smart Meters serviced by the DCC. This covers Smart Meters with Settlement Period level data available and Smart Meters where only Register Readings are available. It also covers non-Smart Meters
Unmetered: Unmetered Supplies, e.g. streetlights, traffic signs, zebra crossings etc.
Market segments have been introduced due to the redundancy of several data items associated with consumption once MHHS goes live. For example, Data Aggregation Type will always H; Measurement Class is not needed to specify Half Hourly or Non Half Hourly.
Each Market Segment may be liable for Supplier Charges. For example, if a Supplier has 100% Accurate volume for a given Settlement Date, Settlement Run, and GSP Group, in the Advanced Market Segment, this Market Segment would not be liable for Supplier Charges. But if for the same Settlement Date, Settlement Run, and GSP Group, their Smart Market Segment Accurate volume was < 100%, this Market Segment would be liable for Supplier Charges.
Principles of MHHS Supplier Charges
Parties’ performance is benchmarked against a target of 100% Accurate Volume
Parties’ performance is based on ‘Limited’ and ‘Accurate’ consumption
The charge per MWh levied for each applicable Settlement Run, SF and RF, varies with the CAP, and overall performance of the market
Parties’ monthly charge is not capped
100% of Supplier Charges are redistributed to Suppliers
This section gives an overview and description of calculations to demonstrate the principles of MHHS Supplier Charges rather than extensive documentation. The full set of calculations can be found in Annex S-1 – Performance Levels and Supplier Charges of the BSC. Notation is kept identical in this Guidance Note to Annex S-1.
Please note the below Defined Terms:
CQs MS H D RT: The Chargeable MWh for a Supplier for a given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment. i.e. a Supplier’s Limited volume to which Supplier Charges will be applied
AQ MS H D RT: The Accurate MWh for a given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment
LQ MS H D RT: The Limited MWh for a given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment
TQ MS H D RT = AQ MS H D RT + LQ MS H D RT: The total quantity in MWh of Accurate and Limited volumes for a given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment
X MS H D RT = LQ MS H D RT / TQ MS H D RT: The percentage of average Limited performance for a given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment.
Pd = X MS H D RT * CAP: The percentage of the live CAP to be applied given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment
SCs MS H RT = CQs MS H D RT * Pd: The £ charge for a given Supplier, Volume Allocation Run, Settlement Date, GSP Group, and Market Segment
TP MS H D RT = ∑(CQ s MS H D RT * Pd): Sum of all payments for a given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment
AQs MS D RT: The Accurate MWh for a Supplier for a given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment
AQ Total MS H D RT = ∑(AQs MS D RT): The total of all Accurate MWh for all Suppliers for a given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment
SSs MS H D RT = AQ s MS D RT / AQ Total MS H D RT: A Supplier’s proportion as a percentage of Supplier Accurate volume for a given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment
SRPs MS H D RT = SSs MS H D RT * TP MS H D RT: A Supplier’s Redistribution Payment calculated as a percentage of their
Accurate MWh out of Total Accurate MWh for a given Volume Allocation Run, Settlement Date, GSP Group, and Market Segment
NPs MS H D RT = SCs MS H D RT - SRPs MS H D RT: Net MHHS Supplier Charge applicable to a Supplier
This section applies the terms defined previously and calculates Supplier Charges and Redistribution using fictitious data.
For a given Settlement Day, Settlement Run Type, GSP Group, and Market Segment, and a CAP of £80 / MWh, consider we have the following MPIDs, Accurate volumes, and Limited volumes:
MPID | Accurate Volume (MWh) | Limited Volume (MWh) |
CASS | 90 | 10 |
JOHN | 45 | 20 |
PAUL | 30 | 60 |
LISA | 20 | 20 |
ALIS | 100 | 0 |
Table 3 - Suppliers’ Accurate and Limited Volumes
For a given Settlement Day, Settlement Run Type, GSP Group, and Market Segment, and a CAP of £80 / MWh, consider we have the following MPIDs, Accurate volumes, and Limited volumes:
MPID | Accurate Volume (MWh) | Limited Volume (MWh) |
CASS | 90 | 10 |
JOHN | 45 | 20 |
PAUL | 30 | 60 |
LISA | 20 | 20 |
ALIS | 100 | 0 |
Table 3 - Suppliers’ Accurate and Limited Volumes
AQ MS H D RT = Sum of Accurate Volume = 285 MWh
LQ MS H D RT = Sum of Limited Volume = 110 MWh
TQ MS H D RT = Total Volume = AQ MS H D RT + LQ MS H D RT = 395 MWh
XMS H D RT = Percentage Limited Performance = LQ MS H D RT / TQ MS H D RT = 110 MWh / 395 MWh = 27.85%
Pd = Percentage of live CAP to be applied = XMS H D RT * CAP = 27.85% * £80 / MWh = £22.28 / MWh
Each MPIDs Chargeable Volume, i.e. their Limited Volume, is multiplied by Pd to calculate their Supplier Charge.
SCs MS H RT = Supplier Charge = CQs MS H D RT * Pd
MPID | Chargeable Volume (MWh) | Supplier Charge (£) |
CASS | 10 | 222.78 |
JOHN | 20 | 445.57 |
PAUL | 60 | 1,336.71 |
LISA | 20 | 445.57 |
ALIS | 0 | 0.00 |
Table 4 – Suppliers’ Chargeable Volumes and Supplier Charges
After all relevant MPIDs have been charged, the total Supplier Charge is then Redistributed based their proportion of Accurate Volumes.
SSs MS H D RT = Supplier Accurate Volume Proportion = AQ s MS D RT / AQ Total MS H D R
AQ Total MS H D R = 285 MWh
SRPs MS H D RT = Supplier Redistribution Payment = SSs MS H D RT * TP MS H D RT
TP MS H D RT = Sum of all Payments = ∑(CQ s MS H D RT * Pd) = £2,450.63
MPID | Accurate Volume (MWh) | Accurate Proportion (%) | Supplier Redistribution Payment (£) |
CASS | 90 | 0.32 | 773.88 |
JOHN | 45 | 0.16 | 386.94 |
PAUL | 30 | 0.11 | 257.96 |
LISA | 20 | 0.07 | 171.97 |
ALIS | 100 | 0.35 | 859.87 |
Table 5 – Suppliers’ Accurate Volumes, Accurate Volume Proportions, and Supplier Redistribution Payments
Now that Suppliers have had their Supplier Charge, and Supplier Redistribution Payment calculated, the last step is to net them.
NPs MS H D RT = Net Payment = SCs MS H RT - SRPs MS H D RT
MPID | Supplier Charge (£) | Supplier Redistribution Payment (£) | Net Payment (£) |
CASS | 222.78 | 773.88 | - 551.10 |
JOHN | 445.57 | 386.94 | 58.63 |
PAUL | 1,336.71 | 257.96 | 1,078.75 |
LISA | 445.57 | 171.97 | 273.60 |
ALIS | 0.00 | 859.87 | - 859.87 |
Table 6 - Suppliers’ Charge, Supplier Redistribution Payment, and Net Payment
Negative values are net gain for the Supplier, positive values are net loss for the supplier.
Key take-homes of MHHS Supplier Charges Calculations
Suppliers with <100% Accurate Volumes are liable for Supplier Charges
Supplier Redistribution Payments are proportional to a Supplier’s proportion of Accurate Volumes
Suppliers whose Accurate Volume is greater than the average (57 MWh) receive a Net Payment
Suppliers whose Accurate Volume is less than the average receives a Net Charge
JOHN, PAUL, LISA Accurate Volume is less than the average and they receive Net Charges (Table 6)
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