Cash out arrangements

Under the current electricity market arrangements in Britain, if a market participant generates or consumes more or less electricity than they have contracted for, they are exposed to the imbalance price, or ‘cash-out’, for the difference.

As cash-out directly affects the incentives on the electricity market participants to invest in secure supplies, the arrangements are central to the delivery of a secure and competitive electricity market.

We have expressed concerns about problems with cash-out prices. We have suggested that this could lead to future electricity security of supply being undervalued and could unnecessarily increase the costs of balancing the system.

To address these concerns, we have launched the Electricity Balancing Significant Code Review (EBSCR) to look at the current cash-out arrangements. The process allows us to complete a holistic review of the cash-out arrangement and consider the need for reform to these arrangements.

At the core of this review is the aim to provide incentives for sufficient investment in capacity to ensure an efficient level of security of supply. In order to achieve this we are working to improve price signals, to make them more reflective of the costs of balancing, and to incentivise participants to balance and improve overall efficiency of the balancing arrangements.

Publications and updates

  • Published: 15th Oct 2015
  • Decisions
  • 1 Associated documents
This letter presents the Authority's decision to approve BSC Modification P323. The decision enables inclusion and treatment of Supplementary Balancing Reserve in the Imbalance Price.

  • Published: 28th Mar 2012
  • Decisions
  • 1 Associated documents
This letter informs stakeholders of our decision to launch a Significant Code Review (SCR) of the electricity cash-out arrangements in summer 2012.

  • Published: 1st Nov 2011
  • Closed: 24th Jan 2012
  • Consultations & responses
  • 1 Associated documents
This document seeks views on whether Ofgem should conduct a significant code review (SCR) considering reforms to electricity imbalance pricing or ‘cash-out’. It also seeks views on the issues around cash-out and the scope of a potential SCR.

  • Published: 5th Oct 2009
  • Decisions
  • 2 Associated documents
The Notice and accompanying Schedule modify Section 11A of the Electricity Act 1989 of Standard Licence Condition C16 of the Transmission Licences, which are required to support the implementation of BSC modification P217A.

  • Published: 25th Aug 2009
  • Closed: 23rd Sep 2009
  • Consultations & responses
  • 4 Associated documents
The notice and accompanying schedule form the statutory re-consultation on proposed changes to Standard Condition C16 of the Electricity Transmission Licence, which are required to support the implementation of BSC modification P217A

  • Published: 8th Jul 2009
  • Open letters & correspondence
  • 4 Associated documents
The notice and accompanying schedule form the statutory consultation on proposed changes to Standard Condition C16 of the Electricity Transmission Licence, which are required to support the implementation of BSC modification P217A.

  • Published: 17th Oct 2008
  • Decisions
  • 1 Associated documents
Cash-out arrangements relating to Mod P217

  • Published: 11th Aug 2008
  • Closed: 19th Sep 2008
  • Consultations & responses
  • 1 Associated documents
This document is Ofgem’s Impact Assessment for BSC Modification Proposal P217. Ofgem is currently minded to approve Alternative Modification P217, and would welcome the views of interested parties on this initial view.

  • Published: 29th Feb 2008
  • Open letters & correspondence
  • 1 Associated documents
Open letter on BSC modification proposals P211 and P217.

  • Published: 29th Feb 2008
  • Other
  • 1 Associated documents
P212 Main imbalance price based on market reference price.

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