Transmission Constraint Licence Condition guidance - decision
Decision
Publication date
Industry sector
Generation and Wholesale Market
Licence type
Electricity Generation Licence
Transmission constraints are any limits on the ability of the electricity transmission system (or any part of it) to transmit power from where it is supplied to where it is needed. Where transmission constraints occur, then individual electricity generators, or groups of generators in particular areas, can hold a position of market power, with the electricity system operator having limited options to manage the constraint other than reaching an agreement with the owners of those specific units to alter their planned output.
Standard licence condition 20A of the Generation Licence (the Transmission Constraint Licence Condition, or TCLC) exists to protect against this market power. By prohibiting licensees from obtaining an excessive benefit in relation to bids submitted in the Balancing Mechanism in transmission constraint periods, it helps to keep down balancing costs – and, ultimately, consumers’ bills.
We publish guidance for licensees and other interested parties on our interpretation and approach to the enforcement of the TCLC. This includes detailed guidance relating to how we will typically expect to approach the question of whether a given bid price is excessive.
In December 2023 we launched a consultation on a set of proposed revisions to the TCLC guidance (which had last been updated in 2017) so as to bring it up to date, and to provide generators with a greater level of detail in relation to our expectations regarding compliance with the TCLC. That consultation closed on 1 February 2024.
Having considered the responses carefully, on 10 June 2024 we published our decision to update the guidance accompanying the TCLC. The new guidance, which takes effect immediately, is available at the link below. Also provided on this page are a document outlining the responses received to the consultation and the rationale for our decision, and a version of the new guidance showing changes compared to the draft published in the December 2023 consultation.