The Electricity Capacity (No. 1) Regulations 2019

Capacity payments: modifications

13.—(1) Regulation 40 (capacity payments) of the Principal Regulations applies as if, after paragraph (7) there were inserted—

“(8) Paragraphs (1) to (7) are subject to regulation 40A”.

(2) The Principal Regulations apply as if after regulation 40, there were inserted—

“Capacity payments: standstill months

40A.— (1) This regulation applies where regulation 40 relates to capacity payments in respect of a standstill month of a delivery year.

(2) Where this regulation applies, regulation 40 applies as if—

(a) in paragraph (1), after “month of a delivery year” there were inserted “which is a standstill month”;

(b) at the end of paragraph (2)(b), there were inserted “in accordance with paragraph (4)(a)”;

(c) in paragraph (4)(a), for “month M” there were substituted “the month following the month in which the deferred capacity payment trigger event occurs”;

(d) in paragraph (5)—

(i) for “month M”, in the first place it occurs, there were substituted “the month following the month in which the deferred capacity payment trigger event occurs”; and

(ii) for “month M”, in the second place it occurs, there were substituted “the standstill collection period”;

(e) for paragraphs (6) and (7), there were substituted—

“(6) If by the day referred to in paragraph (5) the Settlement Body has received capacity market supplier charges in respect of the standstill collection period for a delivery year (“collection period X”) the total of which is less than the sum of MCP_cm for all capacity providers for every month within collection period X (“month SM”), the amount of each capacity payment which would otherwise be determined under paragraph (2) in respect of each month SM must be reduced by the same proportion so that the total amount of capacity payments payable to capacity providers is equal to the total amount of capacity market supplier charges received.

(7) Where the amount of capacity payments determined under paragraph (2) in respect of months within collection period X is reduced under paragraph (6), the Settlement Body must—

(a) determine the total amount of this reduction (the “residual amount”);

(b) determine the portion of the residual amount attributable to each capacity provider (“C”) to whom a capacity payment was payable under paragraph (2) in respect of one or more months within collection period X (“residual capacity payment”); and

(c) issue a credit note to C for the amount of the residual capacity payment attributable to C.

(8) The Settlement Body must issue a credit note to C under paragraph (7)(c) by no later than the 28th working day after the date on which invoices for supplementary mutualisation payments are issued under regulation 6A(11) of the Supplier Payment Regulations in respect of the standstill collection period.

(9) If, by the 26th working day after the date on which invoices for supplementary mutualisation payments are issued under regulation 6A(11) of the Supplier Payment Regulations, the Settlement Body has received capacity market supplier charges in respect of the full residual amount the total of which is less than the full residual amount, the amount of each residual capacity payment determined under paragraph (7)(b) must be reduced by the same proportion so that the total amount of residual capacity payments payable to all capacity providers is equal to the total amount of capacity market supplier charges received in respect of the full residual amount.

(10) A capacity provider’s entitlement to receive a residual capacity payment under paragraph (7) is subject to paragraph (9) and regulations 49 to 51.

(11) In paragraph (6)—

(a) the total amount of capacity market supplier charges received by the Settlement Body is the total amount of supplier charges received in respect of the standstill collection period to make capacity payments in respect of all capacity agreements; and

(b) the total amount of capacity payments payable to capacity providers is the total amount of capacity payments payable to capacity providers in respect of all capacity agreements.

(12) In paragraph (9)—

(a) “full residual amount” means the residual amount attributable to capacity providers in respect of all capacity agreements; and

(b) the total amount of residual capacity payments payable to all capacity providers includes residual capacity payments payable in respect of all capacity agreements.

(13) In this regulation—

“all capacity agreements” means—

(a)

capacity agreements which existed on 15th November 2018; and

(b)

in respect of the delivery year commencing on 1st October 2019, capacity agreements awarded through the conditional agreement auction;

“capacity market supplier charges” means charges which electricity suppliers are required to pay under electricity capacity regulations to meet the cost of funding capacity payments; and

“standstill collection period” has the meaning given in regulation 2(1) of the Supplier Payment Regulations.”.”.