Trading Disputes Process |
Guidance Note |
This document explains the purpose of
Trading Disputes and the processes involved. You will find this document useful if you are a BSC
Party.
What is the Disputes Process?
The Trading Disputes process is used to facilitate the correction of errors in Settlement that have affected Trading Charges. The sole purpose of the process is to correct errors in Settlement and is not designed to assign culpability on any Parties involved. All Trading Disputes are assessed against three criteria, which must be met for the Trading Dispute to be upheld. All Trading Disputes are confidential.
What makes a Trading Dispute?
Settlement Errors occur when the rules of Settlement have not been followed and this failure affects Trading Charges. Under the BSC, Suppliers have an obligation to ensure that Settlement is accurate. In an event when an inaccuracy is caused by directly breaching the BSC, a Trading Dispute is one of the methods in ensuring rectification.
When considering a
Trading Dispute, it is important to take into account Reconciliation Runs.
Settlement Reconciliation Runs are carried out in line with the
Settlement Calendar (which can be found on the
Elexon Portal). The figure below provides an approximation of how long after real-time (known as the
Settlement Date) each run is carried out.
These Settlement Runs can only occur on Working Days and there is a separate run for each Settlement Date.
There are four Reconciliation Runs (R1, R2, R3 and RF) and these Runs provide a continually clearer picture of Settlement at spaced dates after the Settlement Date. The target is for all Suppliers to have read 97 % of meters by RF. The Reconciliation Runs should be thought of as improving the accuracy of Settlement each time.
If any volumes at RF are still under dispute then the Post Final Settlement Run (DF) can be carried out when the corrected data has been received. Any BSC Party can raise a Trading Dispute but it’s the decision of the Trading Disputes Committee as to whether this Settlement Run goes ahead.
How to raise a Trading Dispute
In order to raise a
Trading Dispute, a
Party should send a completed ‘
Trading Dispute Raising Form’ (
BSCP11/01) to the
Disputes Secretary. This can be sent via email to
disputes@Elexon.co.uk.
Please ensure all parts of the form are filled out and that the form is co-signed by a Category ‘A’ or ‘O’ authorised signatory. If a Party wishes to claim exceptional circumstances for the Trading Dispute, it should submit a statement with the Raising Form to explain what makes the Trading Dispute exceptional.
Upon receipt of the form, Elexon will acknowledge receipt of the form and allocate a reference number to the Trading Dispute within 1 Working Day.
What makes a Trading Dispute valid?
A valid Trading Dispute must meet the following three criteria:
Trading Dispute raised within the applicable Dispute Deadline;
Settlement Error has occurred; and
Materiality meets the £3,000 threshold.
Trading Disputes should be raised within certain timescales, which vary according to the type of Settlement Error. There are five types of Trading Disputes, which each have associated timeframes:
Dispute | Dispute Deadline |
| | 70th Working Day following the carrying out of the Final Reconciliation Run (RF). |
| | 70th Working Day following the carrying out of the Final Reconciliation Run (RF). |
| | 3rd Working Day following the Settlement Day in which the affected Settlement Period(s) occurred. |
| | 2nd Working Day following the Settlement Day in which the affected Settlement Period(s) occurred. |
| | 20th Working Day following the day on which the relevant Settlement Run was carried out. |
In addition, where the Settlement Error is an error in a Post-Final Settlement Run (DF) or an Extra-Settlement Determination (ESD) the deadline is 1 month after the date of the Post-Final Settlement Run or Extra-Settlement Determination in which the Settlement Error first occurred.
However, the TDC can, at its discretion, waive the requirement for Trading Disputes to be raised before the deadline. This only happens if the TDC believes there to be exceptional circumstances, which means the Trading Dispute could not have been identified and raised any earlier by the Raising Party.
Elexon will need to be able to identify a rule in the BSC or subsidiary documents that has not been followed, that data in Settlement would be different if the rule had been followed, and that as a consequence Trading Charges are not what they should be.
Non-compliances with rules in the Retail Energy Code (REC) can also be considered Settlement Errors, where those rules have a material impact on Settlement.
Not all erroneous data will constitute a
Settlement Error – it is only where the value of the data is prescribed by rules in the BSC and subsidiary documents. Any data value that is affected at a
Party’s own choice is not considered a
Settlement Error. A
Settlement Error is defined in
BSC Section W 1.3.1 and 1.3.2.
The impact on Trading Charges must exceed £3,000.
Upon receipt of a Trading Dispute, a Dispute Analyst will assess the error and build a consumption profile. This is usually done by looking at the actual error that resulted in an impact to Settlement (e.g. a CT ratio mismatch or wrong energisation status for SVA disputes) and the calculated proposed correction. The materiality of an error is then derived from the difference between actual Meter reads and proposed correction, and multiplied by a current Credit Assessment Price (CAP). For example, at a current CAP of £47/MWh (as of 12 February 2015), an error of 64 MWh or more would be considered as meeting the materiality threshold. The process described is indicative and some Trading Disputes need a more tailored approach when calculating materiality.
Please note that materiality calculation only includes the impact on Trading Charges and does not take into account Distributor Use of System (DUoS) charges or retail prices that result in end-customer billing.
P427 Public Notice of PAP’s Contribution to Settlement Risk
Modification P427: ‘Publication of Performance Assurance Parties’ impact on
Settlement Risk’ introduces a number of triggers, which would result in data and information relating to
Settlement Risk being made public, which has previously been considered confidential. These triggers are summarised below:
De Minimis error thresholds (aggregated market level impact and individual Trading Party level impact) for public notification of accountability for Settlement Errors
EFR escalation process triggers for public notification of EFR status and contribution to risk where a Performance Assurance Party (PAP) fails to meet a milestone in its EFR plan following escalation to the PAB for the same EFR plan
Publication of any data via the Peer Comparison technique, where recommended by the PAB and approved by the BSC Panel
Therefore in the event that a
Trading Dispute is raised and the materiality if found to exceed the defined De Minimis threshold for market wide or PAP level impact this will be notified to the
Performance Assurance Board (PAB) to determine whether a recommendation should be submitted to the BSC
Panel to issue a public notice regarding the PAP’s contribution to
Settlement Risk in respect of the identified error. The De Minimis threshold is set out in
Section Z:
an aggregate financial impact on all Trading Parties equivalent to or greater than the value of 0.05% of the total annual electricity supplied across Great Britain in the preceding BSC Year; or
a financial impact on any single Trading Party equivalent to or greater than the value specified in paragraph 7.2.1(b)(i) divided by the number of Trading Parties at that time.
What happens when a dispute is raised?
Elexon will acknowledge receipt within 1
Working Day of receiving the
Trading Dispute Raising Form (
BSCP11/01).
The information submitted is then investigated. If more evidence is required, Elexon will send a
BSCP11/03 form (‘Request for Assistance’) to a relevant
Party and detail the information required. Elexon treats each
Trading Dispute individually and the information required varies. However, there are some typical requests that Elexon will make:
Following the Supplier Hub Principle, Elexon will request all required information (including that held by the Meter Operator Agent) through the Supplier.
According to
BSC Section W, a
Party and its Agents have to provide any information requested to resolve a
Trading Dispute. When a
BSCP11/03 form is received, party contacted has 5
Working Days to respond to this request and provide the information or explain why it is not available.
If a party fails to respond to the Request for Assistance form in a specified time, Elexon might have to close the Trading Dispute and/or escalate the matter to the Performance Assurance Board (PAB).
Different Stages of a Trading Dispute:
When a Trading Dispute is raised, Elexon will investigate and gather information to determine whether the Trading Dispute is valid against the three criteria.
If Elexon believes the Trading Dispute is valid it will be referred to the TDC for determination.
If Elexon thinks the
Trading Dispute fails to meet one or more of the criteria, the
Trading Dispute will be deemed invalid. Elexon will then provide its findings to the Raising
Party and Affected Parties via a
BSCCo Findings Form (
BSCP11/04). If you accept our findings Elexon will close the
Trading Dispute. Should you object to the findings and send a notification within a prescribed timescale (normally 10
Working Days from us publishing our findings), Elexon will refer the
Trading Dispute to the TDC for decision.
The TDC hears the Trading Dispute and decides if it is valid against the three criteria. If the TDC determines the Trading Dispute is invalid it will reject the Trading Dispute.
Elexon’s role as the BSC Administrator is to be impartial and present the facts that have been gathered to allow the TDC to make an informed decision on a case by case basis.
If the Trading Dispute is valid the TDC will decide how it is to be rectified (if at all). If a Party disagrees with the TDC decision it has the opportunity to refer the Trading Dispute to the BSC Panel.
The Panel hears the Trading Dispute in much the same way as the TDC and will decide whether to overturn the TDC’s decision. If a Party disagrees with the Panel’s decision it can refer the Trading Dispute to Arbitration.
Under normal circumstances, rectification of a Half Hourly or Non-Half Hourly Trading Dispute can go back approximately 17 months (RF plus 70 Working Days) from its raising date. However, a Raising Party can claim exceptional circumstances that, if granted, allow rectification to go back another 3 months (i.e. 20 months from its raising date). Granting exceptional circumstances is at the TDC’s (or the Panel’s) sole discretion. A Raising Party should provide supporting evidence and a statement clarifying what they believe makes the Trading Dispute exceptional and Elexon will present the statement and supporting evidence to TDC for determination.
After hearing all evidence on a Trading Dispute, TDC can decide whether to uphold the Trading Dispute and rectify the error. If upheld, there are three methods of rectification available for TDC – normal Settlement Run, Post-Final Settlement Run (PFSR) or an Extra-Settlement Determination (ESD).
After the TDC meeting, the Dispute Analyst will send a
BSCP11/07 form (‘TDC
Trading Dispute Findings’) detailing TDC determination and the rationale behind it. The form will also specify the action needed to be taken by the
Party or its Agents. If a
Supplier received this form with an action to inform its Agents, it should ensure the Agents are notified accordingly to carry out the rectification in time. Failure to put in effect a TDC determination is a non-compliance and the offending
Party may be referred to PAB.
If the error has not passed the Final Settlement Run (RF), the Supplier can instruct its Agent to rescale the data in line with appropriate correction. If a Trading Dispute is raised, this can be done without taking a Trading Dispute to TDC, if all Affected Parties agree on proposed correction. It is also common that only part of the error is still within the timescales for normal Settlement Runs, with another part already passed RF. In such case, Elexon will take the Trading Dispute to TDC, where an appropriate combination of rectification methods will be determined.
Post-Final Settlement Run (DF)
No further GSP Group-level DF Runs will be available for the correction of error without re-entry of one or more GSP Groups to the Trading Disputes process. The Final Reconciliation (RF) is now the last opportunity to make any corrections that are not the subject of an upheld, MSID-level Trading Dispute.
Extra Settlement Determination (ESD)
An ESD is performed whenever TDC is unable to achieve a rectification through Timetabled Reconciliation Runs. This happens if a
Trading Dispute is raised to rectify data that is entered incorrectly in
Post-Final Settlement Run or if error volumes have missed the deadline for DF Run. However, in some circumstances an ESD can be granted for earlier Reconciliation Runs. This process is detailed in Section 4 of
BSC Section W.
ESDs are still restricted by Dispute Deadlines. TDC determines the dispute validity and, if requested, a case for exceptional circumstances. In cases where an ESD is required, Elexon will also present the proposed methodology for ESD calculation for TDC to approve as well as payment dates for Affected Parties. TDC takes all evidence into consideration when determining which method of rectification to use, including central costs involved in running an ESD.
This method of rectification is primarily a manual process, involving the Dispute Analyst conducting the calculation and instructing the FAA to process payments. It is estimated that, on average an ESD costs £5,000 to process.
If TDC grants an ESD, Elexon will include this in the
BSCP11/07 form sent to Affected Parties. Elexon will then send the
BSCP11/09 (‘
Trading Dispute Payment Authorisation Form’) form to the FAA to process the payment.
Useful information from the
Trading Disputes Committee meetings is publicly available, and Elexon keeps a
Register of Determinations to summarise
Trading Disputes that the TDC have determined.
Intellectual Property Rights, Copyright and Disclaimer The copyright and other intellectual property rights in this document are vested in Elexon or appear with the consent of the copyright owner. These materials are made available for you for the purposes of your participation in the electricity industry. If you have an interest in the electricity industry, you may view, download, copy, distribute, modify, transmit, publish, sell or create derivative works (in whatever format) from this document or in other cases use for personal academic or other non-commercial purposes. All copyright and other proprietary notices contained in the document must be retained on any copy you make. All other rights of the copyright owner not expressly dealt with above are reserved. No representation, warranty or guarantee is made that the information in this document is accurate or complete. While care is taken in the collection and provision of this information, Elexon Limited shall not be liable for any errors, omissions, misstatements or mistakes in any information or damages resulting from the use of this information or action taken in reliance on it. |
