Balancing and Settlement Code (BSC)
Page type: primary-anchored (mirrors BSC, Elexon)
Last updated: 5 April 2026
The BSC is the industry code governing how electricity imbalances are settled in Great Britain. It is a multilateral contract: every licensed generator, supplier, and interconnector must accede. Administered by Elexon under the BSC Panel; Ofgem is the Authority.
Source file: ~/knowledge/sources/elexon/bsc.md
What the BSC does, in plain language
The GB wholesale electricity market works on a "contract then balance" model. Parties trade bilaterally and notify their positions to Elexon. In real-time, the system operator (NESO) accepts Bids and Offers to keep the system balanced. After the fact, Elexon calculates what each party actually produced or consumed, compares it to their contracted position, and charges them for the difference at the System Price.
The BSC is the rule book for all of this: who can participate, how metering works, how contracts are notified, how bids and offers are submitted and accepted, how settlement prices are calculated, how invoices are raised, and what happens when things go wrong.
Structure
The BSC has 26 Sections (A-Z, skipping I and Y) plus sub-sections. Grouped by function:
Governance (A, B, C, D, F)
- Section A: Parties and Participation: Who can join, eight participation capacities, Energy Accounts, registration in the Central Registration System
- Section B: The Panel: Panel composition (Chair + elected + consumer + NETSO + independent members), objectives (efficiency, competition, transparency), powers
- Section C: BSCCo: Elexon's role as Code administrator, 27 enumerated powers, no-profit objective, restrictions (Panel consent for borrowing >£10m)
- Section D: Cost Recovery: How BSC operating costs are shared across Trading Parties via four types of funding share
- Section F: Modifications: How the BSC is changed. Covers raising proposals, Workgroup assessment, Authority decision, cross-code coordination
Metering and Registration (K, L, J, E, O)
- Section K: Classification and Registration: Metering system identification, BM Unit establishment, responsible party rules, exemptable generation, offshore metering
- Section L: Metering: Equipment installation, Codes of Practice, accuracy, dispensations, access rights
- Section J: Party Agents and Qualification: Agent appointment, Performance Assurance Board qualification process
- Section E: BSC Agents: Central service providers (SAA, CRA, CDCA, etc.) contracted by Elexon
- Section O: Communications: Data transfer standards, Party System requirements, security
Trading and Balancing (P, Q, T, U)
- Section P: Contract Volumes: Bilateral contract notifications (ECVNs), metered volume reallocations
- Section Q: Balancing Mechanism: Physical notifications (FPNs), Bid-Offer Pairs, NETSO acceptances. This is the real-time market.
- Section T: Settlement and Trading Charges: System Price calculation (SBP/SSP), imbalance volumes, daily Trading Charges
- Section U: Settlement Provisions: Settlement run timetable (Initial + 4 reconciliations over 28 months), data retention
Supplier Volume Allocation (S, S-1 to S-4, R)
- Section S: SVA: Allocation of volumes to Suppliers (domestic/smaller meters), Supplier IDs, agent responsibilities
- Section S-1: Performance Charges: Tiered charges (£0-£1.43/MWh) for data quality failures
- Sections S-2 to S-4: SVA calculation rules and MHHS transition rules
- Section R: CVA Data Collection: Meter data aggregation for large (centrally-registered) metering systems
Financial (M, N)
- Section M: Credit Cover: Energy indebtedness, credit requirements (Letters of Credit, cash), credit default thresholds
- Section N: Clearing and Payment: BSC Clearer as central counterparty, payment netting, Payment Calendar (~T+29 days), banking (credit facility max £10m)
Assurance, Disputes, Contingencies (Z, W, G)
- Section Z: Performance Assurance: PAB, settlement risk management, Performance Assurance Techniques
- Section W: Trading Disputes: Committee of 6-12 independent members; remedies via settlement correction
- Section G: Contingencies: System Restoration, Market Suspension, Avoidable Costs, Secretary of State emergency powers
General (H, X, V)
- Section H: General: Code hierarchy, Events of Default, relationship with other codes
- Section X: Definitions: Hundreds of defined terms in two glossaries
- Section V: Reporting: BMRS, BSC Agent reports, market data publications
Key concepts
BM Unit: The fundamental unit of settlement. Every generator, demand site, or interconnector is registered as one or more BM Units. Each BM Unit submits physical data, receives balancing instructions, and has its imbalance calculated individually. (Section K)
Final Physical Notification (FPN): The expected MW output/consumption profile for a BM Unit in each half-hour settlement period. This is the baseline. Deviations from it are imbalance. (Section Q3.2)
Bid-Offer Pair: A price and volume at which a BM Unit is willing to increase output (Offer) or decrease output (Bid). NETSO accepts these in real-time. (Section Q4.1)
System Price: The price applied to imbalance volumes. Calculated from accepted Bids/Offers and Market Index Data. Split into System Buy Price (SBP, for parties short of energy) and System Sell Price (SSP, for parties long). (Section T)
Settlement Period: 30 minutes. The BSC divides each day into 48 settlement periods, midnight to midnight.
Trading Charges: The net financial amounts owed by or to each party for each Settlement Day, comprising BM Unit cashflows, imbalance charges, and compensation. Payable via the BSC Clearer approximately 29 days after the Settlement Day. (Sections T, N)
Cross-references to other instruments
| Other instrument | Relationship to BSC |
|---|---|
| ESO Licence | BSC exists as Condition C3 obligation; Applicable BSC Objectives in Condition E1.13 |
| Grid Code | Provides operational data obligations (BC1, BC2, OC2) that feed BSC settlement |
| CUSC | Connection agreements are prerequisites for BSC registration |
| Retail Energy Code | Governs retail market data feeding into SVA |
| DCUSA | Distribution connection agreements; DSO obligations under BSC |
| EBGL (EU 2017/2195, retained) | Article 18 amendment procedures integrated into BSC modification process |
| Transparency Regulation (EU 543/2013, retained) | Data publication requirements in Section Q |
| Electricity Act 1989 | Statutory basis (s.33); insolvency thresholds |
| Capacity Market Rules | Cross-code coordination via Section F |
| CfD Standard Terms | Cross-code coordination via Section F |
Defined terms
See the full register in the source file. The BSC defines several hundred terms across Annex X-1 (General Glossary) and Annex X-2 (Technical Glossary).
Character positions
No character positions captured yet. Think tank commentary on BSC reform (e.g. REMA implications for settlement, System Price methodology debates) to be added from secondary source ingests.
Debate
The major live BSC debates are: - MHHS implementation: Market-Wide Half-Hourly Settlement (P396) is the biggest structural change since NETA. Moving all meters to half-hourly settlement. Sections S-3 and S-4 added for transition. - System Price methodology: Ongoing debate about whether the dual-price (SBP/SSP) cash-out accurately signals scarcity and surplus. - REMA interaction: If REMA delivers locational pricing, the BSC settlement model would need fundamental reform. - Virtual Lead Party / aggregation: New participation capacity enabling flexibility aggregation, still maturing.