The Nuclear Regulated Asset Base Model (Revenue Collection) Regulations 2023

PART 2 Supplier obligation

CHAPTER 1 The supplier obligation

The supplier obligation

3.—(1) Every electricity supplier who supplies electricity during a quarterly obligation period must, subject to paragraph (3), pay an RCC period contribution to the revenue collection counterparty in respect of that period.

(2) That contribution is to be calculated in accordance with regulation 4.

(3) Where the amount of a supplier’s RCC period contribution in respect of a quarterly obligation period is a negative number—

(a) the amount the supplier must pay under paragraph (1) in respect of that period is zero; and

(b) the revenue collection counterparty must pay the absolute value of that amount to that supplier.

(4) For the purpose of ensuring that the RCC period contribution is paid—

(a) an electricity supplier must make—

(i) interim rate payments in accordance with regulation 7(1),

(ii) supplier data reconciliation payments in accordance with regulation 8(2),

(iii) reserve payments in accordance with regulation 10(1),

(iv) any additional reserve payments required by regulation 13(3), and

(v) any reconciliation payments required by regulation 16(3)(a); and

(b) the revenue collection counterparty must make—

(i) counterparty data reconciliation payments in accordance with regulation 8(3), and

(ii) any required reconciliation payments in accordance with regulation 16(3)(b).

RCC period contribution

4.—(1) The RCC period contribution for a supplier for a quarterly obligation period is the amount given by—

where—

• GP is the total amount of revenue collection counterparty payments which the revenue collection counterparty was required to make in the quarterly obligation period;

• SoS repayment is—

(a)

unless sub-paragraph (b) or (c) applies, the SoS payment in respect of the quarterly obligation period that ended three whole quarterly obligation periods before the quarterly obligation period for which this calculation is made (a “full SoS repayment”);

(b)

unless paragraph (c) applies and if the Secretary of State has specified that only a proportion of the full SoS repayment is to be used for the purposes of this paragraph, that amount;

(c)

where the contribution is for any of first four quarterly obligation periods, zero;

CP is the total amount of RCC party payments which the revenue collection counterparty received from RCC parties in the quarterly obligation period;

SoS payment is the total amount of any SoS funds that the Secretary of State has specified are to be used when calculating the RCC period contribution in respect of the quarterly obligation period;

DI is any amount of interest which was paid by virtue of regulation 7(6), 8(7), 10(2), 13(7), 16(5) or 17(7) during that period, less any amount of that interest which was paid to electricity suppliers by virtue of regulation 18(2);

SQS is the amount of electricity supplied by that supplier in the quarterly obligation period;

XEP is the amount of EII excluded electricity supplied by that supplier in the quarterly obligation period;

TQS is the total amount of electricity supplied by all suppliers in the quarterly obligation period; and

AXP is the total amount of EII excluded electricity supplied by all suppliers in the quarterly obligation period.

(2) For the purposes of this regulation, the amount of electricity supplied by a supplier in a quarterly obligation period is the amount of electricity which the BSCCo determines was supplied by that supplier on the basis of—

(a) Final Reconciliation Volume Allocation Runs for each day within the quarterly obligation period; or

(b) where a Post-Final Volume Allocation Run has occurred in relation to a day on which electricity was supplied, the Post-Final Volume Allocation Run for that day.

(3) Where the revenue collection counterparty makes a determination under these Regulations which requires the determination of the amount of electricity supplied on a day which is EII excluded electricity, it must, where possible, base that determination of EII excluded electricity on information derived from the most recent BSC volume allocation run carried out by the BSCCo in relation to the day on which the electricity was supplied.

CHAPTER 2 Interim daily levy

Setting the interim levy rate

5.—(1) The revenue collection counterparty must, in respect of every quarterly obligation period, determine an interim levy rate which is to apply for that period.

(2) The revenue collection counterparty must determine the interim levy rate for a quarterly obligation period at least 30 days before the commencement of that quarterly obligation period.

(3) Where the revenue collection counterparty has determined an interim levy rate for a quarterly obligation period it must—

(a) as soon as reasonably practicable, publish a notice setting out that rate and issue that notice to every electricity supplier who has a BM Unit registered as at the day before the date of publication of the notice, and

(b) issue that notice to every electricity supplier who has a BM Unit that becomes registered on or after the date of publication of the notice and by the last day of the quarterly obligation period to which that rate applies, as soon as reasonably practicable after the BM Unit is registered.

(4) Subject to paragraph (5), the interim levy rate for a quarterly obligation period is to be determined as the amount given by—

where—

• EOC is the estimated quarterly obligation period payment cost, determined in accordance with regulation 6(1);

• EOI is the estimated quarterly obligation period income, determined in accordance with regulation 6(2); and

• EOS is the estimated quarterly obligation period electricity supply, estimated in accordance with regulation 6(4).

(5) Where the amount given by the calculation in paragraph (4) in relation to a quarterly obligation period is less than zero, the interim levy rate must be determined as zero for that period.

Estimated cost, income & electricity supply

6.—(1) The estimated quarterly obligation period payment cost in respect of a quarterly obligation period (“the rate period”) is the sum of the revenue collection counterparty’s estimate of—

(a) any SoS repayment in respect of that rate period, and

(b) the revenue collection counterparty’s estimate, made in accordance with the revenue collection contracts, of the GP required to be paid by the revenue collection counterparty in respect of that rate period.

(2) The estimated quarterly obligation period income in respect of the rate period is the sum of—

(a) any SoS funds that the Secretary of State has specified will be available in respect of that rate period and that the Secretary of State has specified should be taken into account when calculating the interim levy rate under regulation 5 or adjusting the levy rate under regulation 12 (as applicable); and

(b) the revenue collection counterparty’s estimate, having regard to the matters set out in paragraph (3), of the CP that will be paid to the revenue collection counterparty in respect of that rate period.

(3) The matters referred to in paragraph (2)(b) are—

(a) the revenue collection counterparty’s estimate, made in accordance with the revenue collection contracts, of the CP required to be paid to the revenue collection counterparty during the rate period, and

(b) the revenue collection counterparty’s estimate of the likelihood of the RCC parties failing to make the payments required under the revenue collection contracts.

(4) The estimated quarterly obligation period electricity supply in respect of the rate period is the amount of electricity which the revenue collection counterparty estimates will be supplied by all electricity suppliers in the rate period, less the amount of EII excluded electricity which it estimates will be supplied by all suppliers in that rate period.

(5) In this regulation “CP”, “GP” and “SoS repayment” have the meaning given in regulation 4.

Interim rate payments

7.—(1) An electricity supplier must make a payment (“an interim rate payment”) to the revenue collection counterparty in respect of each day on which that supplier supplies electricity in Great Britain during a quarterly obligation period.

(2) The amount of an interim rate payment to be paid by a supplier in respect of a day is equal to the amount of electricity supplied by that supplier on that day, less any amount of EII excluded electricity supplied by that supplier on that day, multiplied by the interim levy rate which applies in relation to that day.

(3) The interim levy rate which applies in relation to a day is—

(a) the rate determined under regulation 5, or

(b) where an adjusted interim rate which has been determined under regulation 11(1)(a) has effect in accordance with regulation 12(4), that rate.

(4) The revenue collection counterparty must, as soon as reasonably practicable after the BSCCo has carried out an Interim Information Volume Allocation Run in respect of a day in a quarterly obligation period, issue a notice to each electricity supplier who supplied electricity on that day stating the interim rate payment which the supplier to whom the notice is issued must pay in respect of that day.

(5) A supplier must make an interim rate payment in respect of a day by the 5th working day after the day on which the revenue collection counterparty has issued a notice under paragraph (4) to that supplier.

(6) Where a supplier fails to pay all or part of an interim rate payment by the day on which that payment must be made, that supplier must pay the revenue collection counterparty simple interest on any unpaid amount at the rate specified in regulation 36(1) from the day after the day on which that payment should have been made.

(7) For the purposes of paragraph (2), the amount of electricity supplied by an electricity supplier on a particular day is the amount of electricity which the BSCCo determines, on the basis of an Interim Information Volume Allocation Run in respect of that day, as the amount of electricity supplied by that supplier on that day.

Data reconciliation of interim rate payments

8.—(1) This regulation applies where, before the conclusion of a quarterly obligation period, the BSCCo carries out a relevant allocation run in respect of a day in that period and the reconciled interim rate amount in relation to that day for an electricity supplier is different to the net levied interim rate payment for that supplier.

(2) Where that reconciled interim rate amount is more than the net levied interim rate payment the supplier must pay the difference to the revenue collection counterparty.

(3) Where that reconciled interim rate amount is less than the net levied interim rate payment the revenue collection counterparty must pay the difference to the supplier.

(4) The revenue collection counterparty must, as soon as reasonably practicable after the BSCCo has carried out a relevant allocation run in respect of a day, issue a notice to each electricity supplier which states the amount which must be paid by virtue of paragraph (2) or (3).

(5) An electricity supplier who is required to make payment by virtue of paragraph (2) must make that payment by the 5th working day after the day on which the revenue collection counterparty issues the notice to that supplier under paragraph (4).

(6) The revenue collection counterparty must make a payment it is required to make by virtue of paragraph (3) by the 8th working day after the day on which the BSCCo carried out the relevant allocation run following which the revenue collection counterparty is required to make that payment.

(7) Where a supplier fails to pay all or part of a payment it is required to make by virtue of paragraph (2), that supplier must pay the revenue collection counterparty simple interest at the rate specified in regulation 36(1) on any unpaid amount from the day after the day on which that payment should have been made.

(8) For the purposes of this regulation—

(a) the reconciled interim rate amount for a supplier in relation to a day is equal to the amount of electricity supplied by that supplier on that day less any amount of EII excluded electricity supplied by that supplier on that day multiplied by the interim levy rate which applies to that day by virtue of regulation 7(3);

(b) the net levied interim rate payment for a supplier in relation to a day is the sum of the interim rate payment that supplier was required to pay in respect of that day, and any payments that supplier was previously required to pay in respect of that day, by virtue of paragraph (2), less any payments the revenue collection counterparty was previously required to pay to that supplier in respect of that day by virtue of paragraph (3);

(c) a relevant allocation run is an Initial Volume Allocation Run or a Reconciliation Volume Allocation Run; and

(d) the amount of electricity supplied by an electricity supplier on a particular day is the amount of electricity which the BSCCo determines, on the basis of the most recent relevant allocation run in relation to that day, as the amount of electricity supplied by that supplier on that day.

CHAPTER 3 Payments for reserve

Reserve payments

9.—(1) The revenue collection counterparty must determine—

(a) the total amount of reserve payments (“the total reserve amount”) to be collected from suppliers in respect of each quarterly obligation period, calculated in accordance with paragraph (6); and

(b) the amount of each electricity supplier’s reserve payment in respect of each quarterly obligation period, calculated in accordance with regulation 10.

(2) The revenue collection counterparty must make and publish its determination of the total reserve amount for a quarterly obligation period before the relevant day.

(3) The revenue collection counterparty must determine the amount of each electricity supplier’s reserve payment for a quarterly obligation period before the end of the period of 8 working days beginning with the relevant day.

(4) The revenue collection counterparty must issue to every relevant supplier a notice which sets out the amount of that supplier’s reserve payment for a quarterly obligation period before the end of the period of 8 working days beginning with the relevant day.

(5) For the purpose of paragraph (4), a “relevant supplier” is an electricity supplier who supplied electricity during the reference period (within the meaning given by regulation 10(4)).

(6) The total reserve amount for a quarterly obligation period is the amount which the revenue collection counterparty determines it would need to be paid for there to be a 19 in 20 probability of it being able to make all the payments it is required to make to RCC parties during the reserve period which commences during that quarterly obligation period having regard to—

(a) the revenue collection counterparty’s estimate of the payments it expects to receive from the RCC parties during that reserve period;

(b) the revenue collection counterparty’s estimate of the payments it will be required to make to RCC parties and electricity suppliers during that reserve period;

(c) the likelihood of any supplier failing to make payments it is required to make under these Regulations during that reserve period; and

(d) any SoS funds that the Secretary of State has specified will be available in respect of that reserve period and that the Secretary of State has specified should be taken into account when adjusting the total reserve amount.

(7) In this regulation the “relevant day” means the day which is 30 days before the beginning of the relevant quarterly obligation period.

Individual suppliers’ reserve amounts

10.—(1) An electricity supplier who supplied electricity during the reference period must make a reserve payment to the revenue collection counterparty in respect of a quarterly obligation period (“ the relevant period”) by—

(a) in the case of the first quarterly obligation period, the 5th working day after the first payment period start date;

(b) in the case of a subsequent quarterly obligation period, the 5th working day after the day on which the revenue collection counterparty has issued a notice to that supplier under regulation 15(3) for the relevant period.

(2) Where a supplier fails to pay all or part of a reserve payment by the date by which it must be paid in accordance with paragraph (1), that supplier must pay the revenue collection counterparty simple interest on any unpaid amount at the rate specified in regulation 36(1) from the day after the date by which that amount should have been paid.

(3) Subject to regulation 14, the amount of a supplier’s reserve payment in respect of the relevant period is the amount given by—

where—

• TRA is total reserve amount for that period;

• SRE is the amount of electricity supplied by that supplier in the reference period as determined on the date on which that total reserve amount is determined;

• SXE is the amount of EII excluded electricity supplied by that supplier in the reference period as determined on the date on which that total reserve amount is determined;

• RE is the total amount of electricity supplied by all suppliers in the reference period as determined on the date on which that total reserve amount is determined; and

• XE is the total amount of EII excluded electricity supplied by all suppliers in the reference period as determined on the date on which that total reserve amount is determined.

(4) The reference period is the most recent period of 30 consecutive days in respect of which the BSCCo has carried out an Initial Volume Allocation Run before the revenue collection counterparty makes its determination under regulation 9(1)(a) in respect of the relevant period.

(5) For the purposes of paragraph (3) the amount of electricity supplied by an electricity supplier in a reference period or adjusted reference period is the amount of all electricity which the BSCCo determines was supplied by that supplier in that period, on the basis of the most recent BSC volume allocation run which the BSCCo has carried out.

CHAPTER 4 Adjustments to interim rate and additional reserve payments

In period adjustments

11.—(1) Where the revenue collection counterparty is of the opinion that there is a high degree of likelihood that it will be unable to make all payments it is required to make to RCC parties in respect of a quarterly obligation period it may, if it thinks it expedient to do so—

(a) determine an adjusted interim levy rate in respect of that period in accordance with regulation 12;

(b) determine an additional total reserve amount in respect of that period in accordance with regulation 13;

(c) determine an adjusted interim levy rate and an additional total reserve amount in respect of that period.

(2) The revenue collection counterparty must take such steps as it considers necessary to ensure that electricity suppliers are kept informed of the likelihood that it will be unable to make all payments it is required to make to RCC parties in respect of a quarterly obligation period.

(3) Where the revenue collection counterparty is of the opinion that there is a high degree of likelihood that it will collect significantly more from suppliers under regulations 7(1) and 10(1) in respect of a quarterly obligation period than the amount it requires to be able to make all payments it is required to make to RCC parties in respect of that period it may, in accordance with regulation 12, determine an adjusted interim levy rate in respect of that period.

Adjusted interim levy rate

12.—(1) Subject to paragraph (2), an adjusted interim levy rate (“adjusted interim levy rate”) for a quarterly obligation period (“the rate period”) is to be determined as the amount given by—

where—

• EOC is the estimated quarterly obligation period payment cost in respect of the rate period, estimated in accordance with regulation 6(1) as at the time of the determination of the adjusted interim levy rate;

• EOI is the estimated quarterly obligation period income in respect of the rate period, estimated in accordance with regulation 6(2) as at the time of the determination of the adjusted interim levy rate;

• SPC is the sum of—

(a)

the total amount of interim rate payments which have been received by the revenue collection counterparty in respect of electricity supply during the rate period as at the time of the determination of the adjusted interim levy rate; and

(b)

the total amount of interim rate payments which the revenue collection counterparty estimates it will receive in respect of electricity supply during the rate period, in the period from the time of the determination of the adjusted interim levy rate until the adjusted interim levy rate has effect; and

EPS is the amount of electricity which the revenue collection counterparty estimates will be supplied by all electricity suppliers in that period from the time the adjusted interim levy rate has effect until the conclusion of the rate period, less the amount of EII excluded electricity which it estimates will be supplied by all suppliers in that period.

(2) Where the rate determined in accordance with paragraph (1) would be a negative number, the revenue collection counterparty must determine the adjusted interim levy rate as zero.

(3) Where the revenue collection counterparty has determined an adjusted interim levy rate it must—

(a) as soon as reasonably practicable, publish a notice setting out that rate and issue that notice to every electricity supplier who has a BM Unit registered as at the day before the date of publication of the notice,

(b) issue that notice to every electricity supplier who has a BM Unit that becomes registered on or after the date of publication of the notice and by the last day of the quarterly obligation period during which that rate has effect, as soon as reasonably practicable after the BM Unit is registered; and

(c) where paragraph (5) applies, specify a date on which the rate shall have effect.

(4) Where the adjusted interim levy rate is greater than the previous levy rate, it has effect from the latest of—

(a) the commencement of the rate period;

(b) the 30th day after the revenue collection counterparty has published the notice under paragraph (3);

(c) any later date in the rate period which the revenue collection counterparty specifies in the notice under paragraph (3).

(5) Where the adjusted interim levy rate is less than the previous levy rate, it has effect from the date specified in the notice published under paragraph (3).

(6) For the purpose of paragraphs (4) and (5), “previous levy rate” means the interim levy rate or the adjusted interim levy rate, whichever is most recently determined in respect of the rate period.

Additional total reserve amount

13.—(1) An additional total reserve amount in respect of a quarterly obligation period is the amount which the revenue collection counterparty determines it would need to be paid, having regard to the matters set out in paragraph (2)—

(a) to be able to make any revenue collection counterparty payments it has failed to make during the reserve period which commences during that quarterly obligation period; and

(b) for there to be a 19 in 20 probability of it being able to make all payments it is required to make to RCC parties during the reserve period after the making of the determination.

(2) The matters referred in paragraph (1) are—

(a) the amount of interim rate payments which it expects to be paid during the reserve period after the making of the determination of the additional total reserve amount;

(b) any other amount which it expects to be paid by suppliers during the reserve period after the making of that determination;

(c) the likelihood of any supplier failing to make payments it is required to make under these Regulations during the reserve period;

(d) the revenue collection counterparty’s estimate of the payments it expects to receive from the RCC parties and electricity suppliers during the reserve period;

(e) the revenue collection counterparty’s estimate of the payments it will be required to make to the RCC parties and electricity suppliers during the reserve period; and

(f) the amount of any SoS funds that the Secretary of State has specified will be available in respect of the reserve period and that the Secretary of State has specified should be taken into account when adjusting the total reserve amount.

(3) Where the revenue collection counterparty determines an additional total reserve amount, each electricity supplier who supplied electricity during the adjusted reference period must pay an additional reserve payment.

(4) An electricity supplier’s additional reserve payment is the amount given by—

where—

• TAA is the additional total reserve amount;

• SRE is the amount of electricity (within the meaning given by regulation 10(5)) supplied by that supplier in the adjusted reference period as determined at the time that additional total reserve amount is determined;

• SXE is the amount of EII excluded electricity supplied by that supplier in the adjusted reference period as determined on the date on which that additional total reserve amount is determined;

• RE is the total amount of electricity (within the meaning given by regulation 10(5)) supplied by all suppliers in the adjusted reference period, as determined at the time that additional total reserve amount is determined; and

• XE is the total amount of EII excluded electricity supplied by all suppliers in the adjusted reference period as determined on the date on which that additional total reserve amount is determined.

(5) Where the revenue collection counterparty has determined an additional total reserve amount it must—

(a) publish a notice setting out its determination of the additional total reserve amount, and

(b) issue a notice to every electricity supplier who supplied electricity during the adjusted reference period setting out its determination of that supplier’s additional reserve payment.

(6) An electricity supplier must pay an additional reserve payment in respect of the reserve period by the later of—

(a) the date by which a reserve payment is due from that supplier in respect of that period;

(b) the 30th day after the revenue collection counterparty has published a notice under paragraph (5)(a); or

(c) any later date which the revenue collection counterparty specifies in the notice published under paragraph (5)(a).

(7) Where a supplier fails to make all or part of an additional reserve payment by the date it must be paid in accordance with paragraph (6), that supplier must pay the revenue collection counterparty simple interest on any unpaid amount at the rate specified in regulation 36(1) from the day after the date by which that amount should have been paid.

(8) For the purposes of—

(a) paragraphs (3), (4) and (5), “the adjusted reference period” means the most recent period of 30 consecutive days in respect of which the BSCCo has carried out an Initial Volume Allocation Run;

(b) paragraph (4), the amount of electricity supplied by an electricity supplier in a reference period or adjusted reference period is the amount of all electricity which the BSCCo determines was supplied by that supplier in that period, on the basis of the most recent BSC volume allocation run which the BSCCo has carried out.

Determination of reduced total reserve amount

14.—(1) This regulation applies where the revenue collection counterparty is of the opinion that there is a high degree of likelihood that it will collect significantly more from suppliers under regulations 7(1) and 10(1) in respect of a quarterly obligation period than the amount it requires to be able to make all payments it is required to make during the reserve period which commences during that quarterly obligation period, taking into account any SoS funds that the Secretary of State has specified will be available in respect of that reserve period and that the Secretary of State has specified should be taken into account when adjusting the total reserve amount.

(2) Subject to paragraph (3), where this regulation applies the revenue collection counterparty may determine again the total reserve amount in respect of that quarterly obligation period in accordance with regulation 9(1)(a) and (6) (the “reduced total reserve amount”).

(3) The revenue collection counterparty may not make a determination under paragraph (2) after the date which is 5 working days before the date on which electricity suppliers must make a reserve payment under regulation 10(1).

(4) Where the revenue collection counterparty makes a determination under paragraph (2) in respect of a quarterly obligation period, it must—

(a) publish a notice setting out its determination of the reduced total reserve amount for that period;

(b) recalculate the amount (the “reduced reserve payment”) each supplier must pay under regulation 10(1) in respect of that period in accordance with regulation 10(3); and

(c) issue a notice to each electricity supplier who was issued a notice under regulation 9(4) in respect of that period setting out the reduced reserve payment that supplier must pay under regulation 10(1) in respect of that period.

(5) The requirement to issue a notice under paragraph (4)(c) does not apply where a notice has been issued under regulation 15(3) in respect of the same obligation period.

(6) Where the revenue collection counterparty issues a notice to a supplier under paragraph (4)(c) and that supplier has already made a reserve payment in respect of the quarterly obligation period to which it relates which exceeds the reduced reserve payment due from that supplier, the revenue collection counterparty must pay back to that supplier the difference between the amount of that reserve payment and the reduced reserve payment now due from that supplier as soon as reasonably practicable.

CHAPTER 5 Reconciliation payments

Reconciliation payments

15.—(1) The revenue collection counterparty must calculate, in accordance with regulation 16(1), the amounts to be paid as reconciliation payments by electricity suppliers or by that counterparty (“a reconciliation determination”) in respect of a quarterly obligation period (“the reconciliation period”)—

(a) as soon as reasonably practicable after the revenue collection counterparty has issued a notice under regulation 7(4) in respect of the day which is the last day of the reconciliation period, and in any event before the conclusion of the quarterly obligation period which immediately follows the reconciliation period; and

(b) once in every subsequent quarterly obligation period until the final reconciliation determination has been carried out in respect of the reconciliation period, as soon as reasonably practicable after the revenue collection counterparty has issued a notice under regulation 7(4) in respect of the last day of the quarterly obligation period which concluded immediately prior to that subsequent period, and in any event before the conclusion of that subsequent period.

(2) The final reconciliation determination in respect of the reconciliation period is the 10th reconciliation determination made in respect of that period.

(3) Where the revenue collection counterparty makes a reconciliation determination it must, as soon as reasonably practicable, issue a notice to each relevant supplier setting out—

(a) the amount of any reconciliation payment which the revenue collection counterparty must make to that supplier following that determination; and

(b) the amount of any reconciliation payment which that supplier must make to the revenue collection counterparty following that determination.

(4) For the purpose of paragraph (3), a “relevant supplier” is an electricity supplier who—

(a) supplied electricity during the reconciliation period,

(b) is due to make or receive a reconciliation payment, or

(c) is due to make a reserve payment.

Determination of reconciliation payments

16.—(1) The amount of a reconciliation payment to be paid to or by a supplier in respect of the reconciliation period is the revenue collection counterparty’s calculation, at the time of making that calculation, of the RCC period contribution in relation to that supplier in respect of the reconciliation period, less the net levied amount for that supplier in respect of that period.

(2) For the purposes of the calculation of a RCC period contribution, where a Final Reconciliation Volume Allocation Run or Post-Final Volume Allocation Run has not been carried out by the BSCCo in relation to a day in the reconciliation period, the amount of electricity supplied on that day by a supplier is to be determined on the basis of the most recent BSC volume allocation run which the BSCCo has carried out in relation to that day.

(3) Where the amount of a reconciliation payment in relation to an electricity supplier—

(a) is a positive number, that supplier must pay that amount to the revenue collection counterparty;

(b) is a negative number, the revenue collection counterparty must pay the absolute value of that amount to that supplier.

(4) Where, following a reconciliation determination, the revenue collection counterparty must make a reconciliation payment to an electricity supplier, or that electricity supplier must make a reconciliation payment to the revenue collection counterparty, that payment must be made by the 5th working day after the day on which the revenue collection counterparty has issued a notice to that supplier under regulation 15(3) in respect of that reconciliation determination.

(5) Where an electricity supplier is required to pay a reconciliation payment and it fails to pay all or part of that payment by the day on which that payment must be made, that supplier must pay the revenue collection counterparty simple interest on any unpaid amount at the rate specified in regulation 36(1) from the day after the day on which the payment should have been made.

(6) For the purposes of paragraph (1), the net levied amount for a supplier in respect of a reconciliation period is the amount of the supplier obligation amount less the counterparty obligation amount.

(7) For the purposes paragraph (6)—

“the supplier obligation amount” is the sum of the following amounts—

(a)

any payment that supplier was required to make under regulation 7(1) in respect of a day in the reconciliation period;

(b)

the sum of any payments that supplier was required to make under regulation 8(2) in respect of days in the reconciliation period;

(c)

any payment that supplier was required to make under regulation 10(1) in respect of the reconciliation period;

(d)

any payment that supplier was required to make under regulation 13(3) in respect of the reconciliation period; and

(e)

the sum of any reconciliation payments which that supplier was required to make under paragraph (3)(a) in respect of any previous reconciliation determination made in relation to the reconciliation period;

“the counterparty obligation amount” is the sum of the following amounts—

(a)

the sum of any payments the revenue collection counterparty was required to make under regulation 8(3) in respect of days in the reconciliation period; and

(b)

the sum of any reconciliation payments which the revenue collection counterparty was required to make under paragraph (3)(b) in respect of any previous reconciliation determination made in relation to the reconciliation period.

CHAPTER 6 Mutualisation

Mutualisation

17.—(1) Where an electricity supplier (“the defaulting supplier”) fails to make a relevant payment the revenue collection counterparty may, subject to paragraph (5), require non-defaulting suppliers to pay a share of an amount equal to the amount which was not paid by issuing a notice (“a mutualisation notice”) to each non-defaulting supplier who supplied electricity during the reference period.

(2) For the purposes of this regulation a “non-defaulting supplier” in relation to a mutualisation notice means an electricity supplier who has—

(a) not failed to make any relevant payment within the time limit for making the payment under these Regulations;

(b) failed to make one or more relevant payments all of which have subsequently been paid to the revenue collection counterparty by the time the defaulting supplier was required to make the relevant payment referred to in paragraph (1); or

(c) failed to make one or more relevant payments not all of which have subsequently been paid to the revenue collection counterparty by the time the defaulting supplier was required to make the relevant payment referred to in paragraph (1), but the revenue collection counterparty is of the opinion that it will hold some collateral provided by that supplier by the 5th working day after the day on which the revenue collection counterparty intends to issue that mutualisation notice.

(3) A mutualisation notice must state—

(a) the amount which the defaulting supplier failed to pay;

(b) the date by which the defaulting supplier should have paid that amount;

(c) the amount (“the mutualisation amount”) which the non-defaulting supplier to whom the notice is issued must pay, calculated in accordance with paragraph (7);

(d) the date (“the mutualisation date”) by which the mutualisation amount must be paid, which must be—

(i) in the case of a mutualisation notice issued in respect of a relevant payment which the defaulting supplier was required to make by virtue of regulation 7(1) or 8(2), no earlier than 5 working days after the date on which the notice was issued; or

(ii) in the case of a mutualisation notice issued in respect of any other relevant payment which the defaulting supplier was required to make, no earlier than 30 days after the date on which the notice was issued.

(4) A mutualisation date must be the same for each mutualisation notice issued in respect of a relevant payment which a defaulting supplier failed to pay.

(5) A mutualisation notice may only be issued where the revenue collection counterparty is of the opinion that it will not hold any collateral provided by the defaulting supplier by the 5th working day after the day on which the revenue collection counterparty intends to issue that notice.

(6) Where the revenue collection counterparty has issued a mutualisation notice to an electricity supplier, that supplier must pay the mutualisation amount specified in the notice by the date specified in the notice.

(7) Where an electricity supplier fails to pay all or part of a mutualisation payment in accordance with paragraph (6), that supplier must pay the revenue collection counterparty simple interest on any unpaid amount at the rate specified in regulation 36(1) from the day after the day on which the payment should have been made.

(8) The mutualisation amount to be stated in a mutualisation notice to be issued to a non-defaulting supplier is the amount given by—

where—

• DA is the amount which the defaulting supplier failed to pay;

• SRES is the amount of electricity supplied by the non-defaulting supplier in the reference period as determined immediately before the notice is issued;

• EXE is the amount of EII excluded electricity supplied by the non-defaulting supplier in the reference period as determined immediately before the notice is issued;

• NDPE is the total amount of electricity supplied by all non-defaulting suppliers in the reference period as determined immediately before the notice is issued; and

• AXE is the total amount of EII excluded electricity supplied by all non-defaulting suppliers in the reference period as determined immediately before the notice is issued.

(9) In this regulation—

(a) “collateral” is to be construed in accordance with regulation 19(7);

(b) “relevant payment” means any payment which an electricity supplier is required to make by virtue of regulation 7(1), 8(2), 10(1), 13(3), 16(3)(a) or 17(6);

(c) the reference period is the most recent period, occurring before the mutualisation notice (to which the reference period relates) has been issued, of 30 consecutive days in respect of which the BSCCo has carried out an Initial Volume Allocation Run; and

(d) the amount of electricity supplied by an electricity supplier in a reference period is the amount of electricity which the BSCCo determines, on the basis of the most recent BSC volume allocation run which the BSCCo has carried out in relation to each day in that period, as the amount of electricity supplied by that supplier in that reference period.

Repayment of mutualised amounts

18.—(1) Where the revenue collection counterparty has issued a mutualisation notice in respect of a failure of an electricity supplier (“the defaulting supplier”) to make a relevant payment (“the relevant default”) and subsequently recovers any amount from that supplier in respect of that failure, that amount must be paid to electricity suppliers who were required to pay mutualisation amounts in respect of that failure in accordance with paragraphs (2) and (3).

(2) The amount which the revenue collection counterparty must, by virtue of paragraph (1), pay an electricity supplier who was required to pay a mutualisation amount (“the non-defaulting supplier”) is the amount given by—

where—

• AR is the amount recovered from the defaulting supplier in respect of the relevant default, including any interest paid by the defaulting supplier in respect of that failure;

• SU is the mutualisation amount which the non-defaulting supplier was required to pay in respect of the relevant default; and

• AU is the total amount of mutualisation payments which were required to be paid by all non-defaulting suppliers in respect of the relevant default.

(3) Any amount which the revenue collection counterparty is required to pay by virtue of paragraph (1) must be paid by the 15th working day after the day on which it recovers the amount to be paid.

(4) In paragraph (1), “relevant payment” means any payment which an electricity supplier is required to make by virtue of regulation 7(1), 8(2), 10(1), 13(3), 16(3)(a) or 17(6).

CHAPTER 7 Collateral

Requirement to provide collateral

19.—(1) This regulation applies at all times after an electricity supplier makes an electricity supply in a quarterly obligation period in respect of which it is required to make an interim rate payment.

(2) Where this regulation applies the supplier must ensure that, on any day, the revenue collection counterparty holds sufficient collateral from the supplier to meet the supplier’s collateral requirement for that day.

(3) The supplier’s collateral requirement for a day (“the relevant day”) is determined by reference to the most recent period of 21 consecutive days prior to the last working day before the relevant day, in respect of which the BSCCo had carried out a BSC volume allocation run (“the relevant period”).

(4) For each day in the relevant period, the amount of electricity supplied by the supplier on that day, less any amount of EII excluded electricity supplied by that supplier on that day, (both as determined on the last working day before the relevant day), multiplied by the interim levy rate which applies in relation to the relevant day, gives a relevant amount.

(5) The sum of the relevant amounts is the supplier’s collateral requirement for the relevant day.

(6) The supplier is not to be treated as having breached its obligation under paragraph (2) where, after the first occasion on which it provided sufficient collateral to the revenue collection counterparty to meet its collateral requirement for a day—

(a) the amount of that supplier’s collateral held by the revenue collection counterparty fell below that supplier’s collateral requirement for a subsequent day; and

(b) by the second working day (“the cure day”) after that subsequent day, the supplier provides sufficient collateral to the revenue collection counterparty to meet its collateral requirement for the cure day.

(7) Collateral may be provided in the form of—

(a) cash;

(b) appropriate letters of credit; or

(c) a combination of the two.

(8) For the purposes of this regulation—

(a) collateral is held by the revenue collection counterparty where it is provided to the revenue collection counterparty and not called (within the meaning of regulation 21);

(b) the amount of electricity supplied by a supplier on any day is the amount which the BSCCo determines, on the basis of the most recent BSC volume allocation run carried out by the BSCCo in relation to that day, as the amount of electricity that the supplier supplied on that day; and

(c) the interim levy rate which applies in relation to a day is the interim levy rate which applies in relation to that day by virtue of regulation 7(3).

(9) Regulation 20 makes further provision about appropriate letters of credit.

Appropriate letters of credit

20.—(1) For the purposes of regulation 19, a letter of credit is appropriate if—

(a) it is issued by a person who holds a required rating; and

(b) it is provided on terms which the revenue collection counterparty considers are appropriate.

(2) The terms which the revenue collection counterparty may consider are appropriate under paragraph (1)(b) include terms relating to—

(a) the manner in which any demand for payment under a letter of credit is to be made;

(b) the manner in which any payment under a letter of credit is to be made; and

(c) requirements about the holding of funds to meet demands for payment under a letter of credit.

(3) Where an electricity supplier has provided the revenue collection counterparty with a letter of credit issued by a person who ceases to hold a required rating that letter will not constitute an appropriate letter of credit from the 10th working day after the day on which that person ceases to hold that rating.

(4) Subject to paragraph (5), a person holds a required rating if that person has been assessed by—

(a) Fitch Ratings as having a short term debt rating of “F1” or better;

(b) Moody’s as having a short term debt rating of “P-1” or better; or

(c) Standard and Poor’s as having a short term debt rating of “A-1” or better.

(5) Where the revenue collection counterparty is of the opinion that the requirement that appropriate letters of credit must be issued by persons holding a short term debt rating mentioned in paragraph (4)(a) to (c) is too onerous in the circumstances, and subject to having regard to its duty under regulation 28(1), it may issue a notice to BM registered electricity suppliers specifying alternative short term debt ratings, and that notice shall remain in force until such time as it is withdrawn.

(6) In paragraph (5), “BM registered electricity suppliers” means electricity suppliers who have a BM Unit registered as at the day before the date the notice is issued.

(7) The revenue collection counterparty may withdraw a notice under paragraph (5) (“the first notice”) by issuing a further notice (“the withdrawal notice”) to electricity suppliers who were sent the first notice setting out the date from which the first notice is to be withdrawn (that date being no earlier than 10 working days after the day on which the withdrawal notice is issued).

(8) The revenue collection counterparty must, before the first revenue collection contract is entered into, publish a document setting out the terms of letters of credit which it is likely to regard as appropriate for the purposes of paragraph (1)(b), and must keep any such document under review and publish any revision from time to time.

(9) In this regulation—

“Fitch Ratings” means Fitch Ratings Limited (registered company number 01316230);

“Moody’s” means the corporation known as Moody’s Investors Service Inc., incorporated in the US State of Delaware with the file number 0577904;

“Standard and Poor’s” means the corporation known as Standard & Poor’s Financial Services LLC, incorporated in the US State of Delaware with the file number 4621989.

Calling of collateral

21.—(1) Collateral provided by an electricity supplier is called by the revenue collection counterparty where the revenue collection counterparty issues a notice to that supplier which sets out the amount of collateral which is to be called.

(2) The revenue collection counterparty may issue a notice under paragraph (1) to an electricity supplier if that supplier has failed to make a relevant payment and—

(a) 2 working days have passed since the day on which that supplier should have made that payment; or

(b) the revenue collection counterparty is of the opinion that there is no prospect of that supplier making that payment by 2 working days after the day on which that supplier should have made that payment.

(3) The amount of collateral which may be called by the revenue collection counterparty where a supplier has failed to make a relevant payment is the lesser of—

(a) the amount of collateral provided by that supplier; or

(b) the amount of that relevant payment or, where there is more than one relevant payment which that supplier has failed to make and in respect of which a notice under paragraph (1) could be issued, the sum of all relevant payments in respect of which a notice under paragraph (1) could be issued.

(4) Where the whole or part of a supplier’s collateral which was provided in the form of cash has been called by the revenue collection counterparty, that amount is to be treated as a payment made by that supplier to the revenue collection counterparty at the time that collateral was called.

(5) Where the whole or part of a supplier’s collateral which was provided in the form of a letter of credit has been called by the revenue collection counterparty—

(a) the revenue collection counterparty must take steps to demand payment from the person who provided the letter in the amount of the lesser of—

(i) the amount which can be demanded under that letter, or

(ii) the amount of collateral which has been called; and

(b) the amount which has been paid to the revenue collection counterparty under that letter is to be treated as a payment by that supplier to the revenue collection counterparty made at the time that amount is received by the revenue collection counterparty.

(6) In this regulation “relevant payment” means any payment which a supplier is required to make by virtue of regulation 7(1), 8(2), 10(1), 13(3), 16(3)(a) or 17(6) which has not been made by that supplier by the time that payment should have been made, and which remains unpaid.

Withdrawal of collateral and payment of interest

22.—(1) Where the collateral provided by an electricity supplier and held by the revenue collection counterparty is more than that supplier’s collateral requirement, that supplier may make a request that the revenue collection counterparty repay or return as much collateral as exceeds the supplier’s collateral requirement by giving a notice to the revenue collection counterparty.

(2) Where a request under paragraph (1) has been received by the revenue collection counterparty, it must, before the 2nd working day after the day on which the request was received, repay or return the lesser of—

(a) the amount requested by the supplier; or

(b) the amount of collateral which the revenue collection counterparty determines exceeds that supplier’s collateral requirement at the time the payment is to be made.

(3) Where a supplier has provided collateral in the form of cash and the revenue collection counterparty holds that sum in an account which bears interest, it must pay to that supplier an amount equal to any such interest earned in relation to that sum within 15 working days of receiving that interest.