Elexon says CAP could rise further

Code administrator Elexon has said it believes the Credit Assessment Price (CAP), currently at an all-time high, could go up even further.

Since August there have been three increases to the CAP, each representing a new record figure.

This week it was confirmed the CAP would rise to £184/MWh following a consultation issued earlier this month.

Elexon revealed that during the consultation, not all respondents and members of the Credit Committee were in agreement with the proposed increase and as such a Credit Committee meeting was called to decide whether a new cap should be set.

During the meeting held yesterday (30 September) the committee considered and discussed the consultation responses received, the latest forward looking electricity prices, the factors driving the trend since the consultation paper was issued, as well as the impact of changing the CAP on the credit cover process.

It then confirmed the increase, which will be effective from 21 October.

The previous notified rise from £113/MWh to £137/MWh will still come into effect on 5 October, however.

Speaking to Utility Week a spokesperson for the code administrator said the organisation believed the CAP could go up again, but added they were unable to say when or by how much.

Last month Tom Steward, formerly a senior regulatory manager at Good Energy, warned that increases to the CAP would worsen the strain on suppliers already struggling to deal with wholesale price rises and could lead to even more failures.

Additionally Andrew Stone, managing director at Interpath Advisory, recently told Utility Week liquidity is now a “primary concern” for many businesses in the sector.

Utility Week has launched its Energy Reset campaign, in a bid to ensure the current crisis results in real reform of the energy retail market.