Market clearing prices in the balancing mechanism of England and Wales

Electrical energy was traded in England and Wales under a centralized system known as the electricity pool. While this market succeeded in many respects, it had some serious flaws. This led to the development of the new electricity trading arrangement (NETA). By keeping this new ideology, OFGEM designed market rules that encourage participants to maximize the amount of energy that they trade under bilateral contracts and to minimize the amount that has to be dealt with centrally. Since the balancing mechanism operates as a last resort to settle imbalances, it represents the spot markets in trading arrangements. All market participants have the opportunity to take part in balancing mechanisms by submitting offers to change their injection positively is also discussed in this paper.