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The Electricity Capacity Regulations 2014

Type Statutory-Instrument

Publication 2014-07-31

Last updated 2025-07-23

State In force

Department King's Printer of Acts of Parliament

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(ii) in respect of which P was a qualified person for the whole of year X; and

(b) P’s proportion of TODPix, as calculated in accordance with paragraphs 7 and 8 of Schedule 1, for each CMU—

(i) for which P was registered on the capacity market register as the capacity provider for part of year X, or

(ii) in respect of which P was a qualified person for part of year X.

Termination fees

43

(1) A capacity provider must pay to the Settlement Body a termination fee, by way of a financial penalty, if—

(a) a capacity agreement is terminated on a ground specified in capacity market rules; and

(b) capacity market rules specify that a termination fee is payable in the event of the capacity agreement being terminated on that ground.

(1A) A termination fee is payable in accordance with paragraph (1) if the capacity agreement is terminated in accordance with capacity market rules, notwithstanding that the termination does not take effect until after the expiry of the delivery year, or period of delivery years, to which the capacity agreement relates (“the relevant period”).

(2) The Settlement Body must, as soon as reasonably practicable after receiving notice of the termination of a capacity agreement on a ground for which a termination fee is payable—

(a) determine the amount in pounds of the termination fee that is payable; and

(b) issue to the capacity provider an invoice for that amount.

(3) Where capacity market rules specify that TFx is payable (for any value of x from x = 1 to x = 5), the amount must be determined in accordance with the formula—

$TF1=TF1rate×CO.$

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) In this regulation—

“CO” means the capacity obligation in MW for which the capacity agreement was issued, as specified in the capacity market register;

“TFxrate” (for any value of x from x = 1 to x = 5) means the rate in pounds per MW determined in accordance with regulation 32 and specified on the capacity market register as the rate at which TFx is payable under the capacity agreement.

(6) In this regulation, references to the termination of a capacity agreement include references to the termination of a transferred part; and for that purpose—

(a) the reference to the relevant period in paragraph (1A) is to be construed as a reference to the transfer period as defined in regulation 30A(1)(b); and

(b) “CO” in paragraph (5) means the capacity obligation in MW comprised in that transferred part as specified on the capacity market register.

CHAPTER 3 — Calculations and determinations: electricity suppliers

Settlement costs levy: the first levy period

44

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 4 — Payment and non-payment

General

45

(1) In this Chapter—

“draw down” has the same meaning as it has in Part 7;

“in default” means a failure to pay in full an invoiced amount by the end of the payment due date;

“invoiced amount” means the total amount payable by a payer as stated in the invoice issued to that payer under regulation 41, 43 ... or 49A;

“payer” , subject to regulation 47(7), means a person to whom an invoice is issued under regulation 41, 43 ... or 49A;

“payment due date” means the day specified in an invoice in accordance with regulation 38(2) as the date by which it is to be paid.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of invoices and accruing interest

46

(1) A payer must pay the invoiced amount to the Settlement Body by no later than the end of the payment due date.

(2) Where a payer has not paid in full the invoiced amount to the Settlement Body as required by paragraph (1), the payer must pay the Settlement Body simple interest at the rate specified in paragraph (4) (“late payment interest”) on the outstanding balance of the invoiced amount from and including the payment due date until the date of payment.

(3) Where a payer disputes an invoiced amount under Chapter 2 of Part 10—

(a) if the decision of the Settlement Body under that Part is that the invoiced amount is reduced but not extinguished, late payment interest accrues on the reduced amount from and including the payment due date until the date of payment;

(b) if the decision of the Settlement Body under that Part is that the invoiced amount is extinguished, no late payment interest accrues in respect of the invoiced amount.

(4) The rate at which late payment interest is payable is 5 per cent per annum over the Bank of England base rate in force on the 30th June (in respect of interest which starts to run between 1st July and 31st December) or the 31st December (in respect of interest which starts to run between 1st January and 30th June) immediately before the date on which the interest starts to run.

(5) In paragraph (4), “Bank of England base rate” means—

(a) the rate announced from time to time by the Monetary Policy Committee of the Bank of England as the official dealing rate, being the rate at which the Bank is willing to enter into transactions for providing short term liquidity in the money markets; or

(b) where an order under section 19 of the Bank of England Act 1998 is in force, any equivalent rate determined by the Treasury under that section.

The non-payment register

47

(1) The Settlement Body must maintain a register (“the non-payment register”) which is to include in respect of a payer (“P”) who has not paid an invoice by the end of the payment due date—

(a) the name of P;

(b) whether P is an electricity supplier or a capacity provider;

(d) the payment due date;

(e) the date or dates when any payment has been made by P in respect of the invoice, and whether it is a full or partial payment; and

(f) whether P has given a disputes notice to the Settlement Body in respect of the invoice;

(g) if P has given a disputes notice in respect of the invoice, whether the dispute has been determined under Chapter 2 of Part 10 and, if so, that determination.

(2) The matters included on the non-payment register under paragraph (1) are a “relevant register entry” in relation to P.

(3) The Settlement Body must—

(a) make a relevant register entry as soon as possible after P is in default; and

(b) update the relevant register entry if a payment is subsequently made, or a dispute is raised or determined.

(4) The Settlement Body must remove a relevant register entry—

(a) if it is determined under Chapter 2 of Part 10 that the payment is not due, as soon as reasonably practicable after the Settlement Body makes that determination;

(b) in any other case, 12 months after the date on which P became in default.

(5) The Settlement Body must publish the information contained in the non-payment register on a website.

(6) The Settlement Body must retain the data contained in a relevant register entry for 5 years after the relevant register entry is made.

(7) In this regulation, “payer” means a person to whom an invoice is issued under these Regulations or the Supplier Payment Regulations.

Payment of credit notes

48

Subject to regulations 49 to 52, the Settlement Body must pay the amount due to—

(a) each capacity provider issued with a credit note for a capacity payment, by no later than the end of the 33rd working day after the end of the month to which the payment relates; and

(b) each capacity provider issued with a credit note for an over-delivery payment, by no later than the end of the 33rd working day after the end of the delivery year to which the payment relates.

Reducing capacity payments: unpaid capacity provider penalty charges

49

(1) This regulation applies if, at the time when a credit note is issued to a capacity provider (“C”) for a capacity payment, C is in default in respect of a capacity provider penalty charge (an “unpaid penalty charge”).

(2) If this regulation applies—

(a) the Settlement Body must ensure that the credit otherwise payable to C is reduced—

(i) by the amount of the unpaid penalty charge;

(ii) to nil, if the amount of the unpaid penalty charge is equal to or greater than the amount of the credit; and

(b) the amount by which the credit is reduced is to be treated as a payment or part payment of the unpaid penalty charge.

(3) The Settlement Body must ensure that the credit note issued to C states the amount by which the credit is reduced, and the reason for the reduction.

Reducing capacity payments: failure to demonstrate satisfactory performance

50

(1) This regulation applies in relation to a capacity committed CMU (“CMU i”) and a delivery year (“year X”) if—

(a) a satisfactory performance requirement applies in respect of CMU i in year X; and

(b) the requirement has not been met by 30th April in year X.

(2) If, by the end of a relevant month, the capacity provider in respect of CMU i (“C”) has not complied with the satisfactory performance requirement, no monthly capacity payment is to be paid in respect of CMU i for that month.

(2A) If C complies with the satisfactory performance requirement during May in year X, no monthly capacity payment is to be paid in respect of CMU i for that month.

(3) If C complies with the satisfactory performance requirement during a relevant month other than May, the Settlement Body must ensure that the credit which would otherwise be payable to C in respect of the monthly capacity payment for CMU i for that month is reduced by the proportion $AB$, where—

(a) A is the number of days in the relevant month before the day on which C complies with the satisfactory performance requirement; and

(b) B is the number of days in the relevant month.

(4) If C has not complied with the satisfactory performance requirement by the end of year X—

(a) C must repay to the Settlement Body all capacity payments made in respect of CMU i and year X less the total amount of any capacity provider penalty charges that C has paid in respect of CMU i and year X; and

(b) the Settlement Body must, as soon as reasonably practicable after the end of year X, issue an invoice to C for the amount due under sub-paragraph (a).

(5) The Settlement Body must—

(a) if paragraph (2) or paragraph (2A) applies, give a notice to C which states that no monthly capacity payment is to be paid in respect of CMU i for the relevant month, and states the reason;

(b) if paragraph (3) applies, ensure that the credit note issued to C for the relevant month states the amount by which the credit is reduced, and states the reason;

(c) if paragraph (4) applies, ensure that the invoice issued to C under paragraph (4)(b) states the reason for the issue of the invoice.

(6) In this regulation—

“extended performance” has the meaning given in the Rules;

“relevant month” means May, June, July, August or September in year X;

“satisfactory performance day” has the meaning given in the Rules;

“satisfactory performance requirement” means a requirement in capacity market rules for a capacity provider to demonstrate satisfactory performance days or extend performance during a satisfactory performance day in respect of a capacity committed CMU.

Withholding credit payments to capacity providers

51

(1) This regulation applies where, at the time when a credit note is issued to a capacity provider (“C”) under this Part—

(a) C is subject to a data default notice; or

(b) the Settlement Body is aware that C is insolvent.

(2) The Settlement Body must ensure that—

(a) the credit is withheld; and

(b) the credit note states that the payment is to be withheld and states the reason why.

(3) In this regulation, “data default notice” has the meaning given by regulation 37(1).

Payment of withheld credit

52

(1) Paragraphs (2) and (3) apply where a credit is withheld from a capacity provider (“C”) under regulation 51.

(2) If, where the credit is withheld for the reason in regulation 51(1)(b), an invoice is due to be issued to C, the Settlement Body may deduct all or part of the withheld credit from the amount invoiced, and the amount so deducted is to be treated as having been paid to C.

(3) Except where the withheld credit has been deducted from an invoice in accordance with paragraph (2), the Settlement Body must pay the withheld credit on the next occasion which the Settlement Body considers practicable when—

(a) credit payments are made under this Part; and

(b) the Settlement Body is not required to withhold a credit from C under regulation 51.

PART 7 — Credit cover

CHAPTER 1 — General

Application of this Part and interpretation

53

(1) This Part applies to a person who—

(a) has applied to prequalify for a capacity auction; and

(b) receives a notice from the Delivery Body under capacity market rules (a “conditional prequalification notice”) that it has prequalified in respect of that CMU subject to satisfying the requirements of this Part.

(2) In this Part, “A” means a person who is required to provide credit cover.

(3) In this Part—

“applicant credit cover” means credit cover provided, or required to be provided, by a person to which this Part applies;

“credit cover” means a letter of credit or cash deposit which meets the requirements in regulation 54;

“credit obligation period” means the period for which, under regulation 60, A is required to provide credit cover;

“draw down” means—in relation to a cash deposit in a bank account, the withdrawal of funds from the account by the Settlement Body;in relation to a letter of credit, the payment of funds by the issuing bank to the Settlement Body further to a notice of drawing;

“letter of credit” means a letter, in a form approved by the Settlement Body, which contains an irrevocable and unconditional authorisation in favour of the Settlement Body to be paid on demand up to an amount stated in the letter from an account held at a qualifying bank at any time during a period specified in the letter;

“notice of drawing” means a notice signed by or on behalf of the Settlement Body demanding payment under a letter of credit;

“qualifying bank” means—a United Kingdom clearing bank;any other bank which has a long term debt rating of—not less than A– by Standard & Poor's ; ornot less than A3 by Moody's ; orsuch other bank as the Settlement Body may approve;

“the required amount” means the amount of credit cover which A is required to provide, as determined in accordance with regulation 59(1) or (4) or, if applicable, regulation 60(2).

(4) In this Part, references to a prospective generating CMU are to be treated as including any generating CMU in respect of which a bidder is awarded, or an applicant pre-qualifies to bid for, a multi-year capacity obligation in a T-4 auction held on or before 31st July 2016.

(5) In paragraph (3), in the definition of “qualifying bank”—

“Moody's” means the corporation known as Moody's Investors Service, Inc, incorporated in the US State of Delaware with the file number 0577904;

“Standard & Poor's” means the corporation known as Standard & Poor's Corporation, incorporated in the US State of Delaware with the file number 4621989.

Credit cover: requirements

54

(1) A person who is under an obligation to provide credit cover must do so—

(a) for at least the required amount; and

(b) in a permissible form (or partly in one permissible form and partly in the other).

(2) The following are permissible forms of credit cover—

(a) a letter of credit which meets the conditions in paragraph (3);

(b) a cash deposit in a bank account specified by the Settlement Body in accordance with paragraph (4).

(3) The conditions in this paragraph are that the letter of credit is—

(a) issued by a qualifying bank;

(b) in sterling;

(c) available for payment at a London branch of the issuing bank against a notice of drawing delivered by the Settlement Body; and

(d) valid—

(i) at least until the end of the credit obligation period; or

(ii) if the credit obligation period is more than 6 months, for a period of not less than 6 months.

(4) A bank account specified by the Settlement Body for the purpose of paragraph (2)(b) must—

(a) be an interest bearing account in the name of the Settlement Body;

(b) be used only for the purpose of holding credit cover provided under these Regulations; and

Approval of credit cover

55

(1) When credit cover is provided by A, the Settlement Body must—

(a) determine whether the credit cover is—

(i) approved in full;

(ii) approved in part and not approved in part; or

(iii) not approved; and

(b) give a notice to A of its determination.

(2) The Settlement Body must approve credit cover if it meets the requirements in regulation 54, and must not approve it otherwise.

(3) The notice under paragraph (1)(b) must be given—

(a) in the case of additional credit cover provided by A under regulation 56(2), not later than 2 working days after the additional credit cover is provided; and

(b) in any other case, not later than 15 working days after the credit cover is provided.

Maintenance of credit cover

56

(1) A must maintain credit cover equal to or more than the required amount at all times during the credit obligation period.

(2) If the Settlement Body gives notice to A that any credit cover provided by A is not approved, A must within 5 working days provide additional credit cover so that the total amount of credit cover provided (excluding credit cover which is not approved or has been drawn down) is equal to or more than the required amount.

(3) Where a letter of credit which A has provided as credit cover is due to expire on a date before the end of the credit obligation period (“the expiry date”), A must, not later than 10 working days before the expiry date, provide to the Settlement Body—

(a) written confirmation from the issuing bank that the letter of credit will be extended by a further period of not less than—

(i) 6 months; or

(ii) the remaining duration of the credit obligation period, if less; or

(b) replacement credit cover.

(3A) If A does not comply with paragraph (3)—

(a) the Settlement Body may immediately draw down on the letter of credit to the full amount stated in the letter of credit and on receipt of funds from the paying bank place the funds in a bank account which satisfies the conditions in regulation 54(4); and

(b) funds placed in a bank account under sub-paragraph (a) shall be treated as credit cover provided by A.

(4) A may at any time during the credit obligation period provide additional credit cover, whether or not A needs to provide the additional credit cover in order to comply with paragraphs (1) to (3).

Downgrade of letter of credit

57

(1) If A becomes aware that the bank issuing the letter of credit ceases to be a qualifying bank (a “ downgrade ”), then A must give notice to the Settlement Body as soon as it becomes so aware.

(2) If the Settlement Body becomes aware of a downgrade, the Settlement Body may give notice to A to that effect.

(3) A must within 10 working days of the giving of such notice by the Settlement Body or A, whichever is the earlier, provide replacement credit cover so that the total amount of credit cover provided which conforms with regulation 54 is equal to or more than the secured amount.

(4) If A does not comply with paragraph (3)—

(a) the Settlement Body may immediately draw down on the letter of credit to the full amount stated in the letter of credit and on receipt of funds from the paying bank place the funds in a bank account which satisfies the conditions in regulation 54(4); and

(b) funds placed in a bank account under sub-paragraph (a) shall continue to be treated as credit cover provided by A.

Release of credit cover

58

(1) This paragraph applies if A has provided credit cover and one of the following circumstances applies—

(a) A is no longer required, under regulation 60, to maintain any credit cover;

(b) A has provided further credit cover under regulation 57(3) to replace the credit cover previously provided, and the Settlement Body has approved the replacement credit cover; or

(2) Where paragraph (1) applies—

(a) A may, by giving notice in writing to the Settlement Body, request the Settlement Body to release—

(i) if paragraph (1)(a) applies, all or part of the credit cover;

(ii) if paragraph (1)(b) applies, the credit cover that has been replaced;

(iii) if paragraph (1)(c) applies, an amount of credit cover not exceeding the amount by which the credit cover referred to in paragraph (1)(c) exceeds the required amount; and

(b) the Settlement Body must release that amount of credit cover as soon as reasonably practicable.

(3) Credit cover is released—

(a) in the case of a cash deposit, by repaying the principal to A; and

(b) in the case of a letter of credit, by issuing notice to A confirming that the letter of credit is no longer required.

CHAPTER 2 — Applicant credit cover

Requirement to provide applicant credit cover

59

(1) Subject to paragraph (1B), an applicant to prequalify for a capacity auction in respect of a CMU (“CMU i”) must, if the applicant receives from the Delivery Body a conditional prequalification notice under capacity market rules, provide applicant credit cover in the amount determined in accordance with paragraph (2).

(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1B) Where an applicant provides applicant credit cover for a capacity auction in respect of an unproven demand side response CMU or an interconnector CMU, the applicant is not required to provide further applicant credit cover for any subsequent capacity auction in respect of that CMU except in circumstances specified in capacity market rules.

(2) Subject to paragraph (2C), the amount of applicant credit cover to be provided is—

(a) in the case of an application to prequalify for a T-4 auction or a T-1 auction—

(i) subject to paragraph (ia), if CMU i is an unproven demand side response CMU, an amount equal to £5,000 per MW of the de-rated capacity of CMU i; ...

(ia) if CMU i is an unproven demand side response CMU, in respect of which the applicant has applied to prequalify to bid for a multi-year capacity obligation and has not yet met the requirements for DSR partial credit cover release in accordance with the Rules, an amount equal to £10,000 per MW of the de-rated capacity of CMU i; and

(ii) if CMU i is not an unproven demand side response CMU, an amount equal to £10,000 per MW of the de-rated capacity of CMU i;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2C) The applicant credit cover provided under paragraph (1) must, where an applicant which applied to prequalify to bid for a multi-year capacity obligation in respect of an unproven demand side response CMU has met the requirements for DSR partial credit cover release in accordance with the Rules, be reduced to an amount equal to £5,000 per MW of the de-rated capacity of the CMU.

(3) If A is required to provide credit cover under paragraph (1), A must do so within 15 working days after receiving the conditional prequalification notice.

(4) In circumstances specified in capacity market rules, the applicant credit cover provided under paragraph (1) in respect of a new build CMU must, where twelve months have elapsed after auction results day, be increased by the capacity provider to an amount equal to £15,000 per MW of de-rated capacity.

(5) The increased credit cover required to be provided under paragraph (4) must be provided within 15 working days after the end of that twelve-month period.

(6) For the purposes of paragraph (4)—

(a) “new build CMU” has the meaning given in the Rules; and

(b) “auction results day” means the date on which the auction results are published under regulation 25(1)(c).

(7) In this regulation, “DSR partial credit cover release” has the meaning given in the Rules.

Credit obligation period

60

(1) Where A provides applicant credit cover in respect of a CMU (“CMU i”), A must maintain credit cover in the amount calculated in accordance with regulation 59 until the earliest of the following events has occurred—

(a) where CMU i is an unproven demand side response CMU, the de-rated capacity for CMU i becomes, in accordance with capacity market rules, less than the product (in MW to three decimal places) of the unproven DSR capacity of CMU i and the de-rating factor;

(b) where A is required by capacity market rules to provide confirmation to the Delivery Body of its intention to bid in the capacity auction in respect of CMU i, it does not provide such confirmation within the time required by capacity market rules;

(ba) where A is required by capacity market rules to provide a notice of confirmation or other document as a requirement for being eligible to bid in the capacity auction in respect of CMU i, it does not do so within the time required by capacity market rules;

(i) cancelled; or

(ii) postponed or stopped, and rearranged, and A gives notice to the Delivery Body (where permitted to do so by capacity market rules) that it does not intend to bid in the rearranged auction in respect of CMU i;

(d) A is unsuccessful in its bid at the capacity auction in respect of CMU i;

(e) A has transferred its capacity agreement in respect of CMU i to another person in accordance with capacity market rules and the transferee has provided replacement credit cover which the Settlement Body has approved;

(f) where CMU i is a demand side response CMU, A has in accordance with capacity market rules provided to the Delivery Body a DSR test certificate which evidences—

(i) a proven DSR capacity equal to or greater than CMU i’s de-rated capacity; or

(ii) a proven DSR capacity less than CMU i’s de-rated capacity, but equal to or greater than 90% of that capacity;

(g) save where CMU i is an unproven demand side response CMU, A has fully discharged all the requirements in capacity market rules against which its applicant credit cover was secured, and which a failure to meet would result in its capacity agreement being terminated under capacity market rules;

(ga) where CMU i is a generating CMU, the Delivery Body has terminated the capacity agreement in respect of CMU i—

(i) under regulation 34(1); or

(ii) under regulation 34A(3);

(h) the credit cover is drawn down under regulation 61.

(2) Where paragraph (1)(a) applies, A must thereafter maintain credit cover—

(a) for a T-4 or a T-1 auction, in an amount equal to £5,000 per MW of the amount of the de-rated capacity of CMU i, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

until the earliest of the events in sub-paragraphs (b) to (h) of paragraph (1) has occurred.

(3) Where paragraph (1)(f)(ii) applies—

(a) the Settlement Body must draw down part of the credit cover calculated in accordance with paragraph (5); and

(b) the applicant must maintain credit cover in the amount so calculated until it has been drawn down, but is no longer required to maintain the remainder of the credit cover.

(4) Where any other sub-paragraph of paragraph (1) applies, the applicant is no longer required to maintain any credit cover.

(5) The amount of credit cover to be drawn down under paragraph (3)(a) (“DD”) must be calculated in accordance with the formula—

$DD=RA×UC−PCUC.$

(6) In paragraph (5)—

“DC” means CMU i’s de-rated capacity;

“PC” means CMU i’s proven DSR capacity;

“RA” means the required amount for CMU i as calculated under regulation 59;

(7) In this regulation “the capacity auction” means the capacity auction in relation to which applicant credit cover has been provided in respect of CMU i.

Draw down of applicant credit cover

61

(1) The Settlement Body must draw down applicant credit cover provided by A in respect of a CMU (“CMU i”) if—

(a) where CMU i is an unproven demand side response CMU—

(i) the credit obligation period has not ended by the date on which the delivery year of A's capacity agreement in respect of CMU i commences; or

(ii) the Settlement Body receives a notice from the Delivery Body that A has provided a DSR test certificate which evidences a proven DSR capacity less than 90% of CMU i's de-rated capacity;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) payment of a termination fee or non-completion fee has become due pursuant to an invoice issued under regulation 43 or 43A, and the termination fee or non-completion fee is unpaid.

(2) Where the Settlement Body is required to drawn down applicant credit cover—

(a) under sub-paragraph (a)(i) ... of paragraph (1), it must do so within 60 days from the date specified in that sub-paragraph;

(b) under sub-paragraph (a)(ii) of paragraph (1), it must do so within 60 days from the date on which the Settlement Body receives the notice referred to in that sub-paragraph;

(c) under sub-paragraph (c) of paragraph (1), it must do so as soon as reasonably practicable after the date on which payment of the termination fee or non-completion fee becomes due.

(3) Subject to paragraph (4), applicant credit cover which is drawn down in accordance with this regulation is forfeited by A.

(4) If, after applicant credit cover has been drawn down, it is determined under Chapter 2 of Part 10 that the credit cover should not have been drawn down, the Settlement Body must pay to A the amount of the credit cover that was wrongly drawn down.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of non-compliance

62

A may not bid in a capacity auction in respect of a CMU for which applicant credit cover is required, if A has not complied with this Part in relation to the provision of applicant credit cover in respect of that CMU.

PART 8 — Information

Duties to provide information

63

(1) The Secretary of State may, for the purpose of any review of the capacity market under regulation 81, require—

(a) an administrative party;

(b) an electricity supplier; or

to provide the Secretary of State with any specified information.

(2) The Authority may, for the purpose of exercising its functions under regulation 82 or 83, require—

(a) an administrative party;

(b) an electricity supplier; or

to provide the Authority with any specified information.

(3) A person appointed under capacity market rules as an auction monitor may require—

(a) any bidder in a capacity auction;

(b) the Delivery Body; or

to provide it with any specified information relating to the conduct of a capacity auction.

(4) Any requirement on a person to provide information under this regulation must be made by giving notice to the person in writing; and references in this regulation to “specified information” mean information specified in such a notice.

(5) Any person on whom a requirement is made under this regulation must, subject to regulation 64, comply with the requirement as soon as reasonably practicable.

Limitation on duty to provide information

64

(1) A person may not be required under these Regulations or capacity market rules to produce, disclose or permit the inspection of protected items.

(2) In paragraph (1) “protected items” means—

(a) communications between a professional legal adviser (“LA”) and LA's client or any person representing LA's client which fall within paragraph (3);

(b) communications between LA, LA's client or any person representing LA's client and any other person which fall within paragraph (3) (as a result of sub-paragraph (b) of that paragraph);

(i) are enclosed with, or referred to in, such communications;

(ii) fall within paragraph (3); and

(iii) are in the possession of a person entitled to possession of them.

(3) A communication or item falls within this paragraph if it is made—

(a) in connection with the giving of legal advice to the client; or

(b) in connection with, or in contemplation of, legal proceedings and for the purposes of those proceedings.

(4) A communication or item is not a protected item if it is held with the intention of furthering a criminal purpose.

Protection of information

65

(1) A person who, by virtue of these Regulations or capacity market rules, has obtained information which relates to the affairs of any individual or to any particular business (“protected information”) must not except as provided in paragraphs (2) to (4)—

(a) use that information for any purpose other than—

(i) participating in the capacity market;

(ii) exercising capacity market functions; or

(iii) providing services to a person exercising capacity market functions; or

(b) disclose that information.

(2) Paragraph (1) does not prohibit a use or disclosure of protected information which is—

(a) made with the consent of the person to whom the information relates; or

(b) required by—

(i) an enactment (including capacity market rules);

(ii) auction guidelines;

(iii) a licence condition (where the person using or disclosing the information is a licence holder);

(iv) a condition of an industry code to which the person using or disclosing the information is a party; or

(v) an assimilated obligation.

(3) Paragraph (1) does not prohibit the use of protected information—

(a) by the Secretary of State, the Authority or the Delivery Body, for the purpose of exercising any EMR functions;

(b) by the Authority, for the purpose of exercising any other statutory functions; or

(c) where the Delivery Body is the national system operator, by the national system operator for the purpose of exercising its functions, to the extent that the use of the information is permitted by the conditions of the national system operator's transmission licence.

(4) Paragraph (1) does not prohibit the disclosure of protected information—

(a) to a person exercising capacity market functions, to the extent that the disclosure is required to enable that person to carry out those functions;

(b) by an administrative party to any public authority exercising any functions in relation to competition law, to the extent that the disclosure is required to enable that authority to carry out those functions in relation to the capacity market;

(c) by an administrative party to a person providing services to it in connection with its performance of capacity market functions, to the extent that the disclosure is required to enable that person to provide those services;

(d) which is already publicly available (other than by reason of a breach of this regulation); or

(e) in accordance with an order of a court.

(5) In this regulation—

“capacity market functions” means functions conferred by or by virtue of Chapter 3 of Part 2 of the Act;

“EMR functions” means functions conferred by or by virtue of Chapter 2, 3 or 4 of Part 2 of the Act;

“licence” means a licence under section 6 of EA 1989.

Disclosure of information under capacity market rules

66

Section 33(3) of the Act applies in relation to a disclosure of information required by virtue of capacity market rules.

PART 9 — Enforcement

Relevant requirements

67

(1) The following requirements are enforceable by the Authority as if they were relevant requirements on a regulated person for the purposes of section 25 of EA 1989 —

(a) the duties and prohibitions in Part 8 (information), except in so far as they apply to the Secretary of State or the Authority;

(b) any other requirement to which any person other than the Secretary of State, the Authority or the Settlement Body is subject under these Regulations , the Supplier Payment Regulations or capacity market rules.

(2) For the avoidance of doubt, paragraph (1) applies whether or not the person on whom a requirement is imposed is in fact a regulated person within the meaning of EA 1989.

PART 10 — Dispute resolution and appeals

CHAPTER 1 — Delivery Body decisions

Delivery body reviewable decisions

68

(1) In this Chapter, a “delivery body reviewable decision” means a decision by the Delivery Body under capacity market rules of a kind specified in the first column of the following table.

(2) A dispute or appeal in relation to a delivery body reviewable decision may only be brought—

(a) by a person specified in the corresponding entry in the second column of the table (an “affected person”); and

(b) in accordance with this Chapter.

Decision	Person who may bring dispute or appeal
A prequalification decision.	The applicant or secondary trading entrant in relation to whom the decision has been made.
A refusal of a request for rectification of the capacity market register on the basis of factual inaccuracy.	The person who made a request for rectification in accordance with capacity market rules.
A refusal of a request to amend a capacity agreement notice on the basis of factual inaccuracy.	The capacity provider to whom a capacity agreement notice has been issued, and who has made a request to amend it in accordance with capacity market rules.
The issue of a non-completion notice, a termination notice, or a notice of intention to terminate a capacity agreement or a transferred part.	The capacity provider to whom the notice has been issued.
A low emissions determination	The capacity provider to whom the notice of the determination was given
The issue of a CCS CFD transfer refusal notice.	The capacity provider who made a request for termination and to whom the notice has been issued.

(3) In the table in paragraph (2), “CCS CFD transfer refusal notice”, “secondary trading entrant” , “termination notice” and “notice of intention to terminate” have the meaning given in the Rules.

Requesting reconsideration by the Delivery Body

69

(1) An affected person may request the Delivery Body to review a delivery body reviewable decision.

(2) The request must—

(a) be submitted in writing to the Delivery Body within 5 working days after receiving notice of the decision; and

(b) include each of the matters specified in sub-paragraphs (a) to (e) of regulation 70(3).

(3) If the Delivery Body receives a request which complies with paragraph (2), within 20 working days of giving notice of the decision it must—

(a) reconsider the matter; and

(b) give notice to the affected person of—

(i) the outcome of the reconsideration (the “reconsidered decision”); and

(ii) the reasons for the reconsidered decision.

(4) The Delivery Body must, within 5 working days after receiving a request which does not comply with paragraph (2), give notice to the affected person that the request is rejected as not complying with that paragraph, and give the reason why.

(5) Subject to paragraph (5A) ... in reconsidering a prequalification decision or a decision to issue a termination notice or a notice of intention to terminate or a decision to issue a CCS CFD transfer refusal notice, the Delivery Body must not take into account any information or evidence which—

(a) the affected person was required by these Regulations or capacity market rules to provide to the Delivery Body before the decision was taken; and

(b) the affected person failed to provide in accordance with that requirement.

(5A) In reconsidering a prequalification decision or a decision to issue a CCS CFD transfer refusal notice, the Delivery Body may take into account information or evidence if the Delivery Body determines that:

(a) the relevant application for prequalification or a CCS CFD transfer notice contained a non-material error or omission; and

(b) the information or evidence is capable of rectifying such non-material error or omission.

(6) Subject to regulations 70 to 72, the reconsidered decision is final.

(7) In this regulation—

“non-material error or omission” means an error or omission in an application for prequalification or a CCS CFD transfer notice which is—manifest, and either inadvertent or the result of an honest mistake;clerical, typographical or trivial in nature; ordetermined by the Delivery Body to be inconsequential to the affected person’s compliance with, or the enforcement of, any requirement in these Regulations or the Rules to which the error or omission relates.

Appeals to the Authority

70

(1) An affected person who has, in accordance with regulation 69(2), made a request to the Delivery Body to review a delivery body reviewable decision, may appeal to the Authority if—

(a) the affected person disputes the reconsidered decision; or

(b) the request for reconsideration was rejected by the Delivery Body on the ground that it did not comply with regulation 69(2).

(2) An appeal under paragraph (1) must be made by submitting an appeal notice to the Authority within 5 working days after the date on which the affected person received the notice from the Delivery Body under regulation 69(3) or (4).

(3) An appeal notice must contain—

(a) a concise statement identifying the relevant part of the delivery body reviewable decision in dispute;

(b) a concise statement of the facts on which the affected person relies;

(d) a succinct presentation of the arguments supporting each of the grounds for dispute; and

(e) a schedule listing the documents submitted with the appeal notice.

(4) The appeal notice must be accompanied by—

(a) a copy of—

(i) the notice given by the Delivery Body under regulation 69(3) or (4);

(ii) the request made to the Delivery Body for reconsideration; and

(iii) any information or evidence submitted to the Delivery Body in support of that request;

(b) in the case of an appeal relating to a prequalification decision, a copy of—

(i) the prequalification decision; ...

(ii) any information or documents provided by the affected person to the Delivery Body as part of the application for prequalification which are relevant to the matter in dispute; and

(iii) any information or evidence submitted in accordance with regulation 69(5A);

(c) in the case of an appeal relating to a termination notice , a CCS CFD transfer refusal notice or a notice of intention to terminate, a copy of—

(i) the notice; and

(ii) any information or documents provided by the affected person to the Delivery Body before the notice was issued, which are relevant to the matter in dispute; ...

(ca) in the case of an appeal relating to a low emissions determination, a copy of—

(i) the notice setting out the determination; and

(ii) any notice that the Rules required to be given before the low emissions determination was made; and

(d) any other documentary evidence which the affected person wishes to rely on in support of the appeal and which—

(i) was provided to the Delivery Body before the reconsidered decision was made; or

(ii) is needed to show what evidence was before the Delivery Body when the reconsidered decision was made.

(5) Where a request for reconsideration was rejected by the Delivery Body on the ground that it did not comply with regulation 69(2), the affected person may submit evidence to the Authority that the request did comply with that regulation.

(6) Except as provided in paragraphs (4) and (5), no other documentary evidence may be included in or submitted with the appeal notice.

Determination of appeal by the Authority

71

(1) The Authority—

(a) must notify the Delivery Body when it receives an appeal notice under regulation 70; and

(b) may request the Delivery Body to provide it with any information relating to the disputed decision which the Authority considers necessary to enable it to determine the appeal.

(2) The Delivery Body must provide to the Authority such of the information requested under paragraph (1)(b) as it holds within 5 working days of receiving the Authority's request.

(3) Upon receiving an appeal notice which complies with regulation 70, and any information requested from the Delivery Body, the Authority must—

(a) subject to paragraph (4), review the reconsidered decision;

(b) determine whether the reconsidered decision was correct on the basis of the information which the Delivery Body had when it made the decision.

(4) In a determination under paragraph (3)(b)—

(a) the Authority must uphold the reconsidered decision if the Authority determines that it was correct on the basis described in paragraph (3)(b);

(b) if the Authority determines that the Delivery Body incorrectly decided not to prequalify the applicant for a capacity auction in respect of a CMU, it must direct the Delivery Body to register the CMU on the capacity market register as a prequalified CMU (in which case regulation 73 applies);

(c) in any other case, if the Authority determines that the Delivery Body's decision was incorrect it must substitute the decision that it considers the Delivery Body should have made.

(5) The Authority must give notice of its determination to the affected person, the Delivery Body and the Settlement Body.

(6) The Authority may, to assist it in determining an appeal, appoint a person independent of the Delivery Body and the affected person to consider the appeal or any matter relating to it and provide a report to the Authority; but the Authority remains responsible for determining the appeal.

(7) If the Authority determines that the Delivery Body incorrectly rejected a request for reconsideration of a decision as mentioned in regulation 70(5)—

(a) the Authority must remit the request to the Delivery Body and direct the Delivery Body to reconsider the decision in accordance with regulation 69; and

(b) the Delivery Body must comply with the direction.

Appeals to the court

72

(1) An affected person may appeal to the court against a determination under regulation 71.

(2) In paragraph (1), “the court” means—

(a) the High Court; or

(b) in Scotland, the Court of Session.

(3) An appeal under paragraph (1)—

(a) may only be made on a point of law; and

(b) must be brought within 28 days after the date of the determination.

(4) On an appeal relating to a prequalification decision in respect of a CMU the court may—

(a) dismiss the appeal;

(b) direct the Delivery Body to register the CMU on the capacity market register as a prequalified CMU (in which case regulation 73 applies); or

(c) remit the matter to the Delivery Body with a direction to reconsider it and make a new decision in accordance with the findings of the court.

(5) On an appeal relating to any other decision, the court may—

(a) dismiss the appeal; or

(b) remit the matter to the Delivery Body with a direction to reconsider it and make a new decision in accordance with the findings of the court.

(6) The court may not—

(a) order a capacity auction to be cancelled, postponed or suspended pending the determination of an appeal; or

(b) make an order which affects the validity or terms of a capacity agreement that has accrued to any person other than the appellant.

Consequences of successful review or appeal

73

(1) Paragraph (2) applies if the Delivery Body—

(a) makes a reconsidered decision under regulation 69;

(b) receives notice of a decision of the Authority or the court under this Chapter; or

(2) The Delivery Body must as soon as reasonably practicable—

(a) make any amendment to the capacity market register required by, or in consequence of, the decision or redetermination; and

(b) give notice to the affected person of any amendment made to the capacity market register.

(3) Paragraphs (4) to (7) apply if, pursuant to paragraph (2)(a), the Delivery Body registers a CMU on the capacity market register as a prequalified CMU.

(4) If the registration is made not less than 11 working days before the start of the relevant capacity auction, the Delivery Body must permit the applicant to bid in the capacity auction in respect of the CMU.

(5) If—

(a) the registration is made after, or less than 11 working days before, the start of the relevant capacity auction; and

(b) the capacity auction is held and is not annulled,

the Delivery Body must offer to the applicant a capacity agreement in respect of the CMU on terms in accordance with paragraph (6).

(6) A capacity agreement offered under paragraph (5) must be—

(a) at the capacity cleared price which would have applied to the CMU if a successful bid had been made in the relevant capacity auction in respect of the CMU;

(b) for—

(i) the de-rated capacity of the CMU (which, if not previously determined, must be determined by the Delivery Body in accordance with capacity market rules); ...

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) for the number of delivery years which it appears to the Delivery Body that the applicant is entitled to a capacity agreement under capacity market rules.

(6A) In the case of a demand side response CMU, the applicant may nominate in accordance with capacity market rules the capacity in respect of which it wishes to be offered a capacity agreement and, where it does so—

(a) that is the capacity which is to be used to determine the de-rated capacity of the CMU for the purposes of paragraph (6)(b), and

(b) the de-rated capacity so determined is the de-rated capacity which applies for the purposes of regulations 32 and 60.

(7) An applicant which receives an offer of a capacity agreement under paragraph (5)—

(a) must within 5 working days give notice to the Delivery Body of whether it accepts the offer; and

(b) is not entitled to any other remedy if it does not accept the offer within that time.

CHAPTER 2 — Settlement Body decisions

Disputes

74

(1) Subject to paragraph (2), a disputing party may use the procedure in this Chapter to dispute any calculation or determination made by the Settlement Body under Part 6 or 7.

(2) The procedure in this Chapter may not be used to dispute the correctness of any data used in making a calculation or determination, which has been provided to the Settlement Body by another person under these Regulations or capacity market rules, except for non-BSC data provided by a capacity provider.

(3) In this Chapter, “disputing party” means, as appropriate, a supplier or a capacity provider.

(4) In paragraph (2), “non-BSC data” means data provided by or on behalf of a capacity provider which is not provided under the Balancing and Settlement Code, irrespective of whether the capacity provider is a party to the Balancing and Settlement Code.

Disputes notice

75

(1) A disputing party may give a notice (“a disputes notice”) to the Settlement Body of a dispute.

(2) A disputes notice must—

(a) set out the matters giving rise to the dispute and the outcome sought by the disputing party; and

(b) be given not later than 28 days after the disputing party receives notice of the calculation or determination giving rise to the dispute.

Determination of disputes

76

(1) After receiving a disputes notice which complies with regulation 75(2), the Settlement Body must, subject to paragraph (2), review the disputed calculation or determination, and decide whether to uphold it or to substitute a different calculation or determination.

(2) The Settlement Body may, to assist in determining a dispute, appoint an independent person to consider the matter in dispute and provide a report on the matter, or an audit of any disputed calculation.

(3) The Settlement Body must, as soon as reasonably practicable after receiving a disputes notice, give notice to the disputing party whether it—

(a) is considering the disputed matter;

(b) has appointed an independent person to consider the disputed matter under paragraph (2); or

(4) The Settlement Body must determine a dispute—

(a) where it commissions a report or audit under paragraph (2), not later than 28 days after receiving the report or audit; and

(b) in any other case, not later than 28 days after receiving the disputes notice.

(5) The Settlement Body must as soon as reasonably practicable after determining a dispute give a notice to the disputing party of its decision and the reason for that decision.

(6) The references in this regulation to “an independent person” include a panel of persons, either—

(a) established under an industry code; or

(b) appointed by the Settlement Body for the purpose of considering disputes under this Chapter,

provided that all the panel members who consider the dispute are independent from the Settlement Body and the disputing party.

PART 11 — Capacity market rules

Authority's power to make capacity market rules

77

(1) The Authority may make capacity market rules about the operation and administration of the capacity market.

(2) The power in paragraph (1)—

(a) includes power to amend, add to, revoke or substitute any provision of the Rules; and

(b) includes power to specify that an obligation in capacity market rules made by the Authority is enforceable as if it were a relevant requirement on a regulated person for the purposes of section 25 of EA 1989 (whether or not the person on whom a requirement is imposed is in fact a regulated person within the meaning of EA 1989).

(3) But the Authority must not—

(a) make any provision in capacity market rules which is inconsistent with these Regulations or the Supplier Payment Regulations; or

(b) except with the approval of the Secretary of State, make, amend or revoke any provision in capacity market rules which confers functions on—

(i) the Secretary of State; or

(ii) the Authority.

Objectives

78

The Authority must when making capacity market rules, in addition to having regard to its principal objective and general duties, have regard to the following objectives—

(a) promoting investment in capacity to ensure security of electricity supply;

(b) facilitating the efficient operation and administration of the capacity market;

Procedure

79

(1) Before making capacity market rules the Authority must consult—

(a) the Secretary of State;

(b) the Delivery Body;

(d) any person who is a capacity provider; and

(e) such other persons as the Authority considers it appropriate to consult.

(2) Paragraph (3) applies where any proposal to amend a provision of capacity market rules is made to the Authority by—

(a) a person mentioned in paragraph (1)(a) to (d);

(b) an applicant, or a person wishing to apply to bid in a capacity auction; or

(c) a representative body representing persons mentioned in paragraph (1)(c) or (d) or any other class of persons which, in the Authority's opinion, has a sufficient interest in the capacity market.

(3) The Authority must—

(a) consider the proposal; and

(b) either—

(i) consult in accordance with paragraph (1) on whether to make the proposed amendment; or

(ii) publish its reasons for rejecting the proposal without consulting on it.

PART 12 — Other functions of the administrative parties

Appointment of Settlement Body

80

(1) The Secretary of State must, as soon as reasonably practicable after this regulation comes into force, appoint a person to be the Settlement Body.

(2) The Secretary of State may terminate the appointment of a person as Settlement Body.

(3) If the Secretary of State terminates the appointment of a person (“A”) as Settlement Body, the Secretary of State must—

(a) as soon as reasonably practicable, appoint another person (“B”) to that position; and

(b) make arrangements to ensure that any funds held by A under these Regulations or the Supplier Payment Regulations are transferred to B.

(4) The Secretary of State must give notice to—

(a) each capacity provider;

(b) each electricity supplier; and

of an appointment, or the termination of an appointment, under paragraph (1), (2) or (3)(a).

Review by Secretary of State

81

(1) The Secretary of State must from time to time—

(a) carry out a review of—

(i) these Regulations and the Supplier Payment Regulations; ...

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) set out the conclusions in a report; and

(2) The report must in particular—

(a) set out the objectives intended to be achieved by these Regulations and the Supplier Payment Regulations;

(b) assess the extent to which those objectives are achieved; and

(c) assess whether those objectives remain appropriate and, if so, the extent to which they could be achieved in a less burdensome way.

(3) The first report under this regulation must be published before the end of the period of five years beginning with the date on which these Regulations come into force.

(4) Reports under this regulation are, after the first report, to be published at intervals not exceeding five years.

(5) In carrying out the review under paragraph (1)(a), the Secretary of State must take account of any reports published by the Authority under regulation 82 or provided to the Secretary of State under regulation 83.

Review of capacity market rules

82

(1) The Authority and the Secretary of State must each from time to time, in accordance with capacity market rules—

(a) carry out a review of capacity market rules;

(b) set out the conclusions in a report; and

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annual operational reports

83

(1) The Authority must—

(a) provide the Secretary of State with an annual report on—

(i) the operation of the capacity market; and

(ii) the Delivery Body's performance of its functions in relation to the capacity market; and

(b) publish the report.

(2) The annual report must also include a report on any particular matters specified in a notice given by the Secretary of State to the Authority.

(3) The Secretary of State must give any notice to the Authority under paragraph (2) not later than 3 months before the date by which the Authority is required to provide the annual report.

(4) The first report under this regulation must be provided to the Secretary of State by no later than 6 months after the completion of the first capacity auction.

(5) Reports under this regulation are afterwards to be provided to the Secretary of State—

(a) by no later than 6 months after the completion of each T-4 auction; and

(b) if no T-4 auction is held in a capacity year, by no later than 6 months after the end of that capacity year.

Settlement Body's annual report

84

(1) The Settlement Body must, in respect of each capacity year which commences after this regulation comes into force, produce an annual report on its performance of its functions.

(2) The Settlement Body must, not later than 3 months after the end of the capacity year to which it relates—

(a) provide the report to the Secretary of State; and

(b) publish the report.

PART 13 — Miscellaneous

Restricted liability in damages

85

(1) Paragraph (2) applies to—

(a) the national system operator;

(b) any director of the national system operator; and

(2) Subject to paragraph (3), a person to whom this paragraph applies is not liable in damages for anything done or omitted to be done in the exercise or purported exercise of the national system operator's functions under—

(a) these Regulations; or

(b) capacity market rules.

(3) The exclusion of liability in paragraph (2) does not—

(a) apply where the act or omission occurs in bad faith, including where the act or omission—

(i) constitutes a tort which involved a wilful act or omission calculated to cause harm or loss to another person; or

(ii) is fraudulent;

(b) prevent an award of damages in respect of an act or omission which is—

(i) unlawful by virtue of section 6(1) of the Human Rights Act 1998 ;

(ii) a breach of a duty owed by virtue of section 27(4) of EA 1989;

(iii) a criminal offence;

(iv) an infringement of a person's intellectual property rights;

(v) a breach of confidentiality, whether statutory or at common law; or

(vi) a breach of contract.

Documents

86

Schedule 2 (documents) has effect.

PART 14 — Transitory provisions and repeal

Transitory provisions: the first T-4 auction

87

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Repeal

88

Section 47ZA of EA 1989 is repealed.

SCHEDULE 1 — Settlement calculations

Interpretation

1

(1) In this Schedule—

“AEij”, “ALFCOij” and “Eij”, 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;

“COix” 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;

“ICOij” means the whole or part of any capacity obligation COzx in MW, as recorded on the capacity market register, which applies to CMU i in relevant settlement period j;

“WFmx” 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.

(3) 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 factor

2

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

(2) $WFmx$must be calculated to 10 decimal places in accordance with the formula—

$WFmx=AB.$

(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 $WFmx$ is calculated.

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

3

(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 COix (“$ACPix$”); 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 (“$MCPim$”).

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

$ACPyx=COyx×PEyx$.

(3) MCPim must be calculated in accordance with the formula—

$MCPim=WFmx×(ACPix+∑NtACPN×DTmNDm)$.

(3A) For the purpose of sub-paragraph (3) tACPN is the amount $ACPzx×tICOiNCOzx$,

where—

“tICOiN” is any obligation, being the whole or part of the capacity obligation COzx, that has been transferred so as to—apply to CMU i for all or part of month M, orcease to apply to CMU i for all or part of month M (in which case tACPN is to be expressed as a negative number);

“DTmN” means the number of days in month M for which that capacity obligation has been transferred;

“Dm” means the total number of days in month M.

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

(5) If the relevant capacity auction was a T-4 auction, $PEix$ is to be calculated in accordance with the formula—

$PEix=CCPi×CPIxCPIbase.$

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) In this paragraph—

“CCPy” means the capacity cleared price for COyx, as recorded on the capacity market register

“$CPIbase$” means the average of the monthly values of CPI for the months of the base period referred to in regulation 11 for the relevant capacity auction;

“$CPIx$” 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 COyx was awarded;

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

4

(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 (“$MCPcm$”).

(2) $MCPcm$must be calculated as the sum of—

(a) $MCPim$, 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 $MCPim$, 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 CMU

5

(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 (“$SPPij$”).

(2) $SPPij$must be calculated in accordance with the formula—

$SPPij=PRix×(ALFCOij−AEij).$

(2A) For the purpose of sub-paragraph (2), “PRij” 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—

$PR=ij∑(PR×NICOijN)N∑INCOijN$

where—

“ICOijN” is the whole or a part of any capacity obligation COzx applying to CMU i in settlement period j, and

“PRN” is the penalty rate applying to that capacity obligation.

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

$PRN=PEzx×(124)$.

(4) In this paragraph—

“PEzx” means the price in pounds per MW determined for COzx in accordance with paragraph 3(4) to (5)

“relevant CMU” means a capacity committed CMU in respect of which $AEij$ is less than $ALFCOij$ in one or more relevant settlement periods in month M.

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

6

(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 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 (“SPPSAij”); and

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

(2) For the purpose of sub-paragraph (1)—

(a) SPPSAij is—

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

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

(b) MPSAim is equal to the value of SPPSAij for the last relevant settlement period j in month M in which the value of ALFCOij 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.

(3) Pij must be calculated in accordance with the formula—

$Pij=(SPiMaxSPi)×min(MaxSPi,MPCij)$.

(4) For the purposes of the calculation in sub-paragraph (3), MPCij 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—

$MPCij=RMCPij+∑ASPPA′$

where—

(a) RMCPij is to be calculated in accordance with the formula—

$RMCPij=(ACPix×WFmx×Fi)+∑N(tACPN×WFmx×Fz)$, and

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

$∑ASPPA′=∑AASPPAA−∑BASPPAB$

where—

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

(ii) ∑BASPPAB is the sum of each amount ASPPAijB calculated under paragraph 6A(4) for any obligation ICOijB applying to CMU i in both—

(aa) settlement period j, and

(bb) any relevant settlement period k in month M preceding settlement period j.

(5) Qijmust be calculated in accordance with the formula—

$Qij=APCij−∑k=1m−1MPSAik$

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

(5A) For the purposes of the calculation in sub-paragraph (5), APCij 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—

$APCij=ACPix×Gi+∑N(tACPN×Gz×WFmx×DTmNDm)$,

where “DTmN” and “Dm” have the meanings given in paragraph 3(3A)

(6) In this paragraph—

“ACPix” means the amount of annual capacity payments calculated under paragraph 3 for CMU i in respect of year X;

“Fy” (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 COyx awarded in respect of CMU y for year X;

“Gy” (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 COyx awarded in respect of CMU y for year X;

“$MaxSPi$” 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 up to and including the settlement period for which the calculation is being made, if $AEij$ had been 0 for all such settlement periods;

“$MCPim$” means the amount of the monthly capacity payment calculated under paragraph 3 for CMU i and month M;

“$∑k=1m−1MPSAik$”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;

“$SPi$” 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 up to and including the settlement period for which the calculation is being made;

“tACPN” has the meaning given in paragraph 3(3A)

Over-delivery payments

7

(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 each relevant settlement period in year X (“ODRij”);

(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 (“$ODPij$”); and

(2) Subject to sub-paragraph (2A), ODRij must be calculated in accordance with the formula—

$ODRix=min(PRix,TPRxTODVx).$

(2A) 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 PRij 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) $ODPij$must be calculated in accordance with the formula—

$ODPij=ODRix×(AEij−ALFCOij).$

(4) $TODPix$must be calculated as the sum of $ODPij$ 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);

“PRij” 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

“qualified person” has the meaning given in regulation 42(2);

a “relevant CMU” means a capacity committed CMU in respect of which $AEij$ is greater than $ALFCOij$ in one or more relevant settlement periods in year X;

“$TODVx$” means the aggregate in MWh of the total amounts over-delivered in year X by all relevant CMUs;

“$TPRx$” means the total amount of capacity market penalty charge payments received by the Settlement Body in respect of year X.

Apportionment between capacity providers

8

(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 (“$ACcx$”).

(3) $ACcx$must be calculated in accordance with the formula—

$ACcx=AC×DPcxDP.$

(4) In sub-paragraph (3)—

“DP” means the number of days in the period for which AC was calculated; and

“$DPcx$” 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 period

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 2 — Documents

1

The provisions of this Schedule—

(a) apply to a document, which includes an application, notice, invoice or credit note; and

(b) are subject to any specific provisions in these Regulations , the Supplier Payment Regulations or capacity market rules about—

(i) a particular kind of document; or

(ii) the provision of documents by or to a particular person or class of persons.

2

A document must be in writing and dated.

3

A document given to a person on a non-working day is to be treated as given on the next following working day.

4

A document may be given to a person by—

(a) delivering it to that person in person;

(b) leaving it at that person's proper address;

(d) sending it by email to that person; or

(e) submitting it by means of a dedicated portal on that person's website.

5

For the purposes of paragraph 4(a) a document is given to—

(a) a body corporate, where it is given to a person having control or management of that body;

(b) a partnership, where it is given to a partner or a person having control or management of the partnership business;

(c) an unincorporated association, where it is given to a person having management responsibilities in respect of the association.

6

For the purposes of paragraph 4(d), a document is given to—

(a) a body corporate, where it is sent to an email address of—

(i) the body corporate; or

(ii) a person having control or management of that body,

where that address is supplied by that body for the conduct of the affairs of that body;

(b) a partnership, where it is sent to an email address of—

(i) the partnership; or

(ii) a partner or a person having control or management of the partnership business,

where that address is supplied by that partnership for the conduct of the affairs of that partnership;

(c) an unincorporated association, where it is sent to an email address of a person having management responsibilities in respect of the association, where that address is supplied by that association for the conduct of the affairs of that association.

7

A person may, in substitution for the proper address which would otherwise apply, specify an address in the United Kingdom at which that person or someone on that person's behalf may be given documents, which address is to be treated instead as that person's proper address.

8

In this Schedule—

“dedicated portal” means a facility on a person's website which is established to allow electronic communication with that person;

“proper address” means in the case of—a body corporate, the registered office (if it is in the United Kingdom) or the principal office of that body in the United Kingdom;a partnership, the principal office of the partnership in the United Kingdom;any other person, that person's last known address, which includes an email address.

Signed

Amber Rudd — Parliamentary Under-Secretary of State — 31st July 2014

Explanatory note

(This note is not part of the Regulations)

Part 1Regulation 2 contains definitions of terms used in these Regulations, including “the Rules” (i.e. capacity market rules), “the Delivery Body”, “the GB transmission system”, and “the Settlement Body”. It also defines various connected terms concerning the “prequalification” and the “de-rating” of generating stations in respect of which capacity agreements may be issued.

Part 2Regulation 6 deals with the reliability standard. The reliability standard is set by the Secretary of State to provide an indication of the acceptable level of security of supply for the GB transmission system, bearing in mind the likely cost of providing that level of security, and is used to inform a decision as to whether a capacity auction is to be held and the auction parameters for such a capacity auction. The reliability standard will be 3 hours of expected loss of load per capacity year.

Part 3Regulation 7 requires the Delivery Body, before the 1st June in 2015 and in each subsequent year, to deliver an annual electricity capacity report to the Secretary of State. This report will contain an assessment, taking into account a range of forecasts, of the amount of capacity that is needed for a delivery year, which runs from 1 October to 30 September, to meet the reliability standard.

Part 4Regulation 10 identifies when the Secretary of State must decide whether or not a capacity auction is to be held. A specific timeframe is laid down for the first capacity auction and then all subsequent T-4 auctions, and from 2017, T-1 and T-4 auctions. The regulation also makes provision to allow the Secretary of State not to hold a T-1 auction and the reasons for when this provision may apply.

Part 5Regulation 30 defines “capacity agreement”. Capacity agreements are awarded to those bidders successful at a capacity auction.

Part 6Regulation 36 requires the Settlement Body to make settlement calculations. Regulation 37 requires the Settlement Body to issue a “data default notice” to a capacity provider who fails to comply with a requirement to provide information under the capacity market rules. Such a notice will prevent a capacity provider receiving payment from the Settlement Body.

Part 7Regulation 53 sets out that Part 7 of the Regulations is applicable to prospective generating CMUs or unproven DSR CMUs as well as those CMUs who have received a “conditional prequalification notice” from the Delivery Body.

Part 8Regulation 63 enables the Secretary of State, the Authority and auction monitors to require information to be provided to them from identified persons for specified purposes. For example, the Secretary of State can require information from suppliers and owners of CMUs for the purpose of reviewing the capacity market.

Part 9Regulation 67 identifies those requirements which are to be enforceable by the Authority as if they were relevant requirements for the purposes of section 25 of the Electricity Act 1989.

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