Capacity Market Rule change proposals CP371, CP376, CP377, CP378 and CP381: statutory consultation

What this is about

Ofgem is consulting on five Capacity Market Rule changes packaged together: CP371, CP376, CP377, CP378 and CP381. The Capacity Market Rules are the operational rulebook for the CM auctions and the obligations that follow them. Rule changes flow through a defined process: a Change Proposal is raised, working groups assess it, and Ofgem decides whether to make the rule. This statutory consultation is the final formal step before Ofgem's decision.

The five proposals are a mixed bag of housekeeping and structural adjustment. CP371 protects capacity providers from being penalised when the connecting Transmission Owner or DNO delays the connection date. CP376 tightens the rules on who can act as an Agent in CM auctions, to stop coordinated bidding by parties that should be competing. CP377 loosens the requirement for new-build plant to demonstrate Satisfactory Performance Days, the operational test that has to be passed before a capacity agreement counts as delivered. CP378 removes the 50 MW cap on individual Capacity Market Units inside a Portfolio CMU, while requiring each component CMU to carry at least a minimum share of the Portfolio's obligation. CP381 changes how Station Connection Entry Capacity is determined in Rule 3.5.5, providing an alternative method.

None of these is a structural reform of the CM. They are the kind of mid-cycle adjustments that accumulate after a few auction rounds expose where the rules pinch. But three of them, CP371, CP377 and CP378, sit at the boundary between "the developer's problem" and "the consumer's problem", and the way that boundary is drawn determines who pays when delivery slips.

Options on the table

CP371: Protection from very late network connections

CP371 amends the Rules to handle situations where the Transmission Licensee or DNO is the cause of a delayed connection. Under the current Rules, a capacity provider that fails to connect by the relevant milestone faces termination of its capacity agreement and loss of revenue, regardless of whether the delay is theirs or the network company's. The proposal shifts that risk allocation so that delays attributable to the network are not borne by the capacity provider.

Winners: developers and operators whose connection sits on the network's critical path, which is a large and growing share given the state of the queue. They get to keep their capacity agreements through network-caused slippage. Losers: there is no obvious loser inside the CM, but consumers carry the cost of any agreement that is honoured despite late delivery, because the capacity is not actually available when it was contracted to be. The deeper issue is that DNOs and TOs face no direct financial consequence inside the CM for missing connection dates, so the rule transfers risk away from one party without putting it on the party causing the delay. That is a property-rights gap, not a fix.

CP376: Clarifying restrictions on the role of Agent

CP376 sharpens the existing prohibition on coordinated bidding. Multiple CMUs can use the same Agent for administrative purposes, but the Agent must not be a vehicle for parties with separate obligations to act in concert. The proposal makes the boundary explicit: an Agent for multiple participants cannot be the same entity that controls bidding strategy across them.

Winners: smaller participants and new entrants, who face a more level playing field if collusion via shared agents is harder. Losers: any incumbent that has been using a shared Agent structure to coordinate. Effect on consumers: positive if it tightens auction competition, negligible otherwise. This is the kind of rule change that matters more than its low profile suggests, because the CM clears uniformly: a single coordinated bidder above the marginal price shifts the clearing price for the entire auction.

CP377: Increasing flexibility for SPD Portfolios

Satisfactory Performance Days are the operational delivery test for new-build CMUs. Before a unit can be treated as a delivered capacity provider rather than a paper agreement, it must demonstrate that it can actually run when called. CP377 increases the flexibility around how SPDs are achieved for Portfolio CMUs (combinations of Same-Project Development units sharing a single Capacity Agreement).

Winners: developers of multi-unit projects, who get more options for assembling the SPD requirement across the portfolio rather than meeting it unit-by-unit. Losers: there is no direct loser, but the SPD test exists for a reason. Each piece of flexibility added to how it can be met weakens the link between holding a capacity agreement and being able to deliver capacity. Consumers pay the capacity payment regardless; the SPD test is meant to ensure they receive a real plant in return.

CP378: Removing the 50 MW limit on individual CMUs in a Portfolio

This is the most consequential of the five. Currently no single CMU inside a Portfolio CMU can exceed 50 MW of connection capacity. CP378 removes that cap. To prevent the Portfolio becoming a wrapper for one large unit plus token assets, it introduces a floor: each CMU within the Portfolio must carry at least a minimum proportion of the Portfolio's total Capacity Obligation.

Winners: larger developers and aggregators who want to bundle a substantial single asset with smaller ones inside a Portfolio CMU, and who were previously forced to split or restructure to stay under the 50 MW unit cap. Removing the limit lets capital concentrate where it is cheaper to deploy.

Losers: pure small-scale aggregators whose competitive advantage was partly the unit-size cap, which created space for genuinely distributed portfolios. The minimum-share floor is the safeguard, but its level matters. Set too low, the Portfolio CMU becomes a route for a single large asset to claim the operational flexibility designed for distributed fleets. Set too high, it constrains the very flexibility CP378 is supposed to provide.

For consumers, the question is whether removing the cap broadens the bidder pool (lowering clearing prices) or simply lets large assets access Portfolio CMU privileges they were previously excluded from (no consumer benefit, potential consumer cost). Ofgem's impact assessment should make the directional answer explicit.

CP381: Changing the definition of SCEC in Rule 3.5.5

Station Connection Entry Capacity is the figure that determines the maximum capacity at which a CMU can offer into the auction. CP381 provides an alternative method for determining SCEC under Rule 3.5.5.

The substance turns on the alternative method and which units qualify to use it. Without the detailed proposal text, the direction of the effect cannot be verified. The general point: SCEC determines the volume each unit can bid, and the volume each unit can bid determines auction outcomes. Any change to how SCEC is determined changes the supply curve. Respondents should focus on whether the alternative method overstates or understates available capacity relative to physical reality.

Questions being asked

The published consultation summary does not list discrete questions inline. The standard Ofgem CM Rule change consultation invites respondents to:

On each Change Proposal

- Do you agree with the proposed amendments to the Capacity Market Rules as drafted in CP371? - Do you agree with the proposed amendments as drafted in CP376? - Do you agree with the proposed amendments as drafted in CP377? - Do you agree with the proposed amendments as drafted in CP378? (In practice: does the minimum-share floor sit at the right level, and are the consequences for portfolio composition understood?) - Do you agree with the proposed amendments as drafted in CP381? (In practice: does the alternative SCEC method produce a figure that reflects the unit's deliverable capacity?)

On the legal drafting

- Are there any drafting issues with the proposed Rule changes that would create ambiguity or unintended consequences in operation? (This is where most useful technical feedback lands; the policy intent may be agreed but the wording may misfire in edge cases.)

On the implementation timing

- Is the proposed implementation date workable for participants who would need to adjust auction strategy, registration documentation, or operational arrangements before the next prequalification window?

Respondents are expected to address each Change Proposal they have a view on, and Ofgem treats silence on a CP as no objection.

How to respond

Deadline: 19 February 2025

Status as of date of analysis: Closed (with decision). The decision document has been published as "Capacity Market change proposals CP371, CP376, CP377, CP378, CP381: decision."

Contact for the original consultation: Jack Britton, jack.britton@ofgem.gov.uk

Main document: Statutory Consultation on Capacity Market Rule change proposals CP371, CP376, CP377, CP378 and CP381 (PDF, 602 KB) on the Ofgem consultation page.

Because this consultation has closed and Ofgem has issued its decision, the operative document is now the decision, not this statutory consultation. Anyone tracking the CM Rules should read the decision document to see which of the five proposals were accepted, modified, or rejected, and on what reasoning. The five CPs will then need to be tracked through the formal Rule change instrument that gives them legal effect.