SCHEDULE 3

PART II methods of calculating hypothetical cost of purchasing or generating certain electricity

Method of calculating hypothetical cost of purchasing certain electricity

3.—(1) The method of calculating what would have been the total cost (in pounds) to each public electricity supplier P of purchasing the electricity mentioned in either paragraph 1 or paragraph 2 of this Schedule if that electricity had been generated by a fossil fuel generating station (which, when combined with the like total cost attributable to every other public electricity supplier, is expressed as By in paragraph 2 of Schedule 2) is given by the formula—

(2) In the formula specified in sub-paragraph (1) above—

• Σ_n signifies the summation over all the qualifying months within period y;

• W_n is the reference price (in pence per unit) in respect of the electricity referred to in paragraph 1 or, as the case may be, paragraph 2 of this Schedule within month n, calculated in accordance with paragraph 5 except during a security period, when it shall be the price determined as the Director, after consultation with licensed suppliers, sees fit; and

• V_n is the number of units of the electricity referred to in paragraph 1 or, as the case may be, paragraph 2 of this Schedule within month n.