BSC Modification P493 advances through Workgroup assessment to improve Transmission Loss Factor transparency and forecasting

Elexon's BSC Modification P493, raised by ScottishPower on 3 July 2025, has progressed through five industry Workgroup meetings (Aug 2025–Jul 2026) developing measures to improve TLF (Transmission Loss Factor) calculation transparency, including annual publication of TLFA input data, a five-year TLF forecast, a refreshed TLF Determination Guidance Note, and review of NESO's TLF process. Workgroup 5 (14 July 2026) agreed a 'staged hybrid' forecasting approach where Elexon retains model ownership, NESO supplies system assumptions, and consultants help establish methodology before transition to an Elexon/NESO-led solution. A TLF Guidance Document was published 13 February 2026 and an Analysis Report plus Power BI tool for BSC Year 2026/27 TLF data were released 15 June 2026. Workgroup Meeting 6 is scheduled for 3 November 2026, with an Assessment Report due to Panel on 11 March 2027.

TLF calculation opacity and the 2025/26 data errors (which prompted the separate P485 'freeze' modification) undermined generator confidence in transmission loss cost forecasting, raising investment risk for long-term schemes like Contracts for Difference and threatening delivery of the UK's Clean Power 2030 and Net Zero objectives. P493's multi-year forecasting and transparency package aims to restore predictability for market participants pricing long-term generation investments.

This is a settlement-methodology transparency reform within the GB Balancing and Settlement Code rather than a new market mechanism, but it has material implications for investment risk pricing in CfD and wholesale contracts, since TLFs directly affect net generation revenues via loss-adjusted settlement. The move toward a five-year forward TLF forecast and a 'staged hybrid' Elexon/NESO forecasting model is a notable governance innovation that could reduce basis risk for generators, particularly in loss-heavy regions (e.g., Scotland), and may influence future locational pricing debates (e.g., REMA) by improving visibility into loss-driven locational signals. The modification remains in Assessment Procedure, with key design elements (LFM publication, forecast methodology) still under Workgroup development, so implementation details are not yet finalized.

Balancing and Settlement Code (BSC) Modification P493, Great Britain (Elexon governance)

Workgroup Meeting 6 · 3 Nov 2026

Primary sources