Electricity Capacity (Supplier Payment etc.) Regulations 2014

Last summer DECC published the Capacity Market Rules 2014 detailing the implementation and operating framework for the Electricity Capacity Regulations 2014. Together these took forward the UK government’s programme of energy market reform to build a capacity market (funded by Energy Capacity Regulationssuppliers). This market will pay suppliers who provide reliable sources of energy (capacity) and share the costs amongst all electricity providers.

“Capacity market supplier charge”

Electricity suppliers will be required to pay the Settlement Body (to be appointed by the UK Government) in any year that they supply to premises in Great Britain in the winter months (November to February). This charge is designed to help the Settlement Body (i.e. the Government) to meet the costs of making capacity payments to capacity providers – i.e. bodies supplying a reliable energy supply.

“Settlement costs levy”

Again, if a supplier provides energy in the winter months then for that year a levy will be paid to the Settlement Body. This levy will be used to meet the costs of the Settlement Body. However, if the Settlement Body receives more revenue in levies than it incurs costs for capacity payments to capacity providers, all suppliers will receive a refund (“settlement costs levy refund”).

Discussed and considered by Parliament late last year, the implementation of these regulations means that change is afoot in 2015.


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