Blog Post

Elexon returns £1.5 million to industry due to Covid-19 impacts and Estimation Derogations to continue into 2021

Richard Simmonds • November 17, 2020

Elexon, the company that administers the Balancing and Settlement Code (BSC) on behalf of the UK electricity industry has announced that it will return £1.5 million to BSC Trading Parties as Covid-19 results in savings.

What is Elexon?

Elexon is a not-for-profit company that is funded by the energy industry and is tasked with administering the BSC and ensures that all qualified parties operate within its guidelines.

Elexon’s main function is to compare how much electricity generators and suppliers say they will produce or consume with actual volumes. It then works out a price for the difference and transfer funds. This involves taking over 1.25 million meter readings every day.

The BSC provides arrangements for UK electricity suppliers to balance and settle energy in Great Britain.

All UK Electricity Suppliers must be party to the BSC, due to the complicated nature of the code many New Market Entrants choose to use a consultancy such as Dyball Associates Ltd to guide them through the process.

Dyball Associates can assist any energy supplier with BSC qualification and can achieve the qualification within 4 months thanks to the expertise of our industry experts. According to Elexon this qualifying process normally takes an energy supplier up to a year.

Also read: Achieve your Elexon accreditation with Dyball Associates

Impact of Covid-19

The reason for returning the money comes as a result of the Covid-19 pandemic and government-imposed lockdowns.

The organisation said that it was able to save money and introduce a number of cost efficiencies following the closure of its head office.

These savings have allowed it to pass on £1.5 million to the BSC Trading Parties meaning that energy suppliers or energy generators that trade in the wholesale market under the terms of the BSC will receive some cash.

“I recognise this is not a significant amount but the principle of returning underspend and savings is correct as many of our customers are dealing with difficult circumstances due to the impact of Covid-19 on the economy, as well as other challenges.

‘We strive to deliver value for money to our customers and we are committed to tight cost controls as well as transparency of our spending. We have returned unused funds in the past, and we will look for furth opportunities to return more money to Trading Parties as we head towards the end of the financial year,” said Mark Bygraves, Elexon’s Chief Executive.

Also read: Energy Price Forecast 2020 - The impacts of Coronavirus

Estimation Derogations to continue into 2021

As a result of the first Covid-19 lockdown back in March Elexon launched a survey of its customers to ascertain what they could do to help them.

The main reply; to temporarily ease the burden of compliance for the BSC. Now with a second lockdown in affect the company has announced that derogations will continue into 2021. Prior to the government announcing lockdown 2.0, the derogations were due to end on December 31st, 2020.

The support measures include:

derogations that allow energy suppliers to instruct their agents to provide estimated consumptions for use in Settlement that reflect the realities of the lockdown.
suspending Error and Failure Resolution (EFR) targets
suspending the charges Suppliers would normally face if they do miss certain Settlement performance targets.

Elexon also states that this current lockdown could be extended beyond the December 2^nd date given by the government and that energy suppliers have requested that derogations continue until the pandemic is over.