49.—(1) This regulation applies if, at the time when a credit note is issued to a capacity provider (“C”) for a capacity payment, C is in default in respect of a capacity provider penalty charge (an “unpaid penalty charge”).
(2) If this regulation applies—
(a)the Settlement Body must ensure that the credit otherwise payable to C is reduced—
(i)by the amount of the unpaid penalty charge;
(ii)to nil, if the amount of the unpaid penalty charge is equal to or greater than the amount of the credit; and
(b)the amount by which the credit is reduced is to be treated as a payment or part payment of the unpaid penalty charge.
(3) The Settlement Body must ensure that the credit note issued to C states the amount by which the credit is reduced, and the reason for the reduction.