Expert Commission on Energy Regulation: main report

The final report of the Expert Commission on Energy Regulation, including the Commission's conclusions and key messages.


AC Synchronous Power Grid - alternating current electrical network across the UK, where power flows must be controlled and operated within acceptable voltage limits.

Ancillary Services - a range of functions which transmission system operators contract so that they can guarantee system security. These include black start capability (the ability to restart a grid following a black-out); frequency response (to maintain system frequency with automatic and very fast responses); fast reserve (which can provide additional energy when needed); the provision of reactive power and various other services.

Balancing Mechanism - the mechanism used by the National Grid Company to balance the supply and demand of electricity.

Black Start - the procedure to recover from a total or partial shutdown of the transmission system which has caused an extensive loss of supplies. This entails isolated power stations being started individually and gradually being reconnected to each other in order to form an interconnected system again.

British Electricity Trading And Transmission Arrangements ( BETTA) - the BETTA arrangement was introduced in 2005 to create a single wholesale electricity market for Great Britain. It replaced the New Electricity Trading Arrangements ( NETA), which did not cover Scotland.

Capacity Mechanism ( CMI) - a mechanism, currently being developed under the UK Government's electricity market reforms, requiring electricity industry participants to provide a defined level of generating capacity.

Capacity Allocation and Congestion Management ( CACM) - process of allocating and calculating interconnector capacity across different European networks and zones, an important part of moves towards a single market.

Carbon Reduction Commitment ( CRC) - the CRC is a UK government emissions trading scheme for large organisations which are not eligible for EU Emissions Trading. This includes banks, large offices, universities, large hospitals, large local authorities and central government departments. The scheme is mandatory. The CRC is expected to deliver emissions reductions totalling 0.5m tonnes of carbon (Mtc) per year by 2015.

Combined Heat and Power ( CHP) - process of generating electricity which also captures and uses the associated heat, rather than its being lost or wasted (e.g. vented to the atmosphere via a chimney).

Common Tariff Obligation - mechanism designed to ensure that electricity suppliers in the North of Scotland are not able to charge comparable domestic customers different prices solely on the basis of their location within the area.

Compressor Stations - facilities located along a natural gas pipeline which compress the gas to a specified pressure, thereby allowing it to continue travelling along the pipeline to the intended recipient.

Contracts for Difference (CfD) - in the context of the UK electricity market, a support mechanism for low carbon power production which will pay (or charge) the difference to eligible low carbon generators between a reference wholesale power price value and the 'strike price' applicable to that low carbon generating technology.

Decarbonisation - refers to the need to reduce the power sector's carbon intensity, that is, the emissions per unit of electricity generated (often given in grams of Co2 per kWh). This is necessary to achieve the mandatory greenhouse gas emission targets set by the Scottish and UK Governments.

Distributed Generation - electricity generation, usually on a relatively small scale, that is connected to the distribution networks rather than directly to the national transmission systems.

Electricity Market Reform ( EMR) - programme of reforms introduced by the UK Government in 2010, aimed at maintaining sufficient generation within the market to meet demand while meeting legally binding targets for renewable electricity and emissions reductions.

Elexon - the body responsible for balancing and settling the wholesale electricity market, utilising market trading information and metered data for energy generators and consumers from generation and production accounts.

Emergency load shedding - circumstances where supply of electricity to the network is deliberately switched off (i.e. demand reduced very quickly) in order to ensure safe management of the network.

Emissions Performance Standard - an annual limit on carbon emissions from new fossil fuel generating stations, part of the current package of reforms to the UK electricity market.

Emissions Trading Scheme - A market mechanism that allows emitters (countries, companies or facilities) to buy emissions from or sell emissions to other emitters. Emissions trading is expected to bring down the costs of meeting emission targets by allowing those who can achieve reductions less expensively to sell excess reductions (e.g. reductions in excess of those required under some regulation) to those for whom achieving reductions is more costly.

Energy Efficiency - achieving desired levels of lighting, heating or cooling for minimum energy use. Cutting down on waste energy.

Energy Trilemma - refers to the balance which Scottish and UK Government energy policies aim to strike between ensuring that energy is affordable, that it is produced sustainably, and that supplies of energy are secure.

Fuel Poverty - a person is living in fuel poverty according to the Scottish Government's definition, if, to heat their home to a satisfactory standard, they need to spend more than 10% of their household income on fuel.

Grandfathering - exemption of particular parties from effects of changes in circumstances or law.

Hydro Benefit Scheme - designed to protect consumers from the high costs of distributing electricity in the North of Scotland. It is funded by charges on all licensed suppliers across Great Britain.

Industrial Emission Directive - a European Union directive from 2010 which commits European Union Member States to control and reduce the impact of industrial emissions on the environment.

Interconnector - an energy link between different countries or systems. Examples are the electrical interconnectors between the UK and France, or Scotland and Northern Ireland, and the gas pipeline linking the UK with the European gas network at Zeebrugge in Belgium.

Large Combustion Plant Directive - a European Union directive which requires Member States of the European Union to legislatively limit emissions from combustion plants with a thermal capacity of 50 Megawatts ( MW) or greater. As well as fossil-fuel power stations, the directive applies to other large thermal plant, such as steelworks and petroleum refineries.

Megawatt - A megawatt ( MW) is one million Watts.

Micro-Generation - the small-scale generation of energy, for example solar panels or domestic wind turbines. These are often referred to as generation from renewable sources at a domestic or small community level.

National Grid - The National Grid owns the main transmission systems and is responsible for transmitting the electricity from the generator to the local RECs area. All electricity generated in mainland UK is put into the National Grid before fed into distribution networks.

National Transmission System ( NTS) - National Grid's high pressure gas network.

Network Code ( NWC) - The rules and procedures that govern the way National Grid and all shippers operate within the deregulated market.

Ofgem - electricity and gas market regulator in Great Britain.

Peak Demand - Point of maximum electricity demand on the national system.

Regulator - organisation charged with protecting and advancing the interests of consumers through use of regulation where necessary and the promotion of competition within the market.

Regional Electricity Market - market trading zones within the European Union, comprising two or more different countries, formed as part of moves towards a single European energy market.

Renewable Energy - used to describe the energy produced using naturally replenishing resources, including wind, wave, tidal, hydro and solar power.

Renewable Obligation ( RO) - legislation (separate Orders exist in Scotland, Northern Ireland and England/Wales) which places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources.

Retail Energy Market - market in which electricity and gas is sold to end-use customers, such as households and businesses.

rGB - a geographical entity, including England and Wales.

rUK - a political entity, including England, Wales and Northern Ireland, that would result from Scottish Independence.

Settlements Agency - This is the body that 'settles' the distribution of electricity to establish where and to whom the generated load has been distributed to.

Smart Metering - will give consumers (via an in-home display) the ability to monitor gas and electricity meters, thus tracking the amount of energy being used and its cost.

Socialisation of Costs - in the context of energy network investment costs, the spreading of those costs across the network as whole rather than concentrating them within distinct geographical zones.

State Aid - an advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities.

Statutory Independent Undertakings ( SIUs) - in the Scottish context, these are gas pipelines in a number of locations, which are not connected to the rest of the network, and the costs of investment in which, are socialised across the network as a whole.

Storage - refers to devices or technologies which enable energy (heat or electricity) to be stored upon production and used at a later date when demand exists.

System Operator - entity charged with ensuring transmission of gas and electricity through the necessary infrastructure (pipelines or cables), and to balance the system in real time.

Thermal Generating Capacity - generating stations which burn fuel (e.g. coal, gas, uranium, straw, municipal waste) to produce steam which drives a turbine, generating electricity and heat.

Transmission - the transfer of electricity at high voltage from the power stations across the UK through wires on pylons to points where it can be distributed to users. This is known as the Grid System and is owned and operated by the National Grid Company ( NGC).

Transmission Charges - costs paid by all users of the electricity transmission infrastructure, with charges varying across the different geographical zones of the UK. Gas transmission charges are made up of entry charges and commodity charges.

Transmission Losses (Line Losses) - when transmitting electricity from generator to local distribution network areas some electricity is lost. Specific calculations have to be made by suppliers to determine the level of these losses.

Terawatt Hours ( TWh) - one thousand Gigawatt hours.

Wholesale Energy Market - series of contracts, derivatives and bilateral trades between generators and suppliers for the onward provision of gas and electricity to final customers.

XOSERVE - Xoserve, delivers transportation transactional services on behalf of all major gas transportation companies.


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