PART 1 Introduction

Citation and commencement_I1

1.—(1) These Regulations may be cited as the Electricity Capacity (No. 1) Regulations 2019.

(2) These Regulations come into force on the day after the day on which they are made.

Interpretation_I2

2.—(1) Subject to paragraph (2), in these Regulations—

• ^M2 “the Rules” mean the Capacity Market Rules 2014 ;

• “ agreement termination trigger event ” means a notification by the Secretary of State under regulation 6(1)(a) or 6(2)(a) in respect of capacity agreements which existed on 15th November 2018, and occurs on the date on which the notification is given;

• ^M3 “capacity agreement” (except in regulation 5 ) has the meaning given in regulation 30(1) of the Principal Regulations;

• “ capacity market supplier charge ” means the charge payable by electricity suppliers to the Settlement Body under regulation 6(1) of the Supplier Payment Regulations;

• “ capacity obligation ” has the meaning given in regulation 2(1) of the Principal Regulations;

• “ capacity payment ” has the meaning given in regulation 2(1) of the Principal Regulations;

• “ capacity provider ” has the meaning given in regulation 2(1) of the Principal Regulations;

• “ conditional agreement auction ” means the T-1 auction for the delivery year commencing on 1st October 2019;

• “ conditional capacity agreement ” has the meaning given in regulation 2(1) of the Principal Regulations (as modified by Part 5);

• “ deferred capacity payment trigger event ” means a notification by the Secretary of State under regulation 4(1), and occurs on the date on which the notification is given;

• “ Delivery Body ” has the meaning given in regulation 2(1) of the Principal Regulations;

• “ delivery year ” has the meaning given in regulation 2(1) of the Principal Regulations;

• “ electricity supplier ” has the meaning given in regulation 2(1) of the Supplier Payment Regulations;

• ^M4 “ Principal Regulations ” means the Electricity Capacity Regulations 2014 ;

• “ relevant authority ” means—

  (a)

  the Commission of the European Union;

  (b)

  ^M5 the European Court ; or

  (c)

  ^M6 the Competition and Markets Authority ;

• “ Settlement Body ” has the meaning given in regulation 2(1) of the Principal Regulations;

• “ standstill month ” means—

  (a)

  October 2018;

  (b)

  any month included (wholly or partly) in the standstill period; and

  (c)

  the month after the last month included (wholly or partly) in the standstill period;

• “ standstill period ” has the meaning given in regulation 3;

• [^F1 “subsequent capacity auctions” means—

  (a)

  the T-1 auction for the delivery year commencing on 1st October 2020;

  (b)

  the T-3 auction; and

  (c)

  the T-4 auction for the delivery year commencing on 1st October 2023;^F1]

• ^M7 “ Supplier Payment Regulations ” means the Electricity Capacity (Supplier Payment etc.) Regulations 2014 ;

• “ T-1 termination trigger event ” means a notification by the Secretary of State under regulation 6(1)(b) or 6(2)(b) in respect of conditional capacity agreements, and occurs on the date on which the notification is given;

• ^F2 “ T-1 auction ” has the meaning given in regulation 2(1) of the Principal Regulations; ...

• “ T-1 capacity agreement trigger event ” means a notification by the Secretary of State under regulation 5(1), and occurs on the date on which the notification is given [^F3 ; and ^F3]

• [^F4 “T-3 auction” has the meaning given in regulation 2(1) of the Principal Regulations; and

• “T-4 auction” has the meaning given in regulation 2(1) of the Principal Regulations. ^F4]

(2) Words read into—

(a)the Principal Regulations as modifications to the application of those regulations under regulations 12 to 23—

(i)have the meaning given in the Principal Regulations as modified by regulations 12 to 23; and

(ii)where defined with reference to the Supplier Payment Regulations, have the meaning given in the Supplier Payment Regulations as modified by regulations 54 to 63;

(b)the Principal Regulations as modifications to the application of those regulations under regulations 29 to 52—

(i)have the meaning given in the Principal Regulations as modified by regulations 29 to 52; and

(ii)where defined with reference to the Supplier Payment Regulations, have the meaning given in the Supplier Payment Regulations as modified by regulations 54 to 63; and

(c)the Supplier Payment Regulations as modifications to the application of those regulations under regulations 54 to 63 have the meaning given in the Supplier Payment Regulations as modified by regulations 54 to 63.

PART 2 Trigger events

Standstill period_I3

3. For the purposes of these Regulations, “ standstill period ” means the period beginning on 15th November 2018 and ending on the date on which the deferred capacity payment trigger event or the agreement termination trigger event occurs.

Deferred capacity payment trigger event: agreements existing on 15th November 2018_I4

4.—(1) If the Secretary of State is aware of a decision by a relevant authority that has the consequence that the making of capacity payments would be in accordance with the law relating to state aid, the Secretary of State must notify the Settlement Body and the Delivery Body of that decision as soon as reasonably practicable.

(2) If the Settlement Body receives a notification under paragraph (1), it must resume making capacity payments under regulation 40 of the Principal Regulations that were payable during the standstill period (but were prevented from being paid at the time by the law relating to state aid) in respect of capacity agreements that were in existence on 15th November 2018.

(3) A notification by the Secretary of State under paragraph (1) must—

(a)specify the date of the notification;

(b)specify that the notification is given for the purposes of this regulation; and

(c)be published as soon as reasonably practicable after it is given.

Conditional capacity agreement trigger event_I5

5.—(1) If the Secretary of State is aware of a decision by a relevant authority that has the consequence that—

(a)the making of capacity payments to holders of agreements awarded to successful bidders in the conditional agreement auction would be in accordance with the law relating to state aid; or

(b)the making of capacity payments in respect of a portion of the delivery year to which these agreements relate would be in accordance with the law relating to state aid,

the Secretary of State must notify the Settlement Body and the Delivery Body of that decision as soon as reasonably practicable.

(2) On the date on which the Secretary of State gives a notification under paragraph (1), conditional capacity agreements become capacity agreements.

(3) A notification by the Secretary of State under paragraph (1) must—

(a)specify the date of the notification;

(b)specify whether the decision of the relevant authority has the consequence that either or both of the capacity payments described in paragraph (1)(a) or (1)(b) can be made; and

(c)be published as soon as reasonably practicable after it is given.

(4) In this regulation, “ capacity agreement ” has the meaning given in regulation 2(1) of the Principal Regulations (as modified by Part 5).

Termination trigger events_I6

6.—(1) If the Secretary of State is aware of a decision by a relevant authority after 15th November 2018 that has the consequence that it would not be in accordance with the law relating to state aid for capacity payments to be made to capacity providers in respect of—

(a)a capacity agreement that existed on 15th November 2018; or

(b)a conditional capacity agreement,

the Secretary of State must notify the Settlement Body of that decision as soon as reasonably practicable.

(2) If the Secretary of State is satisfied that there is no reasonable prospect that there will be a decision by a relevant authority before 1st October 2020 that would have the consequence that—

(a)the making of any capacity payments in relation to a capacity agreement that existed on 15th November 2018 would be in accordance with the law relating to state aid; or

(b)the making of any capacity payments to holders of agreements awarded to successful bidders in the conditional agreement auction would be in accordance with the law relating to state aid,

the Secretary of State must notify the Settlement Body and the Delivery Body by 1st October 2020 that that is the case.

(3) A notification by the Secretary of State under paragraph (1) or (2) terminates with immediate effect, and without any entitlement to capacity payments, any agreement of a kind specified in the notification.

(4) A notification by the Secretary of State under paragraph (1) or (2) must—

(a)specify the date of the notification;

(b)specify that the notification is given for the purposes of this regulation;

(c)specify whether the notification relates to either or both of the following kinds of agreement—

(i)capacity agreements that—

(aa)existed on 15th November 2018;

(bb)had not already expired by the effluxion of time, or been terminated, by the date on which the notification is given; and

(cc)contain a capacity obligation applying to the delivery year beginning on 1st October 2018 or any subsequent delivery year; and

(ii)conditional capacity agreements; and

(d)be published as soon as reasonably practicable after it is given.

PART 3 Payments administered by the Settlement Body

CHAPTER 1 Supplier charge payments during standstill period

Settlement Body to hold supplier charge payments_I7

^M87.—(1) The Settlement Body must hold any capacity market supplier charge and any other payments it receives from electricity suppliers under regulation 6A(7) of the Supplier Payment Regulations (unless returned to the electricity supplier which made the payment) to enable it to meet the cost of making capacity payments—

(a)in respect of capacity obligations contained in capacity agreements that existed on 15th November 2018 which were payable in respect of a standstill month (but were prevented by the law relating to state aid from being paid at the time); and

(b)in respect of capacity obligations awarded through the conditional agreement auction in respect of a T-1 standstill month.

(2) In this regulation, “ T-1 standstill month ” means—

(a)any month included (wholly or partly) in the T-1 standstill period; or

(b)the month after the month in which the T-1 capacity agreement trigger event or T-1 termination trigger event occurs.

(3) For the purposes of paragraph (2), “ T-1 standstill period ” means any part of the delivery year beginning on 1st October 2019 which falls before the date on which the T-1 capacity agreement trigger event or T-1 termination trigger event occurs.

Supplier charge payments used to make capacity payments: deferred capacity payment trigger event_I8

^M98. If the deferred capacity payment trigger event occurs, the Settlement Body must use the capacity market supplier charge and any other payments it holds under regulation 7(1) on the day on which the trigger event occurs to meet the cost of making the capacity payments described in regulation 7(1)(a) in accordance with regulation 40 of the Principal Regulations .

Supplier charge payments used to make capacity payments: T-1 capacity agreement trigger event_I9

^M109. If the T-1 capacity agreement trigger event occurs, the Settlement Body must use the supplier charge and any other payments it holds under regulation 7(1) on the day on which the trigger event occurs to meet the cost of making capacity payments to capacity providers in respect of capacity obligations awarded through the conditional agreement auction in accordance with regulations 40 and 40A of the Principal Regulations .

Return of supplier charge payments: agreement termination trigger event_I10

10. —(1) If the agreement termination trigger event and T-1 termination trigger event have both occurred, the Settlement Body must, for each electricity supplier (“S”), as soon as reasonably practicable after both trigger events have occurred—

(a)determine the amount of supplier charge and any other payments paid by S which it holds under regulation 7(1) on the day on which the trigger event occurs;

(b)determine the amount of interest payable (if any) on the amount determined under sub-paragraph (a); and

(c)make a payment to S for an amount determined by adding the amounts determined under sub-paragraphs (a) and (b).

(2) In paragraph (1)(b), interest is payable only if there is a legal obligation to pay S interest in respect of the amount determined under paragraph (1)(a), and is only payable to the extent of that legal obligation.

^F5CHAPTER 2 Modifications to application of Principal Regulations: agreements existing on 15th November 2018

Application

^F511. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation: modifications

^F512. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capacity payments: modifications

^F513. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capacity provider penalty charges: modifications

^F514. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Over-delivery payments: modifications

^F515. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Termination fees: modifications

^F516. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-completion fees: modifications

^F517. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Repayment of capacity payments: modifications

^F518. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-payment register: modifications

^F519. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Applicant credit cover: modifications

^F520. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Credit obligation period: modifications

^F521. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Draw down of credit cover: modifications

^F522. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of non-compliance: modifications

^F523. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 4 Capacity agreements: miscellaneous

CHAPTER 1 Amendment of Principal Regulations

Secretary of State's discretion concerning non-completion fees: amendments_I11

24. In regulation 43A (non-completion fee) of the Principal Regulations, after paragraph (5), insert—

“(6) Regulation 33 applies (except for paragraphs (2)(b), (3) and (5)(b)) to a non-completion notice as it applies to a termination notice, and for that purpose, a reference in regulation 33 to—

(a)a “termination fee” is to be construed as a reference to a non-completion fee; and

(b)a “termination notice” is to be construed as a reference to a non-completion notice.”.

Delivery Body reviewable decision: amendments_I12

25. In regulation 68 of the Principal Regulations, in paragraph (2), in the table, after “issue of” insert “ a non-completion notice, ”.

^F6CHAPTER 2 Modifications of Principal Regulations

Secretary of State's discretion: modifications

^F626. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-completion fees: modifications

^F627. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F7PART 5 Conditional agreement auction

Application

^F728. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation: modifications

^F729. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rearrangement of conditional agreement auction: modifications

^F730. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capacity agreements: modifications

^F731. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer of a capacity agreement: modifications

^F732. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capacity market register: modifications

^F733. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Termination fee rates: modifications

^F734. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Secretary of State's discretion: modifications

^F735. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Null and void capacity agreements: modifications

^F736. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Settlement calculations: modifications

^F737. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capacity payments: modifications

^F738. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capacity provider penalty charges: modifications

^F739. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Over delivery payments: modifications

^F740. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Termination fees: modifications

^F741. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

DSR unproven capacity fee

^F742. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-completion fee: modifications

^F743. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Repayment of capacity payments: modifications

^F744. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments and penalties: adjustments for DSR providers

^F745. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment and non-payment (interpretation): modifications

^F746. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The non-payment register: modifications

^F747. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of credit notes: modifications

^F748. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Credit cover: modifications

^F749. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Draw down of applicant credit cover: modifications

^F750. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dispute resolution and appeals: modifications

^F751. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule 1 settlement calculations: modifications

^F752. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F8PART 6 Modifications to Supplier Payment Regulations

Modifications to the application of the Supplier Payment Regulations

^F853. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation: modifications

^F854. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplier settlement calculations: modifications

^F855. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capacity market supplier charge: modifications

^F856. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Mutualisation: modifications

^F857. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Penalty residual supplier amount: modifications

^F858. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-payment and withheld credit: modifications

^F859. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consequences of termination of supplier licences: modifications

^F860. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Standstill collection period reconciliation: modifications

^F861. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplier credit cover: modification

^F862. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Calculation of amounts: modifications

^F863. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F9PART 7 Modifications to application of Principal Regulations: credit cover for subsequent capacity auctions

Subsequent capacity auctions: suspension of credit cover during standstill period

64.—(1) The modifications to the application of the Principal Regulations in regulations 12(b) and (d), 20(2), and 21 to 23 apply in relation to the subsequent capacity auctions (including the rights and obligations arising out of, or in relation to, those auctions) with the following modifications.

(2) Regulation 20(2)(e) applies as if—

(a) after “(2)(a)”, there were inserted “, (2B)”; and

(b) for “40” there were substituted “15”.

Subsequent capacity auctions: credit cover arrangements

65. Regulation 59 (requirement to provide applicant credit cover) of the Principal Regulations applies in relation to the subsequent capacity auctions (including the rights and obligations arising out of, or in relation to, those auctions) and capacity agreements that existed on 15th November 2018 as if, after paragraph (1B), there were inserted—

“(1BA) This paragraph applies where—

(a)an applicant is required to provide applicant credit cover under paragraph (5A) in respect of an unproven demand side response CMU or an interconnector CMU for a capacity auction which concluded prior to 15th November 2018 (“suspended credit cover”);

(b)the applicant has provided credit cover in respect of that CMU for—

(i)the T-1 auction for the delivery year commencing on 1st October 2020;

(ii)the T-3 auction; or

(iii)the T-4 auction for the delivery year commencing on 1st October 2023,

in accordance with this regulation (“subsequent credit cover”); and

(c)if the applicant had provided the suspended credit cover before the subsequent credit cover, the applicant would have been eligible to receive an exemption from the requirement to provide some or all of the subsequent credit cover pursuant to paragraph (1B) and capacity market rules.

(1BB) Where paragraph (1BA) applies subsequent credit cover provided by the applicant in respect of the CMU may, to the extent it would not have been required to be provided if an exemption had been obtained pursuant to paragraph (1B) and capacity market rules, instead, at the applicant’s request, and in accordance with capacity market rules, be treated thereafter as applicant credit cover which—

(a)was provided in relation to the applicant’s obligation to provide suspended credit cover under paragraph (5A) in respect of the CMU; and

(b)for the purposes of paragraph (1B), existed at the date on which the applicant was required to provide subsequent credit cover in respect of the CMU.”^F9]