Industry participants have until 5pm on 29 January to respond to a Balancing and Settlement Code modification that would see Capacity Market payments collected from suppliers and held in anticipation of the market winning renewed State Aid clearance. Many suppliers have indicated that they support arrangements to continue to take CM payments. They fear that unless that happens, they will not have the payments accounted for in Ofgem’s price cap for standard variable tariffs.
Ofgem has said that it needs visibility of payment arrangements, as it has to decide by 7 February whether to include the charge in calculations for the tariff cap for standard variable tariffs. The tariff cap will be set on that date for the six months from 1 April and the CM charge would represent about 1.5% of the total annual charge.
Suppliers are also afraid that an agreement on State Aid would otherwise see them asked to make a large payment to make up for those due during the hiatus, raising cash flow issues.
Two options are being progressed for maintaining payments. BEIS is considering a change in existing regulations, while the BSC modification would be an agreement between market members. Members of he BSC can respond to the consultation and Elexon, the code body, particularly sought supplier responses.
P378 would backdate payments to 1 January. The Modification Consultation was issued on 16 January, after the Gas and Electricity Markets Authority agreed that the modification (P378) could be treated as urgent.
Follow the modification process and download the consultation here
- Sara Bell: Capacity Market failings are substantive
- Capacity Market: two options to resume payments in Q1, BEIS seeks views by 10 January
- What has the Capacity Market ever done for us?
- Tempus Energy chief: Capacity Market auctions will have to be re-run
- Ofgem confirms Capacity Market role for co-located storage – including mobile options
- BEIS confirms T-1 auction in summer 2019 but questions remain over payments
- Drax and Iberdrola, mid acquisition, agree to share £36M Capacity Market payment risk
- Capacity Market ruling: the industry responds