Legacy SEM FAQs

There were several distinct types of Generator Units for the purposes of participation in the Single Electricity Market. To help you determine which was the correct category for your unit registration, you would answer the questions below:

1. Is the Generator Unit dispatchable by the relevant System Operator?

• If the Generator Unit is dispatchable, then proceed to Decision 2
• If the Generator Unit is not dispatchable it is classed as Autonomous, then proceed directly to question 3

2. Is the availability of the Generator Unit’s fuel source variable (limited to wind or run-of-river hydro) in the short-term?

• If the Generator Unit’s fuel source is variable in the short term, and the fuel in question is wind or run-of-river hydro, it is classed as a Variable Generator Unit
• If the Generator Unit’s fuel source is not variable in the short term, and/or the fuel in question is not wind or run-of-river hydro, it is classed as a Predictable Generator Unit – in both cases, then proceed to question 3

3. Is the Generator Unit to be included in the price setting process?

• If the Generator Unit is Autonomous, it must be registered as a Price Taker
• If the Generator Unit does not have Priority Dispatch status, it must register as Price Maker
• If the Generator Unit does have Priority Dispatch status, it could choose to register as a Price Maker or as a Price Taker (and could change status between the two with 29 days notice)

All Generator Units needed to be registered as part of a Trading Site. A Trading Site refers to one or more Generator Units and either a Trading Site Supplier Unit (covered by a single connection agreement or located collectively on a contiguous site) or an Associated Supplier Unit.

A Netting Generator Unit needed to be registered by the Market Operator as part of each Trading Site. A Netting Generator Unit is a notional Generator Unit registered to facilitate settlement of a Trading Site. Netting Generator Units do not physically exist, have no meter associated with them and were treated as Autonomous Generator Units for most purposes.

Supplier Units were a collection of demand sites for which metered consumption was aggregated. There were several distinct types of Supply Units for the purposes of participation:

• Trading Site Supplier Unit: Supplier Unit that contains only the demand within a Trading Site. Settled on a net basis against the Generator Units on that Trading Site.
• Associated Supplier Unit: A Supplier Unit which was recorded to a Trading Site but could also contain demand outside that Trading Site. Settled on a gross basis with the Generator Unit(s) on that Trading Site.
• Error Supplier Unit: Each jurisdiction had an Error Supplier Unit for which loss adjusted net demand in that jurisdiction, allowing for net transfers between jurisdictions, was calculated.

Credit Cover is the financial obligation on any new or existing Participant in the market. It was pursuant to their financial exposure while trading in the Single Electricity Market (SEM).

Initial Credit Cover was required to be put in place by the proposed Participant prior to the Effective Date in respect of each such Unit calculated with effect from the Effective Date.

Once a Participant became effective in the Market, calculations were carried out for every working day of the market (i.e. Monday to Friday, except public holidays). A Credit Cover Report (CCR) was available to Participants by 17:00 the same day for that day's calculations.

Credit risk cover was calculated summing the total of the following elements:

Fixed exposure

For each unit (Generator or Supply Unit) a Participant registered in the SEM, a fixed charge was related to those units. The fixed exposure for a Generator Unit was €5,000* per unit. The fixed exposure for a Supply Unit was a minimum of €1,000* and a maximum of €15,000*. This was based on an average of forecast volumes (average of 100 days of forecast data * 8.77**). 

• If this figure was greater than €15,000 the fixed exposure was capped at €15,000.
• If this figure was less than €1,000 this figure was capped at €1,000.
• If this figure was in between the two figures then the fixed exposure was the figure in between.

Invoiced

Amounts invoiced but not paid (Actual Exposure).

Settled not invoiced

Settlement amounts calculated but not invoiced e.g. Indicative or Initial settlement of Energy, Variable Market Operator Charge & Capacity (Actual Exposure).

Not settled

Exposure incurred but not calculated i.e. Indicative Energy, VMOC & Capacity where settlement had not taken place.

Future exposure

Potential future exposure. Time to remove the Participant from the market (suspension delay period), or move all customers to Supplier of Last Resort (SOLR).

Resettlement

M+4 and M+13 Settlement exposures.

* Or GBP equivalent

** As set out in the SEM Parameters for the Determination of Required Credit Cover

Credit Cover was posted collateral, in the form of cash or Letter of Credit and was required to ensure the Single Electricity Market (SEM), and its Participants, were protected from the financial risk of a Participant not paying their outstanding debts to the SEM.

Effective management of this risk was essential to ensuring the financial integrity of the SEM.

A Letter of Credit is a legally binding document that a Participant requests from their bank. It provides a guarantee that monies were made available to the Market Operator should that Participant be in default in relation to any outstanding payments. It was also a means for a Participant to meet their Credit Cover obligations as per the Trading and Settlement Code.

For the SEM, the Letter of Credit needed to be provided by a bank that met the SEM Credit Cover Provider criteria. Trading & Settlement Code section 6.163 provides further information on such criteria.

This was a legally binding document between all parties. Under the Trading & Settlement Code, no amendments could be accepted by the Market Operator in respect of its wording. A Participant’s registration in the SEM could not be completed until such time as this Letter of Credit has been approved.

An alternative to a Letter of Credit was to set up a Cash Collateral Account.

A Collateral Account was a cash account which was set up by the Market Operator at the request of a Participant and held in trust for that Participant by the Market Operator.

Once this account was set up, a Participant could deposit funds into the Collateral Account to assist in meeting their Credit Cover obligations.

In the SEM, a CCIN was issued in the event of a Participants Required Credit Cover exceeding their Posted Credit Cover. It indicated that a Participant did not have sufficient Credit Cover in place to meet their SEM obligations and needed to rectify the situation within 2 working days.

Every Working Day in the Market a Credit Cover Report (CCR) was produced for all Participants registered to trade in SEM. It contained details of a Participant’s Posted Credit Cover, Required Credit Cover and a breakdown of the exposure in the SEM that makes up the Required Credit Cover. If a Participant’s Required Credit Cover was greater than their Posted Credit Cover that Participant was issued with a CCIN by 17:00 by fax. This notice needed to be complied with within 2 working days.

There were a number of ways in which a Participant could resolve a CCIN within the allotted 2 working days:

• Payment of an any outstanding invoice(s) – this could decrease their Required Credit Cover to a figure that was less than their Posted Credit Cover.
• Increasing the value of any Letter of Credit - thereby increasing their Posted Credit Cover above their Required Credit Cover.
• Increasing their Cash Collateral Balance - thereby increasing their Posted Credit Cover above their Required Credit Cover.
• If a Supplier entered into Settlement Reallocations (SRAs) with a Generation Participant, thereby reducing their Required Credit Cover.

If a CCIN was not resolved within 2 working days, a Participant was considered in Default and in breach of their obligations under the Trading & Settlement Code. They were issued with a Default Notice immediately and proceedings to suspend from the SEM commenced.

SRA (Settlement Reallocation Agreement) was an agreement made between two participants whereby one Participant (the Credited Participant, usually a Supplier) was credited with a trading amount and the other Participant (the Debited Participant, usually a Generator) was debited with an identical trading amount for a given Trade Date and Trading Period.

SRAs could only be submitted by the Debited Participant and were limited to a maximum of 6 SRAs per Trading Day.

In the SEM, there were a number of benefits associated with using SRAs:

• Credited Participants could reduce their Required Credit Cover by offsetting the exposure against the exposure of the Debited Participant through the Market
• Credited Participants could reduce cash flows – SRAs reduce total invoice payment amounts due in the SEM, as the SRA component was settled by the Debited Credit Participant out of the Market.

In the SEM, SRAs were cancelled if:

• The SRA caused the Settlement Reallocation Amount to exceed the Trading Payments or Capacity Payments due to the Debited Participant in respect of its Generator Units for that Settlement Period, as applicable.
• Where the Debited Participant had multiple SRAs, which in total caused the Settlement Reallocation Amount to exceed the Trading Payments or Capacity Payments, due to that Participant in respect of its Generator Units for that Settlement Period, as applicable, the SRAs were cancelled in the reverse order of receipt (i.e. the most recently received being the first to be cancelled) until those remaining in total no longer exceeded the Trading Payments or Capacity Payments due to that Participant in respect of its Generator Units for that Settlement Period.

An SRA was cancelled during Credit Cover processing, if that SRA causes the Debited Participant’s Required Credit Cover to exceed the Participant’s Posted Credit Cover.

Please refer to Section 6.235 of the Trading & Settlement Code for further information.

In order for a Participant to cancel any SRA with the Market Operator, a SRA Cancellation Request needed to be submitted by an Authorised Person from both parties to the SRA and submitted to the Market Helpdesk by email and via the MPI.

The criteria for acceptance of the cancellation request were:

• The request needed to be made prior to 17:00 on the second Working Day after the end of the first Billing Period or capacity Period to which the Settlement Reallocation Agreement relates.
• The credited Participant could not, at the time of the request, be in default of any payment due under the Trading & Settlement Code.
• The SRA cancellation could not cause the Required Credit Cover of the Credited Participant to exceed its Posted Credit Cover
• A cancellation form needed to be received from each of the two parties to the SRA

Please refer to Section 6.246 of the Trading & Settlement Code for further information.

All newly registering Participants provided bank details to SEMO as part of the registration process. During registration, SEMO sent a template which needed to be completed with the Participants bank details and submitted to SEMO on company headed paper.

The bank details document needed to be signed by a member of Panel A and Panel B who had been previously nominated on the authorised signatory form by the Participants Company Secretary and Company Director. See Question 4 for Who/What are Authorised Signatories.

SEMO verified the signed bank details and submit these into the Central Market Systems through the Market Participant Interface where they could then be viewed by the Participant.

Generator Self Billing Invoice payments due from SEMO were paid to this account.

SEMO bank account details could be changed in the Market Participant Interface (MPI) by the Participant.

Once the details were changed the Participant had to inform the Market Helpdesk. SEMO then wrote to the Participant confirming details of old and new accounts which had to be returned to SEMO signed by two Authorised Signatories. It also needed a signature from both the Panel A and Panel B authorised persons list.

SEMO verified the signed bank details and accepted them using the MPI where they could then be viewed by the Participant. The Self Billing Invoices due from SEMO were then be paid to the account that was verified.

These are representatives authorised to sign financial documentation. In the SEM they could sign on behalf of the Market Participant.

Two authorised signatures were required for signing purposes (Panel A and Panel B). Two Company Directors or a Company Director and a Company Secretary could sign this form to confirm they nominate the people on Panel A and Panel B.

The Market Participant provided a list of such authorised persons and submitted these to SEMO.

Bank holidays are considered non-working days with payment due dates pushed back for each Bank Holiday as outlined in the Settlement Calendar.

No payments are processed on bank holidays.

If a Participant defaulted on a VMOC, Energy or Capacity payment, SEMO could draw any default payments above a value of 1000 Pounds/Euro from the Participants Letter of Credit (LOC).

The Letter of Credit draw-down process ensures that funds are in place to cover the default on an invoice payment on the due date.

Similar to the LOC process, a Participant’s Cash Collateral Account was used to provide funds for Defaults on Energy, Capacity or VMOC Invoices.

SEMO could draw default payments from the Participants Cash Collateral account after 3pm on the due date should the invoice payment not be received by this time.

The funds from the Cash Collateral Account were made available to be paid out the following working day to Generators and any Resettlement amounts to Suppliers.

A Participant’s Cash Collateral Account could not be used to cover defaults on FMOC invoices. It was the responsibility of the Market Participant to remedy any default on a FMOC invoice.

Market Participants could use their excess cash collateral to pay invoices of value equal to/less than 50 Euro/Pounds for Initial settlement invoices and of value equal to/less than 200 Euro/Pounds for Resettlement invoices.

The Participant had to request the use of their excess cash collateral to cover invoices at least 2 Working Days prior to the Invoice payment due date through the Market Helpdesk.

FMOC invoices could also be paid using the Participants excess cash collateral. FMOC was treated as an Initial settlement invoice, therefore, the invoice value should be equal to/less than 50 Euro/Pounds to allow for the draw-down request to be processed.

In addition to this, Participants could sign up to the Standing Cash Collateral Drawdown Request facility. This facility allowed for Energy, VMOC, Capacity and FMOC invoices to be automatically paid by SEMO on the due date using the Participants excess cash collateral.

Standing Cash Collateral Drawdown Requests allowed for Energy, VMOC, Capacity and FMOC invoices to be automatically paid by SEMO on the due date using the Participants excess cash collateral.

By signing for standing requests, the Participant was no longer required to contact the Market Helpdesk at least 2 working days prior to invoice due date to request that drawdowns be processed. They were automatically processed by SEMO.

Note that the Standing Cash Collateral facility could only be utilised for Initial settlement invoices equal to or less than 50 euro/pounds or for Resettlement invoices equal to or less than 200 euro/pounds.

It was the responsibility of the Market Participant to ensure the payment of invoices where values were above these limits. 

Any invoices above the relevant threshold amounts that were not paid by the Participant by the due date and time were a default.

In order to sign up, Market Participants had to send their request to the Market Helpdesk. The Funds Transfer team then responded to the request, attaching a standard template which had to be completed by the Market Participant on letter headed paper and signed by two authorised signatories.

Alternatively, the following links show the Standing Cash Collateral Drawdown Request forms which set out in detail the procedure - Existing Participant or New Participant

SEMO paid Self Billing invoices according to the timetable outlined in the Settlement Calendar.

Energy and Capacity Self Billing invoices were paid 4 days after the date of invoice. VMOC invoices were paid 6 days after the date of invoice.

Invoices were due for payment according to the schedule outlined in the Settlement Calendar.

Energy and Capacity Invoices were due 3 working days after the date of Invoice by 12:00 noon.

VMOC and FMOC Invoices were due 5 working days after the date of invoice by 17:00.

Defaults on payment of an Energy, VMOC or Capacity invoice resulted in the payment being drawn from the Participants Letter of Credit and/or Cash Collateral Account. A default notice was then issued to the Participant.

Any Participant who defaulted 3 times or more in a 20 Working Day period were reported to the Regulatory Authorities and faced suspension from the Market as outlined in the Trading & Settlement Code. Details of any defaults by Market Participants were published in the Market Operator Report on a Monthly Basis.

Defaults on payment of a FMOC invoice also resulted in the issuance of a default notice. As SEMO was unable to use the Participants Letter of Credit and/or Cash Collateral Account to cover the FMOC payment default, it was the responsibility of the Participant to remedy the default accordingly.

The settlement calculations were published on a daily basis and aggregated into a weekly invoice for Energy or Variable Market Operator Charge (VMOC), or a monthly invoice for Capacity or Fixed Market Operator Charge (FMOC).

The charges or payment line items that could appear on an Invoice/Self Billing Invoice are detailed below.

Energy Market Line Items

For Generators, the invoice line items could include:

• Energy payment
• Constraints payment
• Uninstructed Imbalance payment
• Make Whole payment
• Testing Charge

For Suppliers, the invoice line items could include:

• Energy charge
• Imperfections charges
• Capacity Market Line Items

The invoice line items could include:

• Capacity period payment for Generator Units
• Capacity period charge for Supplier Units

VMOC Market

Only Suppliers received a VMOC Invoice as this was based on meter demand. The line item was named “Exchange Variable Market Operator Charge”.

FMOC Market

Both Generators and Supplier received a Fixed Market Operator Charge Invoice. The line item was named “Exchanged Fixed Market Operator Charge”.

For Generators, the FMOC depended on the number of generating units a Participant had registered against them and also depended on the size of the Generator (i.e. Registered Capacity)

For Suppliers, the FMOC depended on the number of supplier units the Participant had registered against them.

There was an annual tariff set and approved by the Regulators for both the VMOC and FMOC markets. This changed on a financial year basis.

There were no currency cost charges applied to the Market Operator invoices. This was a cost incurred by the Market Operator.

VAT was applied to all invoices depending on what jurisdiction your units were registered to, the type of unit i.e. Generator or Supplier and the market type the invoice related to.

General Invoice Line Items

There were also some line items that were common across all invoices types. These line items could also appear on your Invoice/Self Billing Invoice.

Currency Costs

All Participant Energy or Capacity Invoices included currency costs charge or payment line items.

VAT

VAT was also be applied to your invoice depending on the following:

• Type of unit i.e. Generator or Supplier
• Market type i.e. Energy, Capacity or Market Operator Charge
• Jurisdiction your units were registered in

Settlement Reallocation Agreements (SRA)

SRA’s could also be applied to Initial Energy and Capacity invoices only.

Interest

Interest was only applicable in the case of Resettlement, there was no interest applied at Initial invoicing stage. Resettlement invoices calculated the adjusted settlement amounts from the previous invoice issued which meant the Participant paid the Net Amount.

A Self Billing Invoice (SBI) was an invoice prepared by the Market Operator (SEMO) on behalf of a Participant. The SBI specified either Energy or Capacity payments that were due to the Participant by Market. The SBI included a due date, this was the date that payment would be made to the Participant by SEMO.

Generally, Generators received SBI’s for Energy and Capacity as they were owed money by the market for electricity generated. Suppliers generally received Invoices as they owed money to the market for demand. However, changes in metered demand sometimes meant that Suppliers received SBI’s during resettlement, and Generators received Invoices.

Yes, there were situations where a Generator needed to make payments to the Market.

In addition to Self Billing Invoices a generator could receive Invoices depending on which market was being settled and whether resettlement was occurring. The following scenarios were possible in the market for Generators.

Self Billing Invoices – Payments by SEMO to Generators

Generally, a Generator received an SBI for Initial Energy and Initial Capacity billing periods as a result of generating electricity and providing capacity to the market.

Generators could also receive SBI’s for resettlement (M+4, M+13 or Ad-hoc), if an underpayment was calculated.

Invoices – Payments by Generators to SEMO

For Energy and Capacity Resettlement (M+4, M+13 or Ad-hoc) a Generator could issue an Invoice - where changes in settlement meant the Generator was previously overpaid. This was mainly the result of updated meter data, settlement query or dispute.

A Generator always received an Invoice for Fixed Market Operator Charges (FMOC). This was payable to SEMO by the due date specified.

Variable Market Operator Charge (VMOC) was only applicable to Supplier Units, therefore a Generator was not affected.

Interest was applied whenever the Settlement Rerun (M+4, M+13 or Ad-hoc) increased or decreased the total amount payable for a Billing Period or Capacity Period.

Interest in this case was charged at LIBOR plus 1%.

The interest payment was calculated by summing the interest accrued on each day since the last invoice date. Interest was calculated based on the adjustment amount, for the time period between the original due date for the Billing Period and the due date of the revised invoice.

The Single Electricity Market was designed to accommodate dual currencies. As a result there were currency costs, or benefits, associated with the conversion of charges and payments between currencies.

Currency costs, or benefits, could arise due to a difference in exchange rates between the:

• Trade date and date of invoicing – refered to as “Invoicing Period Currency Cost”
• Invoice date and date of invoice payment – referred to as “Payment Period Currency Cost”

The costs/benefits associated with Currency Costs were distributed across Participants.

SEMO prepared Currency Cost statements for each Billing Period and Capacity Period. There were no currency costs applied to Market Operator Charges.

The Single Electricity Market (SEM) operated in the Republic of Ireland and Northern Ireland with dual currencies being Euro and Sterling.

The currency associated with a Participant was based on the jurisdiction in which they operated. This was determined as part of the market registration process.

If a Participant registered and traded in Northern Ireland they were paid in Sterling and if they were registered and trade in the Republic of Ireland they were paid in Euro.

As a Participant currency is Jurisdictional, the SEM incurred Currency Costs. These were the cost or benefit of converting the currency necessary to pay Participants given the charges received.