The Contracts for Difference (Miscellaneous Amendments) Regulations 2016

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations are made under the powers contained in Chapter 2 (contracts for difference) of Part 2 (electricity market reform) of the Energy Act 2013 (c. 32) (“the Act”).

Part 2 amends the Contracts for Difference (Definition of Eligible Generator) Regulations 2014 (S.I. 2014/2010) (“the Eligible Generator Regulations”).

Regulation 3 inserts new definitions in regulation 3 of the Eligible Generator Regulations which apply to the interpretation of Chapter 2 of Part 2 of the Act.

Regulation 3, along with regulations 7, 8, 18 and 19 in Part 3 and regulation 22 in Part 4 make provision in relation to unincorporated associations.

Part 3 amends the Contracts for Difference (Allocation) Regulations 2014 (S.I. 2014/2011) (“the Allocation Regulations 2014”).

Regulation 5 amends the definition of “distribution system” in regulation 2 of the Allocation Regulations 2014 to account for private networks. It also inserts new definitions. Regulation 5(c), along with regulations 21 and 24 align the definition of “working day” across the Regulations made under Chapter 2 of Part 2 of the Act.

Regulation 6 amends regulation 14 of the Allocation Regulations 2014. The amendments extend the exclusion in regulation 14(5) of the Allocation Regulations 2014 to apply to CFD units being established as well as those being altered. The amendments also provide for a further type of application which is excluded from an allocation round. This type of application is one made in relation to CFD unit in respect of which an application to the capacity market has been made and has not yet been determined.

Regulation 9 amends the requirements in regulation 25 of the Allocation Regulations 2014 setting out what must be provided to evidence direct or partial connection to the national transmission system for Great Britain or the distribution system or, where no such connection applies, connection to a private network. The amendments also clarify that the definition of connection agreement includes a countersigned offer.

Regulation 10 amends regulation 32 of the Allocation Regulations 2014 to include the Authority as a recipient of a notice from the delivery body stating the number, if any, of review notices received.

Regulation 11 amends regulation 34(2) to incorporate the definition of target date. It also amends regulation 34 of the Allocation Regulations 2014 to ensure that target dates can only be delayed, not brought forward as well as correcting a typographical error.

Regulations 12 and 14 prevent a double re-run scenario by prohibiting the delivery body from issuing a proceed direction or a re-run notice where the delay period has expired.

Regulation 13 amends regulation 39 of the Allocation Regulations 2014 to provide for an additional circumstance where a re-run of the allocation process is required and that the allocation framework may establish time periods for such re-runs.

Regulation 15 amends regulation 46 of the Allocation Regulations 2014 to provide for Authority to issue a notice requiring the delivery body to provide information in relation to a qualification appeal. It sets out how the delivery body should respond where the delivery body holds all, part or none of the information required. The amendments also ensure the Secretary of State receives any notice the Authority gives of its determination of an appeal and corrects a typographical error in regulation 46(4) of the Allocation Regulations 2014.

Regulation 16 amends regulation 51 of the Allocation Regulations 2014. The amendments provide for a new circumstance where the delivery body must re-run the allocation process. Regulation 51(3) of the Allocation Regulations 2014 is amended so a determination made under that regulation is made in accordance with the allocation framework. The amendments also incorporate the definition of target dates and ensure target dates can only be delayed and not brought forward. Regulation 51(7) of the Allocation Regulations 2014 is amended so that a determination made by the delivery body in accordance with that paragraph includes flexible bids. The definition of “flexible bid”, as set out in regulation 51(10) of the Allocation Regulations 2014, is also amended.

Regulation 17 amends regulation 54 of the Allocation Regulations 2014 to ensure the Secretary of State may direct the delivery body to provide certain anonymised information in relation to bids submitted in a competitive allocation process. It only permits such a direction if it is given after the first CFD notification has been given for the relevant round and the information does not include the strike price of any bid. The amendments also clarify that the Secretary of State may share information obtained under regulation 54 of the Allocation Regulations 2014 with persons providing services to the Secretary of State in connection with evaluation of any allocation round to the extent that such disclosure is required for evaluation.

Regulation 19 amends paragraph 3(a)(iv) of Schedule 1 to the Allocation Regulations 2014 to incorporate the definition of target dates.

Regulation 26 inserts a new regulation 18 in the Electricity Market Reform (General) Regulations 2014 (S.I. 2014/2013, as amended by S.I. 2015/721) to enable the Secretary of State to issue a direction to the CFD counterparty to modify existing contracts in the event that a change has been made to the CFD sustainability criteria.

A full impact assessment of the effect the CFD regime will have on the costs of business and the voluntary sector is available from the Department of Energy and Climate Change at 3 Whitehall Place, London, SW1A 2AW and is published with the Explanatory Memorandum alongside this instrument on www.legislation.gov.uk.