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.
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 2014/15 was fixed at £1.374m. For 2015/16 it is fixed at £3.891m.