Capacity Market Charge

 

Capacity Market Standstill arrangements

Since 15 November, invoices for Capacity Market Supplier Charges have been suspended following the ECJ’s ruling (see Announcements).  On 28 February 2019, the Department for Business, Energy and Industrial Strategy (BEIS) published its response to the consultation issued on 19 December 2018. In its response, BEIS decided that ESC would set up an interest-bearing bank account which electricity Suppliers can pay into via a Voluntary Supplier Arrangement (VSA) mechanism in preparation for their potential post-standstill Supplier Charge liabilities. There is no requirement for Suppliers to maintain credit cover during the Capacity Market standstill period. For more information, see the BEIS consultation response.

This VSA means that Suppliers can now choose to make payments to ESC in respect of their potential standstill collection period Supplier Charges in accordance with the new Regulations as detailed in EMRS Circular EMRC178, Working Practice WP199 and the Terms and Conditions published by ESC.

EMRS has issued to Suppliers both the provisional and revised annual calculations of Supplier Charges for the 2018/19 Delivery Year. These schedules together form the schedule of post-standstill payments for the 2018/19 Delivery Year.

Suppliers can make voluntary payments at any time during the standstill period. However, the payments must not exceed the scheduled Delivery Year total set out in the relevant schedule of post-standstill payments.

In addition to the Working Practice WP199 and the Terms and Conditions, we have prepared Frequently Asked Questions about the VSA.

 

Capacity Market Supplier Charge

Payments made by ESC under capacity agreements are funded by the Capacity Market Supplier Charge.  The Charge is invoiced monthly based on a supplier’s share of net demand for periods of high demand in the Delivery year multiplied by Total Annual Capacity Provider Payments.  Net demand is initially based on forecasted data from suppliers until actual data is available.
 

Settlement Costs Levy

From 1 August 2014, the operational costs of ESC are funded by suppliers through the Capacity Market Settlement Costs Levy, which is invoiced monthly based on a supplier’s share of net demand for periods of high demand  in the previous financial year multiplied by the total operational costs. The amount of the total operational costs is updated annually by amending The Electricity Capacity  (Supplier Payment etc.) Regulations.  The operational costs levy for 2019/20 was fixed at £7.554m. For 2020/21 it is fixed at £7.502m.