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). They make amendments to regulation 3 of the Contracts for Difference (Standard Terms) Regulations 2014 (S.I. 2014/2012) (the “2014 Regulations”).
Regulation 3 of the 2014 Regulations sets out the provisions to be included in standard terms for Contracts for Difference (CFDs) issued or revised by the Secretary of State, including the provision that where the “strike price” is higher than the “reference price”, the CFD counterparty must pay the generator the difference between the strike price and the reference price (the “difference amount”).
Regulation 2 of these Regulations amends regulation 3 of the 2014 Regulations, to enable the Secretary of State to issue standard terms which set out circumstances in which the CFD counterparty is not required to pay the difference amount or the full difference amount. As this amendment enables the Secretary of State to issue standard terms which include provision that the CFD counterparty is not required to pay the generator the difference amount during periods of negative electricity prices, regulation 2 also removes the existing specific provision to that effect.
While the impact this specific instrument has on the costs of business and the voluntary sector is negligible, 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 for Business, Energy and Industrial Strategy at 3 Whitehall Place, London, SW1A 2AW and is published with the Explanatory Memorandum alongside this instrument on www.legislation.gov.uk.