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TITLE II U.K. REQUIREMENTS FOR TERMS, CONDITIONS AND METHODOLOGIES CONCERNING CAPACITY ALLOCATION AND CONGESTION MANAGEMENT

CHAPTER 2 U.K. Bidding zone configuration

Article 33 U.K.Criteria for reviewing bidding zone configurations

1. If a review of bidding zone configuration is carried out in accordance with Article 32, at least the following criteria shall be considered:

(a) in respect of network security:

(i)

the ability of bidding zone configurations to ensure operational security and security of supply;

(ii)

the degree of uncertainty in cross–zonal capacity calculation.

(b) in respect of overall market efficiency:

(i)

any increase or decrease in economic efficiency arising from the change;

(ii)

market efficiency, including, at least the cost of guaranteeing firmness of capacity, market liquidity, market concentration and market power, the facilitation of effective competition, price signals for building infrastructure, the accuracy and robustness of price signals;

(iii)

transaction and transition costs, including the cost of amending existing contractual obligations incurred by market participants, NEMOs and TSOs;

(iv)

the cost of building new infrastructure which may relieve existing congestion;

(v)

the need to ensure that the market outcome is feasible without the need for extensive application of economically inefficient remedial actions;

(vi)

any adverse effects of internal transactions on other bidding zones to ensure compliance with point 1.7 of Annex I to Regulation (EC) No 714/2009;

(vii)

the impact on the operation and efficiency of the balancing mechanisms and imbalance settlement processes.

(c) in respect of the stability and robustness of bidding zones:

(i)

the need for bidding zones to be sufficiently stable and robust over time;

(ii)

the need for bidding zones to be consistent for all capacity calculation time-frames;

(iii)

the need for each generation and load unit to belong to only one bidding zone for each market time unit;

(iv)

the location and frequency of congestion, if structural congestion influences the delimitation of bidding zones, taking into account any future investment which may relieve existing congestion.

2. A bidding zone review in accordance with Article 32 shall include scenarios which take into account a range of likely infrastructure developments throughout the period of 10 years starting from the year following the year in which the decision to launch the review was taken.