Elexon as CMAG secretariat supports in the management of changes to the Capacity Market (CM) Rules on behalf of Capacity Market participants as well as other key Stakeholders.

Changes to CM Rules can be proposed by:

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The Secretary of State for the Department of Business, Energy and Industrial Strategy (BEIS)
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National Grid Electricity System Operator (NGESO) as the Delivery Body
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Suppliers
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Capacity Providers (including those wishing to apply to bid in a capacity auction)
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Trade Associations (or groups) representing Suppliers and/or Capacity Providers
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Any other class of persons which, in Ofgem's opinion, has a sufficient interest in the Capacity Market

Raising a Change Proposal

To raise a change proposal please complete a CM Rules Change Proposal Form and submit to¬†[email protected].

For further information, please see our ‘Submitting a CM Rules Change Proposal’ webpage.

Ofgem Guidance for CM Rules Changes

Electricity Market Regulations

Regulation 31 requires the Delivery Body to set up and maintain a capacity market register. The register is required to contain the details of (amongst other things) each capacity agreement that is awarded following a capacity auction.

Regulation 77 grants the Authority the power to make capacity market rules which are concerned with the operation and administration of the capacity market. This includes the power to amend, add to, revoke or substitute any provision of the capacity market rules. Any change to the capacity market rules which confers functions on the Secretary of State or confers additional functions on the Authority can only be made with the approval of the Secretary of State.

Ofgem Guidance on Grandfathered Provisions

From Ofgem Guidance for the CM Rules Change Process:

Certain terms in the capacity agreements have been grandfathered by the Secretary of State
through the Regulations. The terms covered by this in regulation 31(2)(a)-(i) are:

  • the description of the CMU in respect of which the capacity agreement is issued
  • the duration of the capacity agreement, and the delivery year or years for which it is issued
  • the capacity obligation for which the capacity agreement is issued
  • the capacity cleared price
  • in the case of a capacity agreement issued following a T-4 auction, the base period applicable for the purpose of calculating capacity payments
  • the annual penalty cap and monthly penalty cap applicable in accordance with the electricity capacity regulations in force at the date of issue of the capacity agreement, expressed respectively as percentages of the annual capacity payment and the monthly capacity payments payable under the capacity agreement
  • whether the capacity provider is subject to a financial commitment milestone and, if so, the date by which that milestone must be met
  • whether the capacity provider is subject to a minimum completion requirement and, if so, the long stop date in respect of that requirement
  • the rates at which termination fees are payable, which must be determined by the Delivery Body in accordance with regulation 32.

These terms in existing capacity agreements will be unaffected by subsequent related changes to the CM Rules.

Ofgem Functions

Currently, Ofgem has the following “functions” in the Capacity Market:

  • Resolve disputes in key areas of dispute between capacity providers and the Delivery Body (Reg 70 & 71)
    (CM Chapter 4.10)
  • Manage and amend CM Rules (amend, add to, revoke or substitute any provision) (Reg 77-79)
  • Review the CM rules and publish the conclusions in a report (Reg 82) (CM Chapter 15.2)

However, Ofgem cannot amend the CM rules in a way that confers additional functions on Ofgem in addition to those set out above, without approval from the Secretary of State.