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OFGEM to Remove Cross-Border Balancing Charges

17 Aug 2012

 UK energy regulator, Ofgem is set to remove the charges for the balancing of the British transmission system from electricity interconnectors that is levied by National Grid, the national Transmission System Operator (TSO).

The move comes as part of the regulators goal to remove cross-border trade barriers, enabling the development of a single European electricity market. The removal of the charges is due to take effect from 30 August 2012.

The daily charges of balancing the system are recovered by National Grid via its Balancing Services Use of System (BSUoS) charges which are divided between suppliers and generators. At present, interconnector imports are charged as generation while exports are charged as demand. Ofgem commented that according to the EU’s Third Package, electricity regulation interconnectors are defined as transmission lines; meaning interconnector flows should be classed as part of the transmission infrastructure, rather than generation or demand.

APX-ENDEX, the Anglo-Dutch Energy exchange said in an official statement, that it “welcomes the Ofgem decision to remove the charge” which could potentially “lead to 10% increase in traded volumes as well as increased interconnector utilisation of up to 20%”.  “APX-ENDEX believes that the removal of the BSUoS charge contributes to more efficient intraday cross-border trading which is essential for the transition to a low carbon energy sector by accommodating the increased intermittency created by the growing amount of wind energy produced in Great Britain” they added.

At present, the UK electricity market links to Continental Europe via the 1 Gigawatt UK-Netherlands BritNed cable and the 2 Gigawatt Interconnexion France-Angleterre (IFA) lines, as well as a link to Ireland via the 500 Megawatt Moyle cable. All flows on currently operational interconnectors, as well as any future interconnectors, will be exempt from the BSUoS charges.