Party Novation |
Guidance Note |
This document provides an overview of the process of novation under the BSC.
The BSC recognises BSC Participants by their
Party ID under which sits information such as the
Party’s
Qualification status, Role
Codes, registered
BM Units, contract notifications etc. Each
Party is owned by a company with a unique company number as registered in
Companies House or non-UK equivalent. No company, described by its company number, can register more than one
BSC Party ID.
The Party novation process was introduced to the BSC to allow a company to transfer (novate) its BSC Party ID to a new company number, including all rights and obligations under the BSC. To assess and minimise the risk to industry all novation applications will be determined on a case by case basis by the BSC Panel with a recommendation from the Performance Assurance Board (PAB).
Who can apply for a Party novation?
Any company who hasn’t already registered a BSC Party may apply to be a Novation Applicant, i.e. the incoming Party.
Any BSC Party may be the Transferring Party, i.e. the outgoing Party.
The novation process is intended for administrative purposes only. A novation application is unlikely to be approved if it will result in a Material Change to the systems and processes under the Party ID.
Examples of likely successful novations include:
It is the responsibility of the Novation Applicant to ensure the application form (see Section 3.2 below) clearly states the reason a novation is required and that there will be no Material Changes to systems or processes.
If the
Transferring Party holds an Ofgem
electricity licence it is the responsibility of the Transferring and Novating Parties to also transfer the licence. For more information please contact
Ofgem. A novation application will not be actioned until evidence of such a licence transfer has been granted.
The Party novation process
The
Party novation process is detailed in
BSCP65 and is driven by the
Novation Applicant. To begin the
Party novation application we require:
A One-off Novation Fee;
One completed Novation Application Form (BSCP65/06a); and
‘Agreement of Novation of a Contract’ forms (BSCP65/06b), signed but not dated in duplicate.
The Novation Fee is currently set at the same price as the Accession Fee of £500. The Novation Fee reflects the administrative costs associated with a new company entering the market.
This can be paid by Cheque/BACS or
CHAPS with clear reference to
Novation Fee and the
Transferring Party’s
BSC Party ID. BACS/
CHAPS payments can be made to Elexon. To obtain the Elexon bank details, please submit your request using the
Elexon Support enquiry service.
Novation Application Form
BSCP65/06a Novation Application Form is completed and signed by the Novation Applicant. The application form requests information the Performance Assurance Board (PAB) will require in order to make a recommendation followed by the Panel for decision. The PAB recommendation and Panel decision process is discussed in further detail in section 4 below.
Note that the question ‘Provide details and timings of any changes to systems, personnel, customer growth or other changes as a result of this Novation Application’ is required for the Panel to determine the extent of predicted impact to the Party as a result of the novation. The intent of process is that there should be no Material Change thereby presenting low risk to industry participants and Settlement.
Agreement of Novation of a Contract
The applicant must provide two paper copies of BSCP65/06b Agreement of Novation of a Contract. When submitted the contracts should be signed by the ‘outgoing’ Transferring Party and the ‘incoming’ Novation Applicant. The signatories should be authorised within their organisation to make such business decisions, and as such should be a director, CEO, company secretary or similar.
Signatories may provide the date of signature but must leave the date on the front cover and first page blank. The ‘continuing’ Party, in this case Elexon, will date and countersign the contract on the date agreed by the Panel, taking into account any Panel conditions.
The novation will take effect on the date Elexon countersigns the contract. One paper copy of the Agreement of Novation of a Contract will be returned to the applicant.
Who decides if a novation can take place?
Elexon will first present the application to the PAB for review. The PAB will make a recommendation to approve or reject the novation based on the application and supporting evidence.
However, the BSC Panel will ultimately approve or reject the application taking both the PAB recommendation and evidence provided by the Party under consideration. The Panel may defer the decision and request further information or evidence.
The Panel’s decision may also be conditional. For example, in the instance of transfer of a licensable activity, a novation may not take place until Ofgem confirm that a transfer of Licence has taken place. In this case the novation would take place on the date of the licence transfer.
The Panel may reject the application, in such instance the BSC Party cannot appeal. If the Novation Applicant wishes to become a BSC Party it must enter through the existing Market Entry process. Likewise, if the Transferring Party wishes to withdraw from the BSC it must exit through the existing Market Exit process.
In all cases, the Panel’s decision is final.
Name change and other considerations
If the registered name and/or address of the BSC Party changes due to the novation then these must be updated through the existing change of details BSCPs. Where applicable, details may need to be changed in the Central Registration Agent (CRA), the Funds Administration Agent (FAA) and in Market Domain Data (MDD). Elexon will advise the Novation Applicant of this during the novation application.
You should also consider the following:
How will you manage the Credit Cover lodged under the Party ID?
Are the Credit Contact details going to change?
Are the Authorised Signatories details going to change?
Does the EMR Settlement Service Provider need to be alerted to the change?
It is the responsibility of the applicant to align the BSC novation with related transfers of other
electricity codes and Ofgem licence where applicable.
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