PART 2Discounted supply price

CHAPTER 1Determination of prices

Reference wholesale price – flexible price contracts11.

(1)

In relation to a flexible price contract the reference wholesale price for any period (“P”) in which energy is supplied is the contracted wholesale price on a volume-weighted average basis for that period.

(2)

The volume-weighted average contracted wholesale price for P is determined by reference to any of the following that apply under that contract—

(a)

any elections (and the quantities, periods and prices subject to those elections) made by the customer to fix the contracted wholesale price;

(b)

any cancellations by the customer of such an election;

(c)

any amounts (so far as relating to wholesale prices) payable by or to the customer in respect of such elections or cancellations;

(d)

any amounts payable by the customer in respect of quantities of energy in default of such elections;

(e)

the quantities, periods and prices on the basis of which the contracted wholesale price was fixed under any other mechanism under the contract;

(f)

other amounts referable to the wholesale cost of electricity in accordance with the principle in paragraph (3),

each so far as attributable to energy supplied under the contract in P.

(3)

The principle is that amounts payable by the customer under the supply contract—

(a)

should be included in the contracted wholesale price where such payment has the effect of passing through to the customer a cost or risk incurred by the supplier and related to the cost of wholesale energy;

(b)

should not be included in the contracted wholesale price where such amount is payable to compensate or reward the supplier for bearing, and not passing through to the customer, such a cost or risk.

(4)

A supplier must—

(a)

establish a methodology setting out the basis on which it will determine the reference wholesale price under each flexible price contract, or each kind of flexible price contract, that it enters or has entered into;

(b)

keep the methodology under review and update it if appropriate;

(c)

maintain, in respect of each flexible price contract, the data necessary to make those determinations in accordance with the relevant methodology;

(d)

apply the relevant methodology in making those determinations.