Clients

The Integrated Single Electricity Market (I-SEM) is a new wholesale electricity market arrangement for Ireland and Northern Ireland that began on October 2018, and includes new wholesale trading arrangements, a reformed mechanism for compensating generation capacity, and new clearing and settlement facilities. The new trading arrangements include four new auctions and an online platform for the trading of day-ahead and intraday physical electricity, compulsory participation for dispatchable generators in a 24-hour balancing market, and a generation capacity remuneration scheme featuring a capacity obligation linked to the settlement prices for electricity.

Beginning in the autumn of 2015, ESP Consulting supported Bord Gais Energy (BGE), a vertically-integrated Irish utility, with a substantive piece of work to prepare their business to successfully enter the I-SEM market. Our work on BGE’s I-SEM Readiness Programme is as follows:

I-SEM Programme Support:

• Senior-level support to the client Programme Manager for the establishment of the Programme Management Office (PMO) and the structuring and prioritising of several inter-related workstreams;
• Operational support to the PMO at programme initiation to set up all monitoring processes, progress tracking, and the establishment of the overall programme governance;
• Costing all activities to build up an overall detailed budget;
• Ongoing expert support over the programme lifetime by senior consultants to the I-SEM Programme Board; and
• Periodic Quality Assurance reviews to the Programme Manager and the I-SEM Board.

Business Design:

• Redesign of BGE’s Trading Organisation across front, middle, and back offices, establishing new team interfaces and re-aligned responsibilities to improve efficiency and the segregation of duties;
• Facilitation of the executive management of BGE to define new P&L segment reporting and a reform of transfer pricing between the Trading and Sales activities;
• Design of a new commercial approach for optimising and hedging production planning for the CCGT asset, together with automation of the business process;
• Design of a new Book Structure for P&L reporting of forward power hedging positions;
• Support for the establishment of the 24-hour Power Operations Desk, including development of the role profile as well as training and capacity building of the new recruits;
• Development of the commercial strategy in the power day-ahead and balancing markets within the risk appetite of the stakeholders;
• Specification of all new business processes for short-term power including forecasting, submission of trading bids and offers, power nominations, etc.;
• Specification and detailed design of an automated daily power P&L report to facilitate management’s detailed tracking of BGE’s performance in the I-SEM market; and
• Redesign of the financial reporting and settlement reporting to include the I-SEM wholesale electricity market and the new capacity market.

I-SEM Solution Implementation:

• Modifying the data interfaces and functionality of several downstream Finance and Risk Management tools and processes (such as Risk Reporting, FX hedging, etc.) to reconnect these following the upgrade of BGE’s Energy Trade and Risk Management (ETRM) system;
• Specifying and validating the functional requirements for the I-SEM Programme, and mapping these to the solution design;
• Vendor liaison, data and system configuration, and testing of a new power market communication and settlement system for I-SEM;
• Data and system configuration of a new generation asset monitoring system; and
• Full delivery (design and coding) of a bespoke front-end solution for Power Operations to calculate and manage bids and offers into the physical power spot and balancing markets.

In early 2015, ESP Consulting conducted a review of the Trading and Risk Management activities of Bord Gais Energy (BGE), a vertically-integrated power and gas utility in Ireland, in order to assess the readiness of their electricity business to participate in the new I-SEM wholesale power market.

The scope of ESP Consulting’s review included:

• The existing IT system landscape, including trading analytics, and systems for trade capture, position management, market communications, settlement, and risk and financial reporting;
• Data architecture and data management across the upstream and midstream activities;
• The organisational structure of the Assets and Trading division, including the responsibilities and capabilities of each of the teams and the interfaces between them;
• Business processes such as demand forecasting, generation planning and optimisation, asset monitoring, power market settlement, etc.; and
• KPIs and the systems and processes for reporting performance measurement across the value chain.

The review included an assessment of the actual capabilities and a gap analysis to identify the new or upgraded capabilities required for BGE to participate in the new market. This study culminated in the development of the initial plans and budgets for what became BGE’s I-SEM Readiness Programme.

In addition to our work on the I-SEM Readiness Programme, ESP Consulting has supported BGE to improve their systems processes across their whole business, especially in the areas of finance reporting and customer pricing.

Support to Finance:

ESP Consulting supported BGE’s Finance Department to streamline and rationalise financial reporting. The month-end financial reporting processes depended on a large number of manual steps to prepare and transmit financial data (such as copy/paste between spreadsheets, emailing attachments, etc.). ESP Consulting developed tooling and reporting templates to streamline the business process and rationalise the underlying data. This resulted in a substantial increase in both the efficiency of the financial reporting process and the timeliness of the reports.

Pricing Support:

ESP Consulting has also supported BGE in improving business processes relating to the pricing of customer offers and the management of data relating to the sourcing of energy for consumers. These daily or monthly activities were manual processes dependent on large amounts of data in spreadsheets, with consequent operational risk. ESP Consulting:

• Eliminated a large number of complex spreadsheets together with an unsupported software tool by designing and developing an interim tool for the management of the forward hedge position for gas and power customer supply;
• Provided SME support to a systems implementation project to replace this interim tool with an enduring position management system under vendor support; and
• Further simplified and rationalised other spreadsheets for the management of customer positions to reduce operational risk.

ESP Consulting additionally provided expert support to review the internal price curves used by BGE for the pricing of customer offers. ESP Consulting both recommended a change to methodology for the construction of the power curve, and developed tools to implement a simplified daily process for the update of the power and gas curves.