What is the Electricity Pool?
The Electricity Pool defines the market trading rules and procedures but does not itself act as market maker buying or selling electricity. The Pool facilitates a competitive bidding process between generators that sets the wholesale price paid for electricity for each half hour period of every day and establishes the preferred generation merit order at the day ahead stage. Click
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In addition the Electricity Pool provides the supporting financial settlement processes that calculate supplier’s bills and ensures payment to generators.
The payments for electricity generation are calculated according to the defined trading rules by a computerised system known as the Settlement System. These rules, known as the Pool rules, and the Pool’s governance arrangements, are defined under the terms of the Pooling and Settlement Agreement. The Pool members are signatories to this agreement and they are bound by it to administer and develop the trading system in a way that balances the interests of actual and potential members and electricity consumers.
The Electricity Pool mechanism meets the specific objectives of enabling competition in generation, on the basis of a merit order of which generation plant should be used, of allowing all prospective suppliers to purchase in the wholesale market on the same basis.
Similarly, the Pool facilitates the mechanisms to support competition in supply, where customers can choose their supplier. The Pooling and Settlement Agreement defines a set of rules that enables the electricity consumed by customers to be attributed to suppliers.
Following the apportionment of electricity used to each supplier, it is then possible to calculate on a half hour by half hour basis how much electricity each generator provides to each supplier, and therefore how much money each supplier should pay each generator. Since the wholesale price of electricity can be different for each half hour period, the calculation of electricity usage has to be made for each half hour period in every day.