The Electricity Capacity (No. 1) Regulations 2019

Capacity payments: modifications

38.—(1) Regulation 40 (capacity payments) of the Principal Regulations applies as if—

(a) in paragraph (1), after “regulations” there were inserted “40A, and”; and

(b) paragraph (7) were omitted.

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

“Conditional capacity payments

40A.— (1) Regulation 40(1) to (4) does not apply if a month of a delivery year is a standstill month.

(2) The Settlement Body must—

(a) after the end of each standstill month, determine the amount of the capacity payment which would have been payable to a capacity provider (“C”) in respect of this month under regulation 40 if paragraph (1) did not apply (“MCP_cm”); and

(b) calculate MCP_cm in accordance with paragraph 4 of Schedule 1.

(3) If the T-1 capacity agreement trigger event has occurred—

(a) C is entitled, subject to paragraphs (5) and (6) and to regulations 49 to 51, to receive from the Settlement Body a capacity payment determined in accordance with this regulation in respect of each standstill month (“month SM”) for the capacity committed CMUs for which C was the capacity provider during month SM; and

(b) the Settlement Body must—

(i) determine the amount of the capacity payment which is payable to C in respect of month SM which is, subject to paragraphs (5) and (6) and to regulations 49 to 51, the amount determined under paragraph (2) in respect of month SM; and

(ii) issue a credit note to C for this amount.

(4) The Settlement Body must issue a credit note to C under paragraph (3)(b)(ii)—

(a) by no later than the 28th working day after the end of the month after the month in which the T-1 capacity agreement trigger event occurred; but

(b) if C is liable to pay a capacity provider penalty charge in respect of month SM, not earlier than the day after the day by which C is required to pay that charge.

(5) Paragraphs (3) and (4) do not apply in relation to month SM unless by the 26th working day after the end of the month after the month in which the T-1 capacity agreement trigger event occurred the Settlement Body has received capacity market supplier charges in respect of the standstill collection period.

(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, 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 (including capacity providers to whom residual capacity payments are payable in respect of a capacity agreement which existed on 15th November 2018) 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 regulation (7) is subject to paragraph (9) and regulations 49 to 51.

(11) In this regulation—

(a) in paragraph (6)—

(i) 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

(ii) 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;

(b) in paragraph (9)—

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

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

(12) In paragraph (11) “all capacity agreements” means—

(a) capacity agreements awarded through the conditional agreement auction; and

(b) capacity agreements which existed on 15th November 2018.”.