N' Keith Tovey, M'A' PhD, C'Eng MICE '' '',

1
The changing face of the Electricity Market in
the UK
???????????? ???? ????? ?????????????? ? ????????
5th September 2005 13th December 2005
???????????? ????????? ??????
N. Keith Tovey, M.A. PhD, C.Eng MICE ?.?.????
?.?., ?-? ??????????? ????
Energy Science Director Low Carbon Innovation
Centre University of East Anglia, Norwich
???????????? ?? ?????????????? ?????????????
????? ????????????? ????????? ???????????
????????? ??????, ??????
2
The changing face of the Electricity Market in
the UK ???????????? ???? ????? ?????????????? ?
????????

• A brief review of the UK Electricity Industry
  prior to 1990.
• The Electricity Markets in the 1990s after
  Privatisation
• The New Electricity Trading Arrangements NETA
  (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• The Supply of Electricity since 1990
• Conclusions

• ??????? ????? ????????? ??????????
  ????????????????? ????? ????????????? ? 1990 ?
• ????? ?????????????? ? 1990 ? ????? ????????????
• ????? ??????? ??????? ???????? N??? (2001)
• ??????? ???????? ? ???????? ??????????????? ?
  ?????????????? (BETTA)
• ???? ?????????????? ? 1990
• ??????????

3
The changing face of the Electricity Market in
the UK ???????????? ???? ????? ?????????????? ?
????????

• A brief review of the UK Electricity Industry
  prior to 1990
• Electricity Generation and Supply
• differences in approach between England / Wales
  and Scotland.
• Fuels used for generation

• ??????? ????? ????????? ??????????
  ????????????????? ????? ????????????? ? 1990 ?
• ????????? ? ???? - ??????? ????? ?????????
• ???????, ???????????? ??? ?????????

4
The Generation and Distribution of Electricity
has always been different in Scotland compared to
England and Wales (????????? ?????? ??????????
?? ?????? ? ?????? ? ????? ???????????? ?
????????????? ?/? )
England and Wales (?????? ? ?????) One
Generating Company (CEGB) and 12 Regional
Electricity Suppliers (???? ???????????? ????????
(CEGB) ? 12 ???????????? ???????????).
5
Structure of Electricity Supply in early 1990s
?????????
??????? ??????????????? ? ?????? 1990
?.?.
Scotland ?????????

• Scotland ?????????
• Vertical Integration ???????????? ??????????
• two companies ???
  ????????

England and Wales ?????? ? ????? 12
Regional Supply Companies 12 ????????????
???????? also Distributed Network Operators
? ?????
?????????????? ??????? ?????????
6
Electricity Generation in the UK
???????????? ?????????????? ? ??????????????
???????? ???????? ??????? ??????? (CCGT)
??????????????
Coal Oil Nuclear Gas (CCGT) Renewables
Growth has averaged 1.8 over last 20 years
2002 2003 growth was 3

?? ????????? 20 ??? ???? ? ???????
???????? 1,8
? 2002 ?? 2003 ?.?. ???? ???????? 3
7
Changes in Fuel Use in Electricity Generation
????????? ? ??????????? ??????? ??? ????????????
??????????????
???????? ??????? ?????? (CCGT) ???????? ??????
??????? ??????????????? (???????)
Coal Nuclear Gas (CCGT) Oil Other Fuels Imports
(France)
Source Digest of UK Energy Statistics 2004
???????? ????? ?????????????? ?????? ??
?????????????? ?????????????? 2004 ?.
8
Transmission Network in the UK
???? ????? ???????? ?????????????? ?
??????????????
Scotland ?????????
Transmission throughout England, Wales and
Scotland became unified on April 1st 2005 ???????
???????? ?????????????? ????? ??????, ????? ?
????????? ????? ?????? 1 ?????? 2005 ?.
England and Wales ?????? ? ?????
Historically transmission networks have been
different in England and Wales compared to
Scotland ???????????, ???? ???????? ?/??????? ?
?????? ? ?????? ?????????? ?? ????? ?????????
9
Most Generating Capacity is in the North - most
demand is in South ?????????? ????? ????????????
?? ?????? - ??????????? ?? ???
Generating Capacity Surplus/Deficit ???????/??????
? ?????? ???????????? on February 12th
1800 (??????? 12, 1800) ve generating
capacity exceeding demand (???????????? ?????????
???????????) -ve demand exceeding generating
capacity (??????????? ????????? ????????????)
MW
10
Electricity Generation - pre 1990 ????????????
?/? - ?? 1990

• Decision on how electricity was to be generated
  was done on a generating set basis
• (???????????? ?/? ?????????????? ????????
  ????????? ?????????
• Generating Sets to run were selected on Merit
  Order.
• Based on Marginal Costs (???????? ?? ????????????
  ?????)
• (i.e. the fuel costs - ???? ?? ?????)
• Some generating sets were run OUT of MERIT ORDER
  where system constraints were an issue.
• Generators sold electricity to Regional
  Electricity Boards (????????????? ????????? ?/?
  ???????????? ????????????? ?/?)
• Electricity Boards sold to consumers in their
  Area only
• (???????????? ???????????? ???????? ?/?
  ???????????? ?????? ????? ???????)
• Prices to consumers varied between regions
• (???? ??? ???????????? ????????????? ?? ????????)

11
???????????? ???? ????? ?????????????? ? ????????

• Most Generating Capacity in North (??????????
  ????? ???????????? ?? ??????)
• Most coal-fired stations in North (???????????
  ???????? ??????? ?? ??????)
• Most Oil-fired stations in South (???????????
  ???????? ??????? ?? ???)
• Nuclear stations - distributed around coast
  (??????? ??????? ?????????????? ?? ?????????)
• Most Hydro stations are in Scotland (???????????
  ??? ? ?????????)

Significant power flows North gt South
12
Privatisation of Electricity Supply Industry 1990
???????????? ? ??????? ?????????? ? 1990
Central Electricity Generating Board ???????????
National Power ???????????? ?????????? PowerGen
Nuclear Electric

• Coal (????????) Fired Power Stations
• Oil (????????) Fired Power stations
• Gas Turbine (?????? ???????) Stations
• Hydro Stations (???)
• Nuclear Stations (???????)
• Transmission (???????????)

National Grid Company ???????????? ???????
????????
12 Regional Electricity Companies (12
???????????? ?/? ????????)
12 Regional Electricity Companies 12
???????????? ?/? ????????
13
Typical UK Electricity Demand in Winter 2003 and
2005
14
The changing face of the Electricity Market in
the UK ???????????? ???? ????? ?????????????? ?
????????

• A brief review of the UK Electricity Industry
  prior to 1990.
• The Electricity Markets in the 1990s after
  Privatisation
• The New Electricity Trading Arrangements NETA
  (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• The Supply of Electricity since 1990
• Conclusions

• ??????? ????? ????????? ??????????
  ????????????????? ????? ????????????? ? 1990 ?
• ????? ?????????????? ? 1990 ? ????? ????????????
• ????? ??????? ??????? ???????? N??? (2001)
• ??????? ???????? ? ???????? ??????????????? ?
  ?????????????? (BETTA)
• ???? ?????????????? ? 1990
• ??????????

15
Scotland ?????????
England and Wales ?????? ? ?????
16
The changing face of the Electricity Market in
the UK

• The Electricity Markets in the 1990s after
  Privatisation
• ????? ?????????????? ? 1990 ? ????? ????????????

• The bidding process - Pool Input and Pool Output
• ??????? ?????? ?????? ? ??????? ????

• The Electricity Pool
• ????????????? ???

17
The Operation of The Electricity Pool 1990
2001 ???????????????? ?????????????? ????
1990-2001

• Only the Generators (gt100 MW) bid into the POOL
  to supply electricity e.g. National Power (now
  Innogy), PowerGen etc (? ?????? POOL
  ????????? ??????? ?????? ????????????? (gt100 MW),
  ???? ??? ???????????? ?????????? (?????? Innogy),
  Powergen ? ?.?.)
• The National Grid Company published projected
  demands for the following day and invited bids
  (???????????? ??????? ???????? ???????? ?????? ??
  ?????? ?? ????????? ???? ? ???????????? ?????)
• The Generators supplied bids for each generating
  set in each station for each half-hour period of
  the following day (????????????? ???????? ??????
  ?? ?????? ??????? ??? ??????? ????????????
  ??????? ?????????? ???)
• The NGC sorted bids to determine which generating
  sets would be used for each particular period,
  and which ones would have capacity made available
  (NGC ???????????????? ?????? ?? ??????? ???????

18
System Marginal Price 19.31 SMP
10000 MW
10000 MW
Companies up to and including B successful
10000 MW
1 50 Roubles
19
The Operation of The Electricity Pool ??????
?????????????? ????

• All Companies who were successful were paid the
  SMP for all units generated irrespective of what
  their bid was
• (??? ????????, ??????? ?????????? SMP
  ?????????? ?? ???? ?????? )
• The bids were for the single half-hour period and
  fresh bids were required for all half hour
  periods
• (?????? ???? ?? ????????? ??????????? ??????? ?
  ????? ?????? ??????? ?????? ??? ????)
• It was possible for companies to bid 0 and this
  would guarantee that they generated and paid SMP
• (???? ?????????? ?????? ??????? ?????? ? ???
  ????????????? ????????? ? ??????? SMP)
• However, if all Companies did the same they would
  have to generate electricity for nothing (????
  ???? ?? ??? ????????? ??? ???????? ?????????????
  ?????????????? ?? ? ??????)
• In addition to the SMP, there was also a
  capacity charge relating to the generating
  capacity which was requested to be available

20
The Operation of The Electricity Pool

• Capacity Charge paid to all Generators who had
  been requested to have capacity available.
• -based on formula(?? ???????)
• LOLP (VOLL - SMP)
• Loss of Load Probability

VOLL was set by the Regulator at around 2400
per MWH (???? ??????????? ??????????? ????????
????? 120 Roubles ?? 1 kWh) LOLP normally a
very low figure but could become significant if
there was a shortfall in generating capacity
(?????? ?????????????? ????? ????? ????? ??????
???? ??????????? ??????? ?????????) Capacity
Charge signal to ensure sufficient capacity was
available. Pool Input Price (PIP) SMP LOLP
(VOLL - SMP)
21
????????????? ??? System Constraints (???????
????????)

• Some Power Stations constrained ON to ensure
  security of supply even when their bid was more
  expensive
• (????????? ?????????????? constrained ON
  ?????????? ?????????, ???? ? ?????? ????? ???????
  ??????)
• Some Power Stations constrained OFF even when
  their bid was cheaper (-excess of capacity in one
  region)
• (????????? ?????????????? constrained OFF
  ?????????? ?????????, ???? ? ?????? ????? ???????
  ??????)
• Constrained Stations paid their Bid Price
• (?????????? ?? ????????? ????)
• POOL Output Price (POP) Pool Input Price
  Uplift
• Uplift represented the additional charges
  incurred to National Grid Company because of
  System Constraints
• Suppliers purchased Electricity at Pool Output
  Price
• (?????????? ???????? ?/? ?? ???? ?? ????
  ?????????????)

22
????????????? ??? A Review

• Need for strong Regulatory Body to ensure prices
  were not fixed.
• Evidence suggested price manipulation took place
  in early years.
• Regulator required major generators to dispose of
  some stations.
• The lack of Demand Side Bidding was a weakness
• Charges for Transmission Losses were averaged
  over whole Network.

• Customers in North subsidise those in South
• Generators in South subsidise those in North
• These issues have been partly resolved under
  BETTA

Separate discussions relating to Distribution
Charges are also under way
23
Changes in Regional Electricity Companies in the
1990s

• Take-over
• Scottish Power takes over MANWEB

1990

• Vertical Integration
• nPower acquire Midlands
• PowerGen acquire East Midlands

United Utilities

• United Utilities formed
• in NORWEB area

PowerGen
nPower

• Mergers
• Scottish Hydro Southern become Scottish
  Southern

c. 1998
24
The changing face of the Electricity Market in
the UK ???????????? ???? ????? ?????????????? ?
????????

• A brief review of the UK Electricity Industry
  prior to 1990.
• The Electricity Markets in the 1990s after
  Privatisation
• The New Electricity Trading Arrangements NETA
  (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• The Supply of Electricity since 1990
• Conclusions

• ??????? ????? ????????? ??????????
  ????????????????? ????? ????????????? ? 1990 ?
• ????? ?????????????? ? 1990 ? ????? ????????????
• ????? ??????? ??????? ???????? N??? (2001)
• ??????? ???????? ? ???????? ??????????????? ?
  ?????????????? (BETTA)
• ???? ?????????????? ? 1990
• ??????????

25
????? ??????? ??????? ???????? N???

• The basic principles ???????? ????????

How does it differ from the Pool? ??? ???
?????????? ?? ?????

• Both Generating and Demand Side Bidding Takes
  Place
• Most Electricity is traded outside Balancing
  Mechanism
• Favours those who guarantee specific levels of
  generation/supply in advance
• Favours those who can guarantee flexibility in
  output / demand at short notice.

• ??????????? ???? ?????????? ??? ?? ???????
  ?????????????, ??? ? ?? ??????? ???????????
• ??????? ????? ?????????????? ????????? ??
  ????????? ?????????????? ?????????
• ???????????? ???, ??? ??????????? ????????????
  ??????? ?????????? ????????????/????????
• ???????????? ???, ??? ????? ????????????? ???????
  ???????? ? ????????? ???????
  ????????????/?????? .

26
????? ??????? ??????? ???????? N???

• The basic principles ???????? ????????

• Generators and Suppliers are penalised if they
  deviate from their agreed level of generation /
  supply.
• System security is maintained via the Balancing
  Mechanism
• Renewable Generators e.g. Wind and small CHP
  (10 MW) can be adversely affected.

• ????????????? ? ?????????? ?????????? ?????????
  ????????? ? ?????? ?????????? ?? ????????????
  ?????? ???????????? / ????????.
• ???????????? ???????????????? ???????
  ?????????????? ????? ????????????? ????????
• ?????????????? ?????????, ????????, ????? ? ?????
  ????????? (10 MW) ????? ????????? ????? ??
  ??????? ????????????

27

• ????? ??????? ??????? ???????? ????
• The basic principles ???????? ????????

• Generation and Supply focuses on
• Balancing Mechanism (BM) Units
• Generating BM Units Demand BM Units
• Trading between Generating and Demand BM Units
• Only the volume traded ( not price) has to be
  notified.

• ???????????? ? ???????? ????????????????? ??
• ????????? ?????????????? ????????? (?M)
• ?? ???????????? ????????? ?M ????? ????????? ??
• ?? ???????? ???????? ????? ????????????? ?
  ????????????? ?????????? ??
• ?????????? ???????? ?????? ?? ???????, ??
  ??????? ??????? ????? (?? ? ?????) .

28
????? ??????? ??????? ???????? (N???)

• Gate Closure and Final Physical Notification
• ???????? ??????? ? ????????????? ??????????
  ???????????

• Initial Physical Notification (IPN)
• System Operator checks sufficient capacity is
  available.
• Gate Closure
• Initially 3.5 hours before REAL Time
• later reduced to 1 hour.
• Final Physical Notification (FPN)

• ????????? ?????????? ??????????? (IPN)
• ????????? ???????? ????????? ??????? ????????????
  ?????????? ??????????????.
• ???????? ???????
• ????????????? 3.5 ???? ?? ????????? ???????
• ???????????? ????????? ?? ?????? ????
• ????????????? ?????????? ??????????? (FPN)

29
The Balancing Mechanism ?????????????
????????
Summary ??????? ????????
3.5 hours
1 hour

• Changes to contract position cannot be made
  after Gate Closure
• Balancing Mechanism provides System Security

• ????????? ? ??????? ???????? ?? ????? ????
  ??????? ????? ???????? ???????
• ????????????? ???????? ????????????
  ???????????? ???????????????? ???????

30
????? ??????? ??????? ???????? N???

• Generators and suppliers are penalised if they
  deviate from their contract position at the final
  physical notification (FPN).
• The System Operator negotiates with balancing
  Mechanism (BM) units to increase/decrease the
  amount of electricity available to maintain
  system security.
• Separate charges apply for these services.

• ????????????? ? ?????????? ?????????? ?????????
  ????????? ? ??? ??????, ???? ??? ??????????? ??
  ?? ??????????? ??????? ????? ??????????
  ??????????? ??????????? (FPN).
• ????????? ???????? ??????????? ? ??????????
  ?????????????? ????????? (?M) ??????
  ??????????/???????? ?????????? ??????
  ?????????????? ? ????? ??????????? ????????????
  ???????.
• ?????????????? ??????????? ???????? ???????????
  ?? ???? ????????.

31
The New Electricity Trading Arrangements ?????
??????? ??????? ???????? ????
The Balancing Mechanism ?????????????
????????

• To allow system to remain stable
• Too little electricity on the system
• Generators can OFFER to INCREASE output
• Suppliers can OFFER to REDUCE consumption

• If OFFER is agreed then Generators / Suppliers
  are PAID for any electricity increased / reduced
  under the OFFER.

32
The New Electricity Trading Arrangements ?????
??????? ??????? ???????? ????
The Balancing Mechanism ?????????????
????????

• Too much electricity on the system
• Generators can BID to REDUCE output
• Suppliers can BID to INCREASE consumption

• If BID is agreed then Generators / Suppliers PAY
  for any reduction in generation / increase in
  demand under the BID.

33
The Balancing Mechanism ?????????????
????????
Generators / Suppliers may submit OFFERs or BIDs
which differ for different levels of deviation
from the Final Physical Notification
National Grid Company normally accepts OFFERS /
BIDS which are cheapest unless System Constraints
prevent this.
34
The Balancing Mechanism ?????????????
???????? What happens if System Operator has got
it wrong?

• OFFERs / BIDs cannot be cancelled
• UNDO BID removes an OFFER and is usually less
  than the OFFER
• UNDO OFFER removes a BID and is usually more
  than the BID
• OFFERs / UNDO BIDs or BIDs / UNDO OFFERs
  are submitted in pairs

35
????? ??????? ??????? ???????? ????
Charges for imbalance depend on whether BM unit
is deviating in same direction as overall system
or not. Example shows cases where imbalance is in
same direction as system
???????? ??????? ?? ????????? ??????? ??????? ??
????, ?????????? ?? ??????? ?? ? ??? ??
???????????, ??? ? ??? ???????, ??? ??? ???????
?????????? ??????, ????? ????????? ???????
?????????? ? ????? ??????????? ?
????????
36
????? ??????? ??????? ???????? ????
Example of System Sell Price (SSP) and System Buy
Price (SBP) ?????? ????????? ???? ??????? (SSP) ?
????????? ???? ??????? (SBP)
37
????? ??????? ??????? ???????? ???? How well has
it performed since starting on 27th March 2001?
In last 18 months wholesale prices have risen and
are now higher than at start of NETA
38
????? ??????? ??????? ???????? ????
Variation in System Sell and System Buy
Prices ??????????? ????????? ???? ??????? ?
????????? ???? ???????
39
The changing face of the Electricity Market in
the UK ???????????? ???? ????? ?????????????? ?
????????

• Introduction
• Key developments in the UK Electricity Market
• The New Electricity Trading Arrangements (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• Other Issues
• Conclusions

• ????????
• ???????? ????????? ????? ??????????????
  ??????????????
• ????? ??????? ??????? ???????? N??? (2001)
• ??????? ???????? ? ???????? ??????????????? ?
  ?????????????? (BETTA)
• ?????? ???????
• ??????????

40
British Electricity Trading and Transmission
Arrangements (BETTA). ??????? ???????? ?
???????? ??????????????? ? ?????????????? (BETTA)

• Began on 1st April 2005
• Integrates Scotland with England and Wales
• Introduces NETA to Scotland
• Relatively little change in England and Wales
• Prices to consumers in Scotland have fallen

• ??????? ? ???????? ? 1 ?????? 2005 ????
• ????????? ????????? ? ??????? ? ???????
• ??????? NETA ? ?????????
• ???? ???????????? ????????? ????????? ? ?????? ?
  ??????
• ???? ??? ???????????? ? ????????? ?????????

41
??????? ???????? ? ???????? ??????????????? ?
?????????????? (BETTA)

• Before BETTA
• System and Transmission Network Operator in
  England and Wales was National Grid Company
  (NGC).
• System and Transmission Network Operator in South
  of Scotland was Scottish Power
• System and Transmission Network Operator in
  North of Scotland was Scottish and
  Southern

• ?? ?????????? ? ???????? BETTA
• ????????? ?????????? ? ?????????? ????
  ??????????????? ? ?????? ? ?????? ???? National
  Grid Company (NGC).
• ????????? ?????????? ? ?????????? ????
  ??????????????? ? ????? ????? ????????? ????
  ???????? Scottish Power
• ????????? ?????????? ? ?????????? ????
  ??????????????? ? ???????? ????? ?????????
  ???? ???????? Scottish and Southern

42
??????? ???????? ? ???????? ??????????????? ?
?????????????? (BETTA)

• After BETTA
• National Grid Company become System Operator for
  whole of England, Wales and Scotland.
• NGC now Transmission operator for England and
  Wales
• In Scotland the two companies now hold the
  respective transmission Network Licences

• ????? ?????????? ? ???????? BETTA
• National Grid Company ????? ????????? ??????????
  ??? ???? ?????????? ??????, ?????? ? ?????????.
• NGC ?????? ???????? ?????????? ????
  ?????????????? ?? ?????????? ?????? ? ??????
• ? ????????? ? ????????? ?????? ??? ????????
  ??????? ???????????????? ?????????? ?? ????????
  ??????????????

43
??????? ???????? ? ???????? ??????????????? ?
?????????????? (BETTA)

• After BETTA
• Issues of differences in Transmission Protocol
  had to be resolved including the use of the
  Inter connector
• Charges for Transmission Losses had to be
  addressed

• ????? ???????? ? ???????? BETTA
• ????? ?? ???????????? ? ????????? ? ????????
  ?????? ???? ????????? ??????? ?????????????
  ??????????? ???????????
• ???????? ??????? ?? ?????? ??? ???????? ????
  ???????????

44
Generator Connection Charges under BETTA
????? ?? ??????????? ? ??????????
??????????????? ?? BETTA
45
The changing face of the Electricity Market in
the UK ???????????? ???? ????? ?????????????? ?
????????

• A brief review of the UK Electricity Industry
  prior to 1990.
• The Electricity Markets in the 1990s after
  Privatisation
• The New Electricity Trading Arrangements NETA
  (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• The Supply of Electricity since 1990
• Conclusions

• ??????? ????? ????????? ??????????
  ????????????????? ????? ????????????? ? 1990 ?
• ????? ?????????????? ? 1990 ? ????? ????????????
• ????? ??????? ??????? ???????? N??? (2001)
• ??????? ???????? ? ???????? ??????????????? ?
  ?????????????? (BETTA)
• ???? ?????????????? ? 1990
• ??????????

46
The Supply of Electricity since 1990 ????
?????????????? ? 1990

• Large Consumers (gt 1 MW)
• ??????? ???????????

• Before privatisation
• Could only purchase from the Local\Regional
  Electricity Company (REC) supplier in their
  region
• After privatisation
• Consumers gt 1MW could purchase from ANY REC not
  just their own regional Company (second tier
  RECs).

• From 1994 Consumers gt 100 kW were included in
  Deregulation

47
The Supply of Electricity since 1990 ????
?????????????? ? 1990

• Domestic Consumers ??????? ???????????
  (?????????)

Transition Arrangements to 1998 ???????? ?
?????????? ??????? ?? ?????? ?? 1998
Domestic Consumers did not benefit from
competition until September 1998. Prices to
Domestic Consumers were regulated according to
the formula RPI - X E F
RPI is a measure of inflation X was a factor
set by Regulator - initially 5 but later
reduced. E was an energy conservation factor
whereby costs of such measures could be
passed on to the consumer F was a levy designed
to promote exploitation of Renewables
48
The Supply of Electricity since 1990 ????
?????????????? ? 1990

• Domestic Consumers ??????? ???????????
  (?????????)
• September 1998 - June 1999

Regions of England and Wales were progressively
Deregulated so that Domestic Consumers could
purchase their electricity from any
supplier. Implementation of Deregulation in
stages allowed any initial problems encountered
to be sorted out. After Deregulation, the RPI -
X E F formula no longer applied. To allow
new suppliers to gain a foothold, the existing
suppliers could not reduce their prices in their
own area for a further transition period of a few
years.
49
Effects of Privatisation and Deregulation on
Energy Prices ?????????
? ????? ?? ?????????????? ? ??????????
???????????? ? ?????? ????????????????
?????????????

• Deregulation in Domestic Market
• ?????? ???????????????? ????????????? ??
  ???????????? ?????
• 1996 - 1998 for Gas (?? ???)
• 1998 - 1999 for Electricity (?? ?????????????)

Domestic Consumers ??????? ???????????
(?????????) ????????? ?????? 1998 7.48p (3.74
Roubles) per kWh gtgtgtgt 2003 5.62p (2.81
Roubles) per kWh Jan 2004 6.20p (3.1 Roubles)
per kWh Oct 2004 7.50p (3.75 Roubles)
per kWh
Source Energy Sector Indicators Department of
Trade and Industry
???????? ??????????
?????????????????????? ??????? ???????????
?????????????? ? ????????
50
Changes in Structure of Supplies Companies in
last 4 years ????????? ? ?????????
????????-??????????? ?? ????????? 4 ????

• Electricité de France (EDF) acquire London
  and SEEBOARD
• ????????????? ??????? (??) ???????? ??????
  ? ??????

Only in Scotland has their been no change in
ownership ?????? ? ????????? ?? ???? ????????? ?
????????? ???? ?????????????
51
Distributed Network Ownership in 2004
Distributed Network Ownership in 2005
???????? ????????????????? ????? ?
2005
Regional Supply Ownership ???????? ????????????
???????????
PowerGen
Central Networks
Distributed Network Ownership ????????
????????????????? ????
52
????????????? ??? Supply Side
Impact on Suppliers of Renewables Obligation
Certificates (ROCs) ??????????? ????????????
????????????? ?? ????????????? ??????????????
??????????

• Since April 1st 2002, all suppliers must
  provide a minimum percentage of electricity from
  renewable sources.
• The percentage is set to increase each year to
  10.4 by 2010.
• Compliance is indicated by Renewable Obligation
  Certificates. Failure to meet this requirement
  incurs a fine at the Buy-out price - initial 3p
  per kWh (1.5 Roubles per kWh) and rising in line
  with inflation - currently 3.129p per kWh.
• But-out fines are recycled to companies in
  proportion to ROCs they hold - thus trading is
  occuring in ROCs at a surcharge price as high as
  4.8p per kWh (2.4 Roubles).
• Domestic prices are set to rise slightly because
  of this Renewable Obligation.

53
The Regulator

• OFGEM controls the prices charged by National
  Grid (Transco)
• and the Distribution Companies
• These are natural monopolies.
• Transmission and distribution make up around
  25-30 per cent of the
• average domestic bill.
• BUT
• OFGEM also has a duty to ensure the companies
  can finance
• investment needed to rewire Britain.
• Rewiring is necessary with increased use of
  Renewables.

54
Consumer Protection

• Energywatch set up by the Utilities Act
  (2000).
• Funded by Department of Trade and Industry
• Funding comes from the licence fee paid by all
  energy
• companies
• It looks after consumers interests and deals
  with complaints
• Energywatch is accountable to the DTI.
• Energywatch is separate from OFGEM.
• Two organisations work closely together.
• Relationship with OFGEM is set out in a
  Memorandum of
• Understanding.

55
Consumer Protection

• Energywatch
• Some key projects currently underway by
  Energywatch
• Dealing with Rogue Traders who try to get
  people to switch
• suppliers
• Dealing with late and inaccurate bills
• In 2002/2003 Energywatch had
• 45,546 account, billing and other complaints (up
  from 37,075)
• 34,027 transfer complaints (up from 30,743)
• 12,960 direct selling complaints (up from 6,991)

56
Metering

• Specialist Metering Companies have entered market
  since 1998.
• Siemens Energy Services is now the largest
  independent supplier of metering services.
• It reads gas and electricity meters throughout
  the UK
• Processes customer data and handles the payment
  of bills.
• Siemens covers nearly 8 million households
  (around one-third)
• It provides a metering service for
• British Gas,
• Powergen,
• npower,
• Scottish Power,
• Scottish Southern Energy.

57
Provision of Comparison Services
58
Developments in the Electricity Markets in the
UK the move towards BETTA???????? ?????
?????????????? ? ?????????????? ?? ???? ? ?????

• Introduction
• Key developments in the UK Electricity Market
• The New Electricity Trading Arrangements (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• Other Issues
• Conclusions

• ????????
• ???????? ????????? ????? ??????????????
  ??????????????
• ????? ??????? ??????? ???????? N??? (2001)
• ??????? ???????? ? ???????? ??????????????? ?
  ?????????????? (BETTA)
• ?????? ???????
• ??????????

59
Conclusions (1)

• Key Changes in Electricity Market in UK
• April 1st 1990 Privatisation Electricity
  POOL Established
• Large Consumers benefit from Deregulation
• 1994 Intermediate Consumers benefit from
  Deregulation
• 1998 All Consumers benefit from Deregulation
• 27th March 2001 NETA replaced POOL
• 1st April 2002 Renewable Obligation comes into
  force
• The POOL and NETA were not used in Scotland
• 1st April 2005 BETTA extended NETA to
  include Scotland

60
Conclusions (2)

• Key Changes in Electricity Market in UK
• Prices to consumers fell as a result of
  Deregulation (up to 20 in some cases but have
  returned to pre-Deregulation levels)
• Wholesale prices of Electricity fell by 20
  after NETA, but have risen significantly in last
  18 months.
• Prices to consumers changed little after
  introduction of NETA - but have recently risen
  in response to wholsesale price changes.
• Most electricity gtgt 90 is traded outside
  Balancing Mechanism Trading
• NETA favours Generators / Suppliers who can
  guarantee output / supply in advance
• NETA favours Generators / Suppliers who can be
  flexible to make adjustments during Balancing
  Mechanism Trading.

61
Conclusions (3)

• There is a need for
• A strong Regulator with Powers to curtail
  malpractice
• A Consumer Watchdog to deal with Complaints
  etc.
• New companies are emerging in the market
• Metering Companies
• Distribution only Companies
• Significant changes in structure
• Mergers / Demergers
• Vertical Integration / Splitting of functions

62
Developments in the Electricity Markets in the
UK the move towards BETTA???????? ?????
?????????????? ? ?????????????? ?? ???? ? ?????

• This presentation is available over Internet at
• www2.env.uea.ac.uk/gmmc/neta/NETA.htm
• Further information on the POOL and NETA
• The Changing Face of the Electricity markets in
  the UK 2003
• Recent Changes in the Electricity Markets in the
  UK 2004
• Available at the same WEB address

• ????????? ??????????? ???????? ? ???? Internet ??
  ??????
• www2.env.uea.ac.uk/gmmc/neta/NETA.htm
• ?????????????? ?????????? ?? POOL ? NETA
• ???????????? ????? ????? ?????????????? ?
  ?????????????? 2003
• ????????? ????????? ????? ??????????????
  ??????????????2004
• ???????? ?? ?????????? ???? WEB-??????

63
The changing face of the Electricity Market in
the UK
???????????? ???? ????? ?????????????? ? ????????

• Some Useful WEB Sites
• www.bmreports.com/ Up to date information of
  NETA Market
• www.ofgem.gov.uk/ The UK Regulator
• www.elexon.co.uk/ Documents and
  Modifications to NETA
• www.nationalgrid.com/uk/ The System Operator
• www.energywatch.org.uk/ Energy Watch
• www2.env.uea.ac.uk/gmmc/energy/enpoint.htm
• the Energy Web Page at UEA giving links to many
  Energy Web Sites in UK and overseas.

This presentation is available over Internet
at www2.env.uea.ac.uk/gmmc/neta/NETA.htm
64
?.?.???? ?.?., ?-? ??????????? ???? ?????????
????????????? ???????????? ????????????
????????? ??????
k.tovey_at_uea.ac.uk
Energy Science Director Low Carbon Innovation
Centre
School of Environmental Sciences University of
East Anglia Norwich NR4 7TJ