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 are with this call for input inviting views from industry participants on whether any changes are required to the TCLC, in order to ensure that it is as effective as possible in keeping bills down. This call for input accompanies a separate formal consultation that we have launched relating to a number of proposed updates to the guidance which accompanies the TCLC.