Deferred capacity market charges due in November

The deferred capacity market charges, which energy suppliers were encouraged to collect and put aside whilst the scheme was frozen, should be owed to the Electricity Settlements Company on 14 November, according to a senior figure at Energy UK.

Head of policy, Audrey Gallacher, was speaking to Utility Week after the European Commission reapproved the capacity market yesterday (24 October) under state aid rules.

The delivery and settlement bodies for the scheme – National Grid Electricity System Operator (ESO) and the Electricity Settlements Company respectively – both confirmed earlier today they had been notified of the decision by business and energy secretary Andrea Leadsom, allowing them to resume the activities that were suspended during the standstill.

Gallacher said this update should now trigger a set timetable for collecting the charges, with outcome that: “Suppliers will be getting an invoice on 14 November, and they’ve got until the 21 November – five working days – to pay that invoice.

“If they don’t pay that invoice, then the Electricity Settlements Company will do a default supplier list – so it will name who hasn’t made the payments,” she added. “And then because it’s a creditor, it will go out and actively get that cash off anybody who hasn’t paid.”

“Any money that is not collected the 13 December is then subject to mutualisation.”

Gallacher said suppliers should already be clear on what they owe: “Up until now suppliers have been encouraged to collect the money. They’ve been getting shadow invoices, if you like, so that there isn’t any surprise about what the ultimate bill would be.”

She continued: “Throughout the summertime, BEIS conducted an exercise to assure themselves that suppliers were collecting that money.

“Now, they didn’t contact all suppliers because of course there’s about 60 suppliers in the market, but they contacted suppliers that cover about 90 per cent of the market and 90 per of the customers, and they satisfied themselves that the money is there.”

The capacity market was suspended in November last year after a court overturned the original decision by the European Commission to grant state aid approval for the scheme in 2014.

Siding with the claimant in the case, Tempus Energy, the European Court of Justice ruled that the commission had failed to properly examine concerns that the mechanism discriminated against some technologies, in particular, demand-side response. The commission launched an “in-depth” investigation into the capacity market in February.

The chief executive of Tempus Energy, Sara Bell, has nevertheless accused the commission of caving to industry pressure by reapproving the scheme. She said it “rushed through” the reinstatement, “ensuring the energy industry can rip off consumers to the tune of £1 billion a year.”

In a statement to parliament yesterday, Leadsom said she expected the “vast majority” of the money owed to capacity providers to be paid in January 2020.