Electricity Capacity (Supplier Payment etc.) Regulations 2014

Page type: primary-anchored (mirrors The Electricity Capacity (Supplier Payment etc.) Regulations 2014, SI 2014/3354)

Last updated: 2026-04-05

Source file: ~/knowledge/sources/legislation/uk/si-2014-3354-capacity-supplier-payment.md

What this instrument does

The Electricity Capacity (Supplier Payment etc.) Regulations 2014 (SI 2014/3354) govern how electricity suppliers fund the Capacity Market. They are the companion to the Electricity Capacity Regulations 2014 (SI 2014/2043): that instrument governs the provider side (auctions, agreements, payments to generators), this one governs the supplier side (charges on retailers to fund those payments).

Made under the Energy Act 2013 (ss.27, 28, 30-33, 36, 40(1)). In force from 18 December 2014. Applies to Great Britain.

Two charges on suppliers

Capacity market supplier charge (Reg 6): the main charge, allocated based on each supplier's share of demand during the "period of high demand," defined as 4pm to 7pm on working days in November, December, January, and February (Reg 2). This winter peak window determines cost allocation and creates a financial incentive for suppliers to reduce demand during the hours when capacity stress is most likely.

Settlement costs levy (Reg 9): a quarterly levy covering the Settlement Body's operational costs of running the Capacity Market settlement system.

The delivery year runs November to October, aligning with the winter peak season.

Payment and default

Suppliers must pay invoices by the 10th working day after issuance (Reg 11). Interest accrues on late payment.

If a supplier defaults, the Settlement Body draws down on that supplier's credit cover (Reg 12). If credit cover is insufficient, the shortfall is mutualised across all non-defaulting suppliers (Reg 7), who collectively cover the gap. This means no individual supplier default can starve capacity providers of payments, but compliant suppliers bear the cost.

Persistent non-compliance leads to entry on the credit default register (Reg 29). The Settlement Body must enforce payment obligations and notify Ofgem of defaults (Reg 33).

Reconciliation

Monthly reconciliation runs during the delivery year adjust charges to the latest metering data (Reg 20). An annual reconciliation after delivery year end provides the final adjustment to actual demand (Reg 21). Differences are settled through reconciliation invoices and credit notes (Regs 22, 25).

Credit cover

Suppliers must provide credit cover before supply, calculated per Schedule 1 based on their estimated supplier charge (Regs 27-28). Non-compliance results in registration on the credit default register (Reg 29).

Cross-references

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