http://www.legislation.gov.uk/id/uksi/2014/2043

http://www.legislation.gov.uk/uksi/2014/2043/schedule/1

The Electricity Capacity Regulations 2014

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Statute Law Database

ELECTRICITY

2024-04-09

Expert Participation

2023-07-22

These Regulations make provision for the purpose of enabling consumers' demands for electricity in Great Britain to be met. They do so through capacity agreements, instruments which confer rights and impose obligations on those awarded an agreement. These rights and obligations consist principally of the right to receive capacity payments from the Settlement Body for generating (or reducing demand for) electricity at times of system stress, and the liability to make a penalty payment where the capacity agreement is breached. The Regulations also impose obligations on persons who supply electricity in Great Britain pursuant to an electricity supply licence (granted by the Gas and Electricity Markets Authority (“the Authority”) under section 6 of the Electricity Act 1989 ). Those obligations consist principally of requirements to make payments to the settlement body.

The Electricity Capacity Regulations 2014

reg. 3(3)

The Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024

reg. 8

reg. 1(2)

The Electricity Capacity Regulations 2014

reg. 4(2)(aa)

The Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024

reg. 9(b)(iii)

reg. 1(2)

The Electricity Capacity Regulations 2014

reg. 4(b)

The Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024

reg. 9(c)

reg. 1(2)

The Electricity Capacity Regulations 2014

reg. 19(aa)

The Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024

reg. 11(b)

reg. 1(2)

The Electricity Capacity Regulations 2014

Sch. 1

para. 2(5)

The Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024

reg. 12(a)

reg. 1(2)

The Electricity Capacity Regulations 2014

Sch. 1

para. 3(1)

The Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024

reg. 12(b)(i)

reg. 1(2)

The Electricity Capacity Regulations 2014

Sch. 1

para. 3(5)

The Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024

reg. 12(b)(ii)

reg. 1(2)

The Electricity Capacity Regulations 2014

Sch. 1

para. 7(4)

The Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024

reg. 12(c)

reg. 1(2)

The Electricity Capacity Regulations 2014

Sch. 1

para. 8(4)

The Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024

reg. 12(d)

reg. 1(2)

The Electricity Capacity Regulations 2014

SCHEDULE 1Settlement calculations

Regulation 36

Interpretation1

F51

In this Schedule—

“AE_ij”, “ALFCO_ij” and “E_ij”, in relation to a capacity committed CMU i and a relevant settlement period j, are to be interpreted in accordance with regulation 39 and mean the amounts determined in accordance with that regulation;
“CO_ix” means the capacity obligation in MW, as recorded on the capacity market register, awarded in respect of CMU i for year X in a capacity auction;
“ICO_ij” means the whole or part of any capacity obligation CO_zx in MW, as recorded on the capacity market register, which applies to CMU i in relevant settlement period j;
“WF_mx” means the weighting factor determined under paragraph 2 for month M in capacity year X.

2

Where, in a formula, two values in parentheses are separated by a comma and preceded by “min”, that means that the lesser of those two values is to be used in making the calculation.

F63

Where, in a formula, the symbol ∑ is used, it denotes that a value is to be determined from the summation of the sequence of elements found immediately to its right; these elements may be derived from one variable or a collection of variables contained in parentheses.

4

In this Schedule, if not otherwise defined, subscript suffixes used in a term refer to the following things unless the context requires otherwise—

“i” refers to a specific CMU which is the subject of the provision the term appears in (“the relevant provision”);
“j” refers to a relevant settlement period which is the subject of the relevant provision;
“k” refers to any relevant settlement periods in a given month that precede the relevant settlement period which is the subject of the relevant provision;
“m” refers to a given month;
“y” refers to any capacity obligation awarded in a capacity auction in respect of a CMU; and
“z” refers to a specific capacity obligation awarded in a capacity auction in respect of a CMU.

Weighting factor2

1

The Settlement Body must, by no later than 3 months before the commencement of a capacity year (“year X”), calculate in respect of each month of year X (“month M”) the weighting factor (“

W F_{m x}

”) which is to be used for the purpose of calculating capacity payments in respect of that month.

2

W F_{m x}

must be calculated to F110 decimal places in accordance with the formula—

W F_{m x} = \frac{A}{B} .

3

In this paragraph—

“A” means the sum of the amounts of electrical demand in GWh in Great Britain during each of the months corresponding to month M in the calculation period;
“B” means the sum of the amounts of electrical demand in GWh in Great Britain during the calculation period;
“the calculation period” means the period of 3 years ending on the last day of the month preceding the month in which $W F_{m x}$ is calculated.

Capacity payments: calculations to be made annually for each capacity committed CMU3

1

The Settlement Body must, by no later than 3 months before the commencement of a delivery year (“year X”), calculate in respect of each capacity committed CMU (“CMU i”)—

a

the total amount in pounds of the capacity payments which, subject to regulation 40(5) and (6) and to regulations 49 to 51, are payable in respect of F7CO_ix (“

A C P_{i x}

”); and

b

in respect of each month of year X (“month M”), the amount in pounds of the capacity payment which, subject to those regulations, is payable in respect of CMU i for that month (“

M C P_{i m}

”).

F82

ACP_yx (for any value y) must be calculated in accordance with the formula—

$A C P_{y x} = C O_{y x} \times P E_{y x}$ .

3

MCP_immust be calculated in accordance with the formula—

$M C P_{i m} = W F_{m x} \times (A C P_{i x} + \sum_{N} t A C P_{N} \times \frac{D T_{m N}}{D_{m}})$ .

3A

For the purpose of sub-paragraph (3) tACP_N is the amount $A C P_{z x} \times \frac{t I C O_{i N}}{C O_{z x}}$ ,

where—

“tICO_iN”is any obligation, being the whole or part of the capacity obligation CO_zx, that has been transferred so as to—
1. a
  apply to CMU i for all or part of month M, or
2. b
  cease to apply to CMU i for all or part of month M (in which case tACP_Nis to be expressed as a negative number);
“DT_mN” means the number of days in month M for which that capacity obligation has been transferred;
“D_m” means the total number of days in month M.

4

For the purpose of sub-paragraph (2), “F9PE_yx” means the price in pounds per MW at which capacity payments are payable in respect of F9CO_yx, which is to be determined in accordance with sub-paragraphs (5) and (6).

F375

If the relevant capacity auction was a T-4 auction,

P E_{i x}

is to be calculated in accordance with the formula—

P E_{i x} = C C P_{i} \times \frac{C P I_{x}}{C P I_{b a s e}} .

F376

If the relevant capacity auction was a T-1 auction or a DSR transitional auction,

P E_{i x}

is equal to

C C P_{i}

7

In this paragraph—

F32“CCP_y” means the capacity cleared price for CO_yx, as recorded on the capacity market register
F33...
“ $C P I_{b a s e}$ ” means the average of the monthly values of CPI for the months of the base period F34referred to in regulation 11 for the relevant capacity auction;
“ $C P I_{x}$ ” means the average of the monthly values of CPI for the months of the winter ending on the 30th April preceding the start of year X;
“relevant capacity auction” means the capacity auction in which F35CO_yx was awarded;
F36...

Capacity payments: calculations to be made monthly for each capacity provider4

1

The Settlement Body must, after the end of each month of a delivery year (“month M”), calculate for each capacity provider (“C”) the amount in pounds of the capacity payment which, subject to regulation 40(5) and (6) and to regulations 49 to 51, is payable to C in respect of month M (“

M C P_{c m}

”).

2

M C P_{c m}

must be calculated as the sum of—

a

M C P_{i m}

, as calculated under paragraph 3, for each capacity committed CMU for which C was the capacity provider for the whole of month M; and

b

C’s proportion of

M C P_{i m}

, as calculated under paragraphs 3 and 8, for each capacity committed CMU for which C was the capacity provider for part of month M.

Capacity provider penalty charges: calculation of settlement period penalty applying to a capacity committed CMU5

1

The Settlement Body must, after the end of each month of a delivery year (“year X”) in which one or more relevant settlement periods occur (“month M”), calculate in respect of each relevant CMU (“CMU i”) and each relevant settlement period (“settlement period j”) the settlement period penalty in pounds applying to CMU i in respect of settlement period j (“

S P P_{i j}

”).

2

S P P_{i j}

must be calculated in accordance with the F31formula—

S P P_{i j} = P R_{i x} \times (A L F C O_{i j} - A E_{i j}) .

F102A

For the purpose of sub-paragraph (2), “PR_ij” is the penalty rate in pounds per MWh applying to CMU i in respect of settlement period j, and is to be calculated in accordance with the formula—

$P R {}_{i j}= \frac{\sum {}_{N}{(P R {}_{N}\times I C O {}_{i j N})}}{\sum {}_{N}I C O {}_{i j N}}$

where—

“ICO_ijN” is the whole or a part of any capacity obligation CO_zx applying to CMU i in settlement period j, and
“PR_N” is the penalty rate applying to that capacity obligation.

F113

For the purpose of sub-paragraph (2A), PR_N is to be calculated in accordance with the formula—

$P R_{N} = P E_{z x} \times (\frac{1}{24})$ .

4

In this paragraph—

F12“PE_zx” means the price in pounds per MW determined for CO_zx in accordance with paragraph 3(4) to (6)
“relevant CMU” means a capacity committed CMU in respect of which $A E_{i j}$ is less than $A L F C O_{i j}$ in one or more relevant settlement periods in month M.

Capacity provider penalty charges: calculation of monthly penalty charge for a capacity committed CMU6

F131

The Settlement Body must, after the end of each month of a delivery year (“year X”) in which one or more relevant settlement periods occur (“month M”), calculate for each relevant CMU (“CMU i”)—

a

for each relevant settlement period in month M (“settlement period j”), the settlement period penalty settlement amount for CMU i in settlement period j (“SPPSA_ij”); and

b

the monthly penalty charge to be paid in respect of month M (“MPSA_im”).

2

For the purpose of sub-paragraph (1)—

a

SPPSA_ij is—

i

equal to the amount P_ij (calculated in accordance with paragraph (3)) unless paragraph (2A) applies; and

ii

equal to the lesser of the amount P_ij and the amount Q_ij (calculated in accordance with paragraph (5)) if paragraph (2A) applies; and

b

MPSA_im is equal to the value of SPPSA_ij for the last relevant settlement period j in month M in which the value of ALFCO_ij for CMU i was greater than zero.

2A

This paragraph applies where—

a

a capacity provider penalty charge has been incurred in respect of CMU i in at least 48 relevant settlement periods, and

b

those periods together comprise at least 8 relevant settlement periods in each of at least 6 months in delivery year X.

F143

P_ij must be calculated in accordance with the formula—

$P_{i j} = (\frac{S P_{i}}{M a x S P_{i}}) \times \min (M a x S P_{i}, M P C_{i j})$ .

F154

For the purposes of the calculation in sub-paragraph (3), MPC_ij is the monthly penalty cap in pounds applying to CMU i in respect of relevant settlement period j in month M, and is to be calculated in accordance with the formula—

$M P C_{i j} = R M C P_{i j} + \sum A S P P A^{'}$

where—

a

RMCPij is to be calculated in accordance with the formula—

$R M C P_{i j} = (A C P_{i x} \times W F_{m x} \times F_{i}) + \sum_{N} (t A C P_{N} \times W F_{m x} \times F_{z})$ , and

b

∑ASPPA′ is to be calculated in accordance with the formula—

$\sum A S P P A^{'} = \sum_{A} A S P P A_{A} - \sum_{B} A S P P A_{B}$

where—

i

∑_AASPPA_A is the sum of each amount ASPPA_ikA calculated under paragraph 6A(4) for any obligation ICO_ikA applying to CMU i in any relevant settlement period k in month M preceding settlement period j; and

ii

∑_BASPPA_B is the sum of each amount ASPPA_ijB calculated under paragraph 6A(4) for any obligation ICO_ijB applying to CMU i in both—

aa

settlement period j, and

bb

any relevant settlement period k in month M preceding settlement period j.

F165

Q_ij must be calculated in accordance with the formula—

$Q_{ij} = A P C_{i j} - \sum_{k = 1}^{m - 1} M P S A_{i k}$

and where that calculation would give a negative number, the value of Q_ij is to be taken to be zero.

F175A

For the purposes of the calculation in sub-paragraph (5), APC_ij is the annual penalty cap in pounds applying to CMU i in respect of relevant settlement period j, and is to be calculated in accordance with the formula—

$A P C_{i j} = A C P_{i x} \times G_{i} + \sum_{N} (t A C P_{N} \times G_{z} \times W F_{m x} \times \frac{D T_{m N}}{D_{m}})$ ,

where “DT_mN” and “D_m” have the meanings given in paragraph 3(3A)

6

In this paragraph—

F2...
F3“ACP_ix” means the amount of annual capacity payments calculated under paragraph 3 for CMU i in respect of year X;
F18“F_y” (for any value y) means the percentage stated on the capacity market register under regulation 31(2)(f), at the date of issue of the capacity agreement, as the monthly penalty cap percentage for the capacity obligation CO_yx awarded in respect of CMU y for year X;
“G_y” (for any value y) means the percentage stated on the capacity market register under regulation 31(2)(f), at the date of issue of the capacity agreement, as the annual penalty cap percentage for the capacity obligation CO_yx awarded in respect of CMU y for year X;
“ $M a x S P_{i}$ ” is the sum in pounds of all settlement period penalties which would have applied to CMU i in respect of relevant settlement periods in month M, as calculated in accordance with paragraph 5 F19up to and including the settlement period for which the calculation is being made, if $A E_{i j}$ had been 0 for all such settlement periods;
“ $M C P_{i m}$ ” means the amount of the monthly capacity payment calculated under paragraph 3 for CMU i and month M;
F21“ $\sum_{k = 1}^{m - 1} M P S A_{i k}$ ”
means the sum of the monthly penalty charges paid or payable in respect of CMU i for each of the months of year X preceding month M (or where M is the first such month, zero); and
“relevant CMU” has the same meaning as in paragraph 5;
“ $S P_{i}$ ” is the sum of all settlement period penalties applying to CMU i in respect of relevant settlement periods in month M, as calculated in accordance with paragraph 5 F19up to and including the settlement period for which the calculation is being made;
F20...
F22“tACP_N” has the meaning given in paragraph 3(3A)

F4Capacity provider penalty charges: apportionment6A

1

Immediately after calculating SPPSA_ijfor a relevant CMU i and any relevant settlement period j in month M under paragraph 6, the settlement body must also calculate D in accordance with the formula—

_{$D = S P P S A_{i j} - S P P S A_{i (j - 1)}$},

where “SPPSA_i(j-1)” is the settlement period penalty settlement amount for CMU i in the relevant settlement period preceding period j (or, where j is the first such period in month M, zero).

2

For each relevant settlement period j in month M, the settlement body must then determine for each obligation ICO_ijapplying to CMU i in that settlement period (“ICO_ijN”)—

a

the monthly penalty cap applying in respect of ICO_ijN (“MPC_ijN”); and

b

the apportioned settlement period penalty amount for ICO_ijN (“ASPPA_ijN”) as determined in accordance with sub-paragraph (4).

3

For the purpose of sub-paragraph (2)(a), MPC_ijN is to be determined in accordance with the formula—

_{$M P C_{i j N} = I C O_{i j N} \times P E_{z x} \times W F_{m x} \times F_{z} - \sum_{k = 1}^{j - 1} A S P P A_{i k N}$},

where—

“ICO_ijN” is the whole or a part of the capacity obligation CO_zx awarded in respect of CMU z for year X,
“PE_zx” means the price in pounds per MW determined for CO_zx in accordance with paragraph 3(4) to (6),
“F_z” is to be interpreted in accordance with paragraph 6(6), and
“ $\sum_{k = 1}^{j - 1} A S P P A_{i k N}$ ”
means the sum of all apportioned settlement period penalty amounts calculated for ICO_ijN when that obligation applies to CMU i in any relevant settlement period in month M that precedes period j (or, where j is the first such period, zero).

4

For the purpose of sub-paragraph (2)(b) ASPPA_ijN is to be determined as follows (where D is the result of the calculation referred to in sub-paragraph (1))—

a

for each obligation ICO_ijN referred to in sub-paragraph (2), calculate PR_N in accordance with paragraph 5(3), and arrange those obligations in a series (beginning with ICO_ij1) as described in paragraph (b);

b

each such obligation ICO_ijNis ranked according to the magnitude of its corresponding PR_N (in descending order with the highest corresponding penalty rate first), except that where the same penalty rate corresponds to more than one such obligation those obligations are ranked between themselves—

i

according to the date on which the obligation was awarded in respect of CMU i, or transferred so as to apply to CMU i (with the latest such date first), and

ii

for obligations awarded or transferred on the same date, according to the time at which a request to transfer the obligation was received by the Delivery Body (with the latest such time first), and with an awarded obligation ranking prior to any transferred obligation;

c

then for any such ICO_ijN—

i

if $\sum_{k = 1}^{N} M P C_{i j k} > D$ , $A S P P A {}_{i j N}= M P C {}_{i j N}$ ;

ii

if $\sum_{k = 1}^{N - 1} M P C_{i j k} < D$ and $\sum_{k = 1}^{N} M P C_{i j k} > D$ , $A S P P A_{i j N} = D - \sum_{k = 1}^{N - 1} M P C_{i j k}$ ; and

iii

otherwise, $A S P P A_{i j N} = 0$ .

Over-delivery payments7

1

The Settlement Body must, after the end of each delivery year (“year X”), determine for each relevant CMU (“CMU i”)—

a

the over-delivery rate in £/MWh applying to CMU i in respect of F23each relevant settlement period in year X (“ODR_ij”);

b

the amount in pounds of the over-delivery payment applying to CMU i in respect of each such settlement period in which CMU i over-delivered (“

O D P_{i j}

”); and

c

the amount in pounds of the total over-delivery payment applying to CMU i in respect of year X (“

T O D P_{i x}

”).

2

F25Subject to sub-paragraph (2A),F24ODR_ij must be calculated in accordance with the F24 F30formula—

O D R_{i x} = \min (P R_{i x}, \frac{T P R_{x}}{T O D V_{x}}) .

F262A

For the purposes of the calculation in paragraph (2), where the over-delivery payment is to be made to a qualified person who is not a capacity provider in settlement period j, the value of PR_ij is deemed to be equal to the penalty rate applying to a capacity obligation awarded in the T-4 auction for year X and calculated in accordance with paragraph 5.

3

O D P_{i j}

must be calculated in accordance with the F29formula—

O D P_{i j} = O D R_{i x} \times (A E_{i j} - A L F C O_{i j}) .

4

T O D P_{i x}

must be calculated as the sum of

O D P_{i j}

for all the relevant settlement periods in year X in which CMU i over-delivered.

5

For the purposes of this paragraph—

“over-delivered” is to be interpreted in accordance with regulation 42(2);
F27“PR_ij” means the penalty rate in pounds per MWh applying to CMU i in respect of settlement period j, as calculated in accordance with paragraph 5
F28“qualified person” has the meaning given in regulation 42(2);
a “relevant CMU” means a capacity committed CMU in respect of which $A E_{i j}$ is greater than $A L F C O_{i j}$ in one or more relevant settlement periods in year X;
“ $T O D V_{x}$ ” means the aggregate in MWh of the total amounts over-delivered in year X by all relevant CMUs;
“ $T P R_{x}$ ” means the total amount of capacity market penalty charge payments received by the Settlement Body in respect of year X.

Apportionment between capacity providers8

1

This paragraph applies if—

a

an amount in pounds (“AC”) has been calculated under paragraph 3(1)(b), 6(1) or 7(1)(c) in respect of a CMU (“CMU i”); and

b

two or more persons were each registered on the capacity market register as the capacity provider in respect of CMU i for different parts of the period for which the calculation was made.

2

For each of the persons referred to in sub-paragraph (1)(b) (“CX”), the Settlement Body must calculate CX’s share of AC (“

A C_{c x}

”).

3

A C_{c x}

must be calculated in accordance with the formula—

A C_{c x} = A C \times \frac{D P_{c x}}{D P} .

4

In sub-paragraph (3)—

“DP” means the number of days in the period for which AC was calculated; and
“ $D P_{c x}$ ” means the number of days during that period for which CX was registered on the capacity market register as the capacity provider in respect of CMU i.

Settlement costs levy: the first levy period9

1

The Settlement Body must, in respect of the first levy period, calculate the amount of settlement costs levy (“

S L_{s}

”) to be paid by each liable electricity supplier (“S”) in accordance with the formula—

S L_{s} = P A \times \frac{D_{s}}{\sum D_{s}} .

2

In this paragraph—

“ $D_{s}$ ” means the net demand of S for the first levy period;
“ $\sum D_{s}$ ” means the sum of the net demand of all liable electricity suppliers for the first levy period;
“the first levy period” has the same meaning as in regulation 44;
“liable electricity supplier” has the same meaning as in regulation 44;
“net demand” means the sum of the demand for active energy for which an electricity supplier is responsible including demand directly connected to the transmission system or a distribution network, less the output of any generation for which an electricity supplier is responsible that is connected to a distribution network, and for the purposes of this paragraph net demand cannot be less than zero; and
“PA” means the prescribed amount, as specified in regulation 44(2).