UK Capacity Market at a standstill

What does this mean for electricity customers?

On 15 November 2018 the electricity Capacity Market was put into a period of standstill after the European Court of Justice (ECJ) annulled its State aid approval on procedural grounds. Importantly the Court did not find the design of the GB Capacity Market to be incompatible with State aid guidelines.

The Capacity Market is now in a ‘standstill’ period which means the Government can’t hold any auctions or make any payments under existing agreements. 

The cost of operating the Capacity Market is funded by business electricity consumers which means some of Gazprom Energy’s electricity customers are charged through their monthly invoices from November to February each year.  This appears as Capacity Market Supplier Charge.

At the request of the UK government, National Grid and the Electricity Settlements Company are continuing to operate the Capacity Market scheme in the meantime, short of making payments, to ensure that capacity providers may be eligible for deferred payments after the standstill period (subject to State aid clearance).

Now that the Capacity Market is in standstill, it is not mandatory for Gazprom Energy to include the Capacity Market Supplier Charge on invoices.  However, in light of the information coming from the government we believe it is prudent to continue recovering charges from customers to avoid having to backdate charges in future if/when the Capacity Market is reinstated.

Why are you continuing to include the Capacity Charge on my invoice?

Whilst Capacity Market charges are not currently being collected by Electricity Settlements Company, they are highly likely to be reintroduced in the future.  It’s also highly likely that payments will be backdated to cover the standstill period and we don’t want our customers to be exposed to these back dated charges  if payments are re-introduced so we have chosen to continue to include the Capacity Market Supplier Charge on invoices.

What happens if the Capacity Market is reinstated and Capacity Chargers are reintroduced?

If the Capacity Market charges are reintroduced then we will review what customers have paid during the standstill period against backdates issued by the Electricity Settlements Company.  If you have paid too little then we will invoice you the difference and if you have paid too much then we will credit you.

What happens if Capacity Charges change or are not reintroduced?

If the Capacity Market charges are not reintroduced and the Electricity Settlements Company does not collect backdated payments for the standstill period then we will credit the Capacity Charge payments you have made.

How will I know if/when the Capacity Market is reinstated?

Once the future of the Capacity Market is decided, we will write to all affected customers to confirm the outcome.

What is the industry doing about it?

Gazprom Energy is working with others in the industry to obtain clarity on the future of the Capacity Market as soon as possible, and to investigate solutions to minimise the impact to end users.

Where can I find out more about the Capacity Market?

Further details on the capacity market standstill period are available at:  www.gov.uk/government/collections/electricity-market-reform-capacity-market