DE MORGAN HOUSE, 58 RUSSELL SQUARE, LONDON, WC1B 4HS

The bid price scale on Figure 2 has been set to a maximum of £300 per MWh to focus on the prices most likely to reflect the wind farm operator’s view of the appropriate price for reducing output. [...] As in Figure 1, it can be seen that in the first 10 months of 2012, prior to the introduction of the TCLC, the bid prices of the majority of wind farms had settled at a level around £100 per MWh. [...] We believe that the pool of Scottish wind farms in the areas where constraints bite and that are participants in the Balancing Mechanism is too small for a realistic market to operate effectively and that the current situation is contrary to consumer interests. [...] The TCLC was set up to be a market abuse condition, and on the basis of the Ofgem seminar, the purpose was to ensure bid prices covered only the costs of reducing output during a constraint. [...] Until the requirements of the TCLC are utterly clear and the evidence of costs in the public domain, it is impossible to quantify the benefits in any meaningful way.