The New Electricity Trading Arrangements 'Go Active'

Update

Monday 14th August 2000 saw the signing of documents which signal the future cessation of trading through the Electricity Pool and its replacement by the New Electricity Trading Arrangements ("NETA").

On Monday, which has been labelled the "Go Active" date, the legal framework for NETA was put in place. This has set the foundation for the next phase of the implementation of NETA. The next major milestone will be the "Go Live" date in the autumn when NETA will come into effect.

Ofgem's Deputy Director General, Dr Eileen Marshall, said: "The successful implementation of NETA is crucial to creating more competition in the wholesale electricity market and today's signing is a major milestone towards achieving that. So far, we have hit all our deadlines and all the key players are striving to meet the "Go Live" date. We are firmly committed to introducing the new trading arrangements this year during the window of opportunity which exists between the end of October and the middle of December and we are currently working towards 21 November [2000] for the "Go Live" date."

The documents signed on Monday included the Balancing and Settlement Code ("BSC"), which sets out the rules for the balancing mechanism and settlement process under NETA, the licence changes and the implementation scheme. The documents also formally put in place Elexon, the company that will administer aspects of NETA, including the BSC Panel, which will include representatives from the industry and customers and supervise the delivery of NETA related services and the modification of the BSC.

Background

NETA is a joint initiative between the Department of Trade and Industry and energy regulator Ofgem to put in place market-based trading arrangements more like those in commodity markets and competitive energy markets elsewhere. It is also designed to be more efficient and provide greater choice for market participants while maintaining the operation of a secure and reliable electricity system. Accordingly, NETA will replace the Electricity Pool with long and short term forwards markets, a balancing mechanism and settlement process.

Using a power contained in the Utilities Act 2000, which received royal assent on Friday 28th July 2000, the Secretary of State for Trade and Industry designated new licence conditions last week requiring those licensed under section 6 of the Electricity Act 1989 (as amended by section 30 of the Utilities Act 2000) to sign the above mentioned documents.

How can we help you?

CMS Cameron McKenna has a dedicated BETTA/NETA unit within its Energy and Projects Group. We help market participants to understand the regulatory implications of BETTA/NETA and the opportunities it creates.

For advice relating to BETTA/NETA or electricity markets more generally, or to find out more about our Energy and Projects Group, please contact either Mark Bartholomew (Tel: 020-7367-2045, Fax: 020-7367-2000, e-mail: mjb@cms-cmck.com) or Robert Lane (Tel: 020-7367-2021, Fax: 020-7367-2000, e-mail: rcl@cms-cmck.com) for a no-obligation, cost-free discussion