INTRA-DAY TRADING Development of Modification(s) 1st February 2011.

INTRA-DAY TRADING

Development of Modification(s)

1st February 2011

• During 2010, the RAs instigated the development of proposals in respect of Intra-Day Trading in the SEM.

• Through the Modifications Committee Working Groups, the High Level Design for Intra-Day Trading was developed.

• The High Level Design was recommended for approval by the Modifications Committee in Meeting 32.

• In November 2010, the SEM Committee agreed that SEMO and the TSOs should continue to develop the design in conjunction with the CMS and Operational Scheduler vendor.

• There is currently no legal drafting to reflect the High Level Design.

• This document discusses options for the development of the required Modification or Modifications during 2011.

Introduction

• SEMO will be developing the Modifications to align with the High Level Design (developed by SEMO on behalf of the Working Group) and the requirements as provided to the CMS vendor.

• This is in line with the RA decision paper (SEMO-10-011):

• SEMO intends to develop a “Plain English” document which will accompany each Modification Proposal.

• The “Plain English” document associated with each Modification Proposal will:• Detail the proposed changes in a more descriptive manner• Align with legal drafting• Promote understanding of the changes (noting that the legal drafting is what

will ultimately be considered by the Modifications Committee)

How will the Modifications be developed?

• The introduction of intra-day trading in the SEM represents a major change in the market design. As a result, there will be a number of changes that will impact on the Trading and Settlement Code (“Code”), including:

• Bidding to multiple Gate Windows (EA1, EA2 and WD1) for the relevant Trading Day.• Restriction of Interconnector Unit bidding in the EA1 Gate Window to Capacity Holders.• Reallocation of unused Interconnector Capacity to any Interconnector Unit (with no requirement to

be a Capacity Holder) in EA2 and WD1 MSP Software Runs.• Different lengths of Trading Window for each Ex-Ante MSP Software Run:

• EA1: entire Trading Day• EA2: entire Trading Day• WD1: second portion of the Trading Day

• Fixing of Interconnector Unit capacity allocations from EA1 MSP Software Run (MIUNs) in the EA2 and WD1 MSP Software Runs.

• Fixing of Interconnector Unit capacity allocations from EA1 MSP Software Run (MIUNs) in the EA2 and WD1 MSP Software Runs.

• Changes to Credit Cover arrangements to ensure that the SEM remains as collateralised as possible.

Market changes required for Intra-Day Trading

Key T&SC Changes (initial SEMO assessment which needs to be further refined)

Code Section

Description

2 Changes to Registration Processes, particularly in relation to the registration of Interconnector Units.

3 Clarification of treatment of Default Data, MSP Software run contingencies and Data Contingencies.

4 Explanation of input data (COD, TOD, EDP data) for each Gate Window, description of Trading Windows/Optimisation Time Horizons.

5 Clarification of the data required and utilised within each Gate Window and MSP Software Run.

6 Clarification of treatment of Trading Day Exchange Rate, Data and Settlement Queries and values for Administered Settlement.

App E Clarification of publications following each MSP Software Run or Gate Window Closure.

App H Changes to Registration Processes, particularly in relation to the registration of Interconnector Units.

App I Changes to clarify the Offer Data requirements for each Ex-Ante Gate Window.

App J Revision of SMO and TSO Data Transactions (particularly in the context of Technical Offer Data).

App K Changes to clarify SMO and TSO Data Transactions (new and existing).

App N Optimisation constraints for each MSP Software Run (e.g. Active Capacity Holdings in EA1, Superposition for EA2 and WD1).

Glossary New and amended Glossary definitions.

AP1 Changes to Registration processes.

AP2 Clarification of treatment of Interconnector Units in multiple Gate Windows and Trading Windows.

AP3 Clarification of testing in the Certification Environment of bid/offer data for each relevant Gate Window.

AP4 Changes to reflect additional Gate Windows and Trading Windows, along with COD and TOD treatment.

AP6 Detail of reports published following each Ex-Ante MSP Software Run or Gate Window.

AP7 Explanation of agreed run contingencies (run cancellation etc).

AP9 Significant changes to reflect proposed Credit Cover arrangements for Interconnector Units.

AP13 Possible changes to criteria for Data and Settlement Queries.

Option 1: Single Modification

• The changes to the Code to account for Intra-Day Trading are wide-ranging.

• Development, presentation and approval of a single Modification would increase the risks of delay to the approval of the legal drafting:

• It would delay when the Modifications Committee can consider the proposed text.• It would be difficult to consider as a whole in a Modifications Committee meeting.

Option 2: Functional Grouping

Group Name Sections Included

Registration and Submission Section 2 Section 5 registration-related Appendix H Appendix K registration-related transaction Appendix E registration-related publications AP1 AP6 registration-related Key Glossary definitions

Bids, Data Transactions and MSP Software

Section 4 (submission and transactions) Section 5 (Interconnectors & bids/Data Transactions/MSP Software) AP4 bids Appendix K Data Transactions Appendix I Appendix E scheduling and pricing-related publications

Settlement and Credit Management

Section 4 (settlement) Section 6 Appendix E, CRM or settlement-related publications

• Functional grouping would allow a consistent set of changes to be considered separately (example grouping below – to be refined following further analysis) .

• Easier for SEMO to develop and the Modifications Committee/RAs to consider.

Note: a full analysis has not been completed, hence further changes may be required.

Option 3: Sectional Grouping

Group Name Sections Included

Main Sections Sections 2, 3, 4, 5 and 6

Appendices Appendices H, I, J, K, N

Agreed Procedures Agreed Procedure 1, 2, 3, 4, 5, 6, 7, 9, 10, 13 and 14

• Sectional grouping would allow each section/AP/Appendix to be addressed separately.

• Would require each section to be revisited once associated changes are made in other sections.

• More difficult for the Modifications Committee/RAs to consider and approve, as associated changes would not be available to consider at the same time.

Note: a full analysis has not been completed, hence further changes may be required.

SEMO Recommendation: Option 2 (Functional Grouping)

• SEMO recommends that a functional grouping approach is adopted.

Current Committee Timelines

• Meeting 33: 01 February (Dublin)

• Meeting 34: 05 April (Belfast)

• Meeting 35: 09 June (Dublin)

• Meeting 36: 09 August (Belfast)

• Meeting 37: 11 October (Dublin)

• Meeting 38: 06 December (Belfast)

SEMO intends to submit Modifications from May 2011

More meetings are needed

• It is assumed that the Intra-Day Trading Modification(s) need(s) to be approved by the end of 2011/very early 2012.

• SEMO is concerned that the Modifications Committee meeting schedule will be insufficient to allow Modifications Proposals to be considered and approved to meet the intended timetable.

Proposal

• SEMO proposes that four additional meetings are scheduled, in accordance with AP12:

• Commence planning, analysis and drafting could begin from mid February 2011

Current Committee Timelines

• Additional Meeting 1: 10 May (Belfast)

• Meeting 35: 09 June (Dublin)

• Additional Meeting 2: 05 July (Dublin)

• Meeting 36: 09 August (Belfast)

• Additional Meeting 3: 20 September (Belfast)

• Meeting 37: 11 October (Dublin)

• Additional Meeting 4: 10 November (Dublin)

• Meeting 38: 06 December (Belfast)

Note: exact grouping and number of Modification Proposal(s) will be developed by SEMO