EXPLANATORY NOTE
(This note is not part of the Regulations)

These Regulations make amendments to the Electricity Capacity Regulations 2014 (S.I. 2014/2043).

The Electricity Capacity Regulations 2014 make provision for the purpose of meeting consumers’ demands for electricity in Great Britain by establishing a Capacity Market (“the scheme”) under which those who make capacity available (“capacity providers”) can obtain capacity agreements which give capacity providers rights to receive capacity payments (“capacity payments”) and which also impose obligations on capacity providers to provide capacity during one or more specified years (“delivery year”). Following a prequalification process during which applications must be made to the scheme’s delivery body (National Grid ESO), capacity agreements are awarded in competitive auctions (“capacity auctions”) held four years ahead of a delivery year (“T-4 auction”) and one year ahead of a delivery year (“T-1 auction”). Further detailed and technical provision is made by the Capacity Market Rules 2014 (“the Rules”)3.

Regulation 2 and the Schedule to these Regulations make amendments to the Electricity Capacity Regulations 2014 to make technical improvements to the operation of the scheme. In the Schedule, Part 2 prevents the extinguishing of rights and obligations related to a partially transferred capacity obligation in circumstances where the original capacity agreement is terminated. Part 3 concerns a “reduction notice” (defined in the Rules) which is given to a capacity provider to reduce the duration of their capacity agreement for failure to meet a specified requirement under the Rules. It provides the Secretary of State with a discretion to direct the delivery body to extend the date for compliance with, or withdraw, a reduction notice. Part 4 amends the information or evidence which the delivery body and the energy regulator, the Gas and Electricity Markets Authority, may take into account when disputes or appeals are brought by applicants for prequalification. This allows information or evidence that rectifies non-material errors or omissions to be taken into account. Part 1 implements a minor correction.

An impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.