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National Grid Electricity System Operator (ESO) has proposed an urgent modification to the Balancing and Settlement Code (BSC) to enable Elexon to administer the payment scheme for electricity for the government’s new Energy Price Guarantee.
The measure, announced by new prime minister Liz Truss last week, will freeze annual energy bills at £2,500 for a typical household over a two-year period.
From 1 October, the average unit price for dual fuel customers paying by direct debit will be limited to 34p/kWh for electricity and 10.3p/kWh for gas, with the government covering the difference between these rates and suppliers’ costs.
According to the factsheet released alongside the announcement, customers on fixed price tariffs will have their unit rates reduced by 17p/kWh for electricity and 4.2p/kWh for gas, although Martin Lewis from Money Saving Expert has reported they will only be lowered down to the level of the new price guarantee.
In the proposal document for its modification, designated P446, the ESO said appointing Elexon to administer the payment scheme for electricity will require an extension of its powers to enable the company, which is the code manager for the BSC, to undertake a new non-BSC related function.
The modification will describe and limit Elexon’s roles and functions as the scheme’s administrator by reference to a more detailed “scheme document”.
“Having the details of the scheme within the scheme document, rather than the BSC, ensures that the government have appropriate control over the scheme and hold the risks as the scheme owner,” the ESO explained. “Additionally, not all BSC parties will be party to the scheme.”
The scheme document established by the secretary of state for energy will set out details of the Energy Price Guarantee, including the payment calculations, payment timetable and reconciliation processes, as well as the obligations on scheme parties. It will also include the scheme agreement which suppliers will need to accede to become a scheme party and become eligible to receive payments.
As Elexon will be performing a separate and distinct role, the BSC panel and panel committees will not have any responsibilities in respect of its functions as the scheme administrator.
The scheme document and the proposed modification will together ensure that the payments are accounted for separately from other BSC costs and trading charges and that BSC parties are not responsible for funding them. However, the modification will allow costs incurred by Elexon in administrating the scheme to be included as BSC costs.
The ESO said administering the payment scheme will require the development of calculation and payment systems, with the proposed solution involving the extraction of information from the Supplier Volume Allocation Agent.
Consumption data for non-half-hourly and half-hourly meters will be aggregated to provide a sum of the daily consumption volumes for each supplier. Payment will then be calculated by multiplying this consumption by a pence/kWh rate specified by the secretary of state.
The modification was presented to the BSC panel on Tuesday (13 September).
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