The New Electricity Trading Arrangements (NETA) which were introduced in England and Wales in 2001 and extended to Scotland following BETTA Go-Live on 1st April 2005 are designed to provide greater competition in the wholesale market, while maintaining a secure and reliable electricity system. The new arrangements are based on bilateral trading between generators, suppliers, traders and customers, and include:

• Forwards and futures markets that allow contracts for electricity to be struck over timescales ranging from several years ahead to on-the-day markets;
• A Balancing Mechanism by which the System Operator, accepts offers and bids for electricity close to real time to enable it to balance supply and demand; and
• An Imbalance Settlement process for making payments to and from those whose contracted positions do not match their actual metered electricity production or consumption and for clearing certain other costs of balancing the system.

As indicated above, the Balancing Mechanism is one of the key aspects of NETA. It is the mechanism by which the System Operator procures commercial services (Balancing Services) from generators and suppliers, in accordance with the relevant provisions of the Balancing and Settlement Code (BSC) and the Grid Code, in order to maintain security of the electricity supply across the transmission network. These commercial services are represented by Offers to sell energy (increase generation or decrease demand) and Bids to buy energy (decrease generation or increase demand), respectively, which are submitted by the participants in the Balancing Mechanism. Acceptance of a Bid or an Offer by the System Operator represents a binding contract with the generator or supplier which is cash settled through the systems and services managed by ELEXON.

Balancing Services are defined in the Procurement Guidelines which the System Operator is required to establish in accordance with Licence Condition C16 of its Transmission Licence (and which is available for download at http://www2.nationalgrid.com/uk/industry-information/electricity-codes/balancing-framework/transmission-license-c16-statements/).

The System Operator may procure the services it requires in order to balance the system either in the BM, by acceptance of Bids and Offers, or via other mechanisms as deemed necessary. Where appropriate the costs and volumes of procuring Balancing Services outside of the BM are also fed through into the calculation of System Prices (SBP and SSP), in the form of Balancing Services Adjustment Data (BSAD) and also, for post P217 Settlement Dates, Disaggregated BSAD (DISBSAD). This is calculated in accordance with the System Operator's BSAD Methodology Statement and is submitted for each Settlement Period. Details of which Balancing Services are included in BSAD can be found in the Methodology Statement.

A BM Unit is a representation of an association of generation equipment or of consumption, as the case may be, registered under the BSC for the purposes of participation in the BM. Every single metering system in Great Britain, whether for generation or consumption, is a component of a BM Unit (and only one BM Unit). A generation BM Unit typically represents a discrete unit of generation plant at a power station; a consumption BM Unit may comprise one or more consumption sites. Each supply business has one (or more) BM Units for its customers in each of the 14 regional distribution zones (Grid Supply Point Groups).

A list of the BM Units registered in the BMRS can be obtained using the BM Unit Search option.

Every BM Unit is a member of a Trading Unit. Trading Units may consist of one or more BM Units. Where BM Units are combined to form a Trading Unit, the production or consumption of the Trading Unit as a whole is treated on a net basis when calculations are carried out for the treatment of losses or the calculation of imbalances.

A Settlement Period is the lowest possible resolution for the calculation of imbalances, lasting half an hour. Settlement Periods run from midnight to midnight each day (British Summer Time during summer and Greenwich Mean Time during winter) and each Settlement Period corresponds to a number ranging from 1 to 48. A long day (end of BST) will have 50 periods, whereas a short day will have 46 (beginning of BST) periods. To calculate Settlement Periods, a reference table can be seen here.

Gate Closure is the time 1 hour prior to the start of the Settlement Period to which it relates. Physical Notifications and Bid-Offer Data must be received by the System Operator (and Contract Volumes must be received by ECVAA) before Gate Closure. Therefore, for example, changes in Bid-Offer prices relating to the Settlement Period 16:30 - 17:00 must be received by the System Operator before 15:30 on the same day.

In the initial months of trading under NETA, Gate Closure was set at 3½ hours. It was reduced to 1 hour in July 2002.

Following the end of each Settlement Period two Imbalance Prices, known as System Buy Price (SBP) and System Sell Price (SSP) respectively, are calculated and published on the BMRS. These prices are purely indicative, as they are calculated before all the necessary information for definitive calculations, such as actual transmission losses, is available. The definitive calculations for Settlement purposes are carried out separately, several days later. These definitive calculations may also include amendments to the Balancing Mechanism data following post event analysis.

The Imbalance Prices are used for the settlement of the energy imbalances incurred by participants – that is to say, the differences between the volumes of energy which a participant contracts for (in all trading, not just in the Balancing Mechanism) and the volumes actually generated or consumed. A participant whose imbalance is a net spill on to the system will be paid for the energy which is put on to the system, at the System Sell Price. A participant whose imbalance is a net shortfall will have to pay for the volume of energy which is in deficit, at the System Buy Price. It is thus equally possible for generators or consumers alike to be out of balance in either direction in a given half hour.

The calculation of both of the Imbalance Prices in each half hour is based on an assessment of whether the system had too much or too little energy (usually referred to as being 'long' or 'short' respectively).

For Settlement Dates prior to P217 the comparison of the total volumes of Bids and Offers accepted in a period gives rise to a Net Imbalance Volume, which may be either positive or negative. If the result is positive (more purchases have been made than sales) then the market is short, and the main price will be SBP. If, however, the result is negative, then the market is long, and the main price will be SSP. The priced actions that go to make up the Net Imbalance Volume are further reduced by employing a process known as PAR Tagging. This process selects the set of most expensive priced actions which are not De Minimis, Arbitrage, CADL or NIV Tagged whose combined volume does not exceed a defined upper limit (the Price Averaging Reference volume). The main price is then calculated to be the average price at which the System Operator had sold the remaining priced energy actions accepted in the half hour (plus the appropriate BSAD adjustment for sales made outside the Balancing Mechanism).

For Settlement Dates for which Modification P217 is effective the comparison of the total volumes of accepted Bids and Offers, and Balancing Services Adjustment Actions (Disaggregated BSAD) in a period gives rise to a Net Imbalance Volume, which may be either positive or negative. If the result is positive then the market is short, and the main price will be SBP. If, however, the result is negative, then the market is long, and the main price will be SSP. If any of the actions that go to make up the Net Imbalance Volume have been 'Classified' as unpriced (as a result of being CADL Flagged or SO-Flagged) then they are re-priced by use of the Replacement Price Average Reference (RPAR) volume. The remaining volumes are then further reduced by employing a process known as PAR Tagging. The main price is then calculated to be the average price of the remaining actions (plus the appropriate BSAD adjustment for sales made outside the Balancing Mechanism).

For Settlement Dates for which Modification P305 is effective the comparison of the total volumes of accepted Bids and Offers, Balancing Services Adjustment Actions (Disaggregated BSAD) and Demand Control Events in a period gives rise to a Net Imbalance Volume, which may be either positive or negative. If the result is positive then the market is short, and the main price will be SBP and SSP will defaulted to SBP. If, however, the result is negative, then the market is long, and the main price will be SSP and SBP will be defaulted to SSP.

Also post P305, the Offers and Disaggregated BSAD may be classified as STOR actions depending on the STOR Flag and the STOR availability window. These price of the STOR action will be determined as the greater of:

• The Utilisation Price of the STOR Action i.e. the Offer Price or the BSAD action price (cost/volume);
• The Reserve Scarcity Price (RSP) for that Settlement Period. The RSP is calculated as the product of the Final Loss of Load Probability (LoLP) value for that Settlement Period and the Value of Lost Load (VoLL) Price.

Where a STOR Action extends over the start or end time of a STOR Availability Window, the price will not be adjusted in any Settlement Period outside of the STOR Availability Window, and will always be the Utilisation Price. This calculated price will be included as the price of the item in the buy stack used in the main price calculation.

If any of the actions that go to make up the Net Imbalance Volume have been "Classified" as unpriced (as a result of being CADL Flagged or SO-Flagged) then they are re-priced by use of the Replacement Price Average Reference (RPAR) volume. The remaining volumes are then further reduced by employing a process known as PAR Tagging. The main price is then calculated to be the average price of the remaining actions (plus the appropriate BSAD adjustment for sales made outside the Balancing Mechanism).

A more detailed description is given within the BMRA URS.

BMRA receives Current and Day Ahead forecast data every half hour. The quantity and type of data received changes over time as outlined in the table below. The time in the left hand column is the target time by which BMRA should have received the forecast data files. The report coverage and the number of values in the report are given in the Coverage column.

For forecast types NDF, TSDF, IMBALNGC, MELNGC, INDGEN, and INDDEM, the data is received for national and zonal levels at the same time. Note that initial forecast data is shown in bold type.

Day+0: Today
Day+1: Tomorrow
Day+2: Day after tomorrow

To summarise: The files received from 0000 to 1130, other than the file received at 0900, contain values from their Target Time (the time by which they should be received) through to 0500 on D+1 (i.e. over this time range the file coverage goes from 58 values down to 41 values). The files received from 1200 through to 2330 contain values from their Target Time to 0500 on D+2 (i.e. over this time range the file coverage goes from 82 values down to 59 values). The files received at 0900 each day contain only the Initial National Demand Forecast data and Initial Transmission System Demand Forecast data for the period 0500 on D+1 to D+2.

Although data is issued half-hourly, the underlying demand forecast data is not updated as regularly as this. In general the demand forecasts will be updated by the following target times for the time ranges indicated:

• 02:00 - Data from 02:00 on D to 05:00 on D+1
• 10:00 - Data from 10:00 on D to 05:00 on D+1
• 16:00 - Data from 05:00 on D+1 to 05:00 on D+2
• 16:30 - Data from 16:30 on D to 05:00 on D+1
• 22:00 - Data from 22:00 on D to 05:00 on D+2

Between these target times the demand forecast may be updated for operational reasons where required.

BMRA will receive Long Term Forecast data at set daily and weekly times as described in the table below. Note that if the day on which a week forecast (NDFW, SPLW) is due falls on a public holiday, the forecast will be produced on the last Business Day prior to the holiday.

The Zonal Data pages display forecast information for each zone. The zones represent areas encompassed by the 17 transmission constraint boundaries defined in the National Grid Seven Year Statement (SYS). The zones as they appear on the BMRS are as follows:

MELNGC for an Import constraint is the boundary transfer limit less (for an Export constraint it is plus) the System Operator's forecast of demand in the zone plus (for an Export constraint it is less) the MEL generation in the zone.

Click here to view the zonal map