New electricity trading arrangements in England and Wales

This paper discusses how the market in the UK made a transition from a pool based system to one which was based on more general commodity markets. This market allows the bulk of electricity trading to take place in forward markets by bilateral contracts and on power exchanges with rolling half hour trades. The final balancing of generation and demand is passed to the operator one hour ahead of real time. The paper identifies how the operator manages the physical energy imbalance and how the balancing mechanisms costs are reconciled. The final section covers the market participants and the system operator prepared for the new market and how it was implemented.