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Pre-Gate Closure *1 Participant – notifies SEMO of possible LCF SEMO – confirms LCF (and not GCF)

INTRA-DAY TRADING DESIGN Future Options for Limited Communication Failure (LCF) 27 September 2011. Key Steps for Current LCF Process. ~ 40 minutes *2. Pre-Gate Closure *1 Participant – notifies SEMO of possible LCF SEMO – confirms LCF (and not GCF)

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Pre-Gate Closure *1 Participant – notifies SEMO of possible LCF SEMO – confirms LCF (and not GCF)

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  1. INTRA-DAY TRADING DESIGNFuture Options for Limited Communication Failure (LCF) 27 September 2011

  2. Key Steps for Current LCF Process • ~ 40 minutes*2 • Pre-Gate Closure*1 • Participant – notifies SEMO of possible LCF • SEMO – confirms LCF (and not GCF) • SEMO – Advises Participant to submit bids (via fax) • Post Gate Closure*3 • SEMO – validate LCF bid submission • SEMO – manually enter bids • SEMO – secondary check of manually entered bids • SEMO – send response to Participant to confirm bid inclusion (via fax) • SEMO – complete MSP software run & confirms bids have been used as expected • Participant • Market Controllers • Market Helpdesk • Market IT • ~ 30 minutes*4 • Market Controllers • Market Helpdesk • *1 - Key steps only. • *2 - Time is indicative , being dependent on Participant familiarity with LCF process and type of data being submitted. • *3 - Key steps only, detail involves 18+ steps • *4 - Time is indicative and will depend upon event, number of Units, bid structure, etc.

  3. Number of LCF Events • LCFs are relatively rare events • 8 LCF forms have been received to date in 2011 from 5 Participants. • 4 LCF forms accepted. • 4 LCF forms rejected. • Rejected LCF forms were not classified as an LCF, due to: • errors in submission (e.g. incorrect format or bid structure); • issues with digital certificates; or • ultimately being successful in submitting bids before gate closure.

  4. Managing the LCF Process Today • Managing a LCF is a resource intensive, manual process within SEMO: • Submission of LCF is via Type 1 (fax), with manual data entry by the MO. • Considerable interaction is required with affected Participants. • Market Operations use resources from other functions to assist, facilitated by the 10am timing of the existing gate closure being during normal business hours. • Length of time and amount of resources will depend upon the complexity of the bid information to be entered (e.g. multiple or single Units; number of PQ Pairs, etc.)

  5. LCF Under Intra-Day Trading • The handling of LCFs will need to be reconsidered under Intra-Day Trading: • Likelihood is that there will be more LCFs, due to multiple gates. • Shorter timeframes to submit will likely increase the number of failures. • The 08:00 WD1 Gate Closure is outside of normal business hours, putting pressure on Participants’ systems/processes and SEMO’s ability to handle LCFs by the rapid deployment of ‘other staff’ to assist. • The 90 minute timelines for MSP Software Runs for IDT, as developed in the high level design workshops, do not incorporate time for LCF events. • If any change required, this would be best handled via a separate Modification Proposal.

  6. Options for treatment of LCFs under IDT (1) • Option 1 – Retain LCFs as per the current Code • Advantages • A Participant retains the ability to update its bids even if it has problems with its systems. • Disadvantages • The 90 minute timelines for MSP Software Runs for IDT do not include allowance for LCF events. • High risk of MSP Software Run Cancellation if LCF occurs, due to limited time and highly manual process. • Cancelling MSP Software Runs due to Participant issues is inconsistent with the Code Objectives: • Participants would be able to affect MSP Software Run Cancellation by their own actions. • LCFs could be used to refine Generator (including Interconnector Unit) cost/availability submissions. • The actions of one Participant would discriminate against all others. • LCFs could remove opportunities to trade - contrary to the promotion of trade and price efficiency. • Could result in higher constraint costs than would otherwise be the case. • Discussion • LCFs typically result from Participant issues and not issues with the Central Market System. • Participant issues with Digital Certificates are not classed as Limited Communication Failures.

  7. Options for treatment of LCFs under IDT (2) • Option 2 – Remove LCF from the Code • Advantages • No need to cancel subsequent MSP Software Runs due to LCFs. • Does not discriminate against all Participants because of the actions of one. • Disadvantages • A Participant loses its current ability to update its bids in the event of problems with its systems. • Discussion • LCFs relate to a single Participant; any issues with receipt of data from multiple users by the Market Systems are not categorised as LCFs and would fall into the definition of General Communications Failure (GCF) which have a different mechanism for ensuring bids are received. • Updates to data for all Participants not affected by LCF would be received and utilised. • Participants will not be able to affect MSP Software Run Cancellation by their own actions (using LCF). • The presence of Default Data/Starting Gate Window Data would allow processing and trading to continue (for all Participants, excluding Interconnector Users).

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