Consultation issued on 01 November on decrease of the CAP to £240/MWh
We are consulting on a decrease of the CAP to £240/MWh from the last notified value of £259/MWh. A change to CAP can impact the amount of Credit Cover required by a BSC Party.
Summary
A trigger event has occurred, meaning that the absolute difference between the CAP and the reference price is greater than the current trigger level of +/- £26/MWh. Following this trigger event, the Credit Committee decided to move to the alternative CAP review process, as it was felt the alternative process would be more appropriate given the fast market conditions.
While the alternative Credit Assessment Price review process is being operated, the consultation period is reduced to two working days and the notification period is reduced to 10 working days.
The Credit Committee will also review the Credit Assessment Price every two weeks.
If required, the Credit Committee will meet shortly thereafter to determine if a new CAP value should apply.
Relevant dates
The consultation period will end at 17:00 on Wednesday 3 November 2021.
If the Credit Committee does not meet, the proposed CAP value will be implemented on Thursday 18 November 2021.
How to respond
BSC Parties are invited to respond to this consultation using the proforma available on this page.
Please return responses to [email protected]
How we calculate the CAP to be consulted on
As described in the CAP Review Guidance, the CAP that is consulted on is calculated based on what the reference price will look like on the day the new CAP is going to be implemented.
When a trigger event happens, Elexon issues a consultation paper on the same day of the event. The consultation closes five working days thereafter and provided that no responses from the industry or Credit Committee disagrees with the proposed CAP, then the new CAP will be notified to the BSC Parties and will be implemented 15 working days afterwards.
The implementation day for this recent trigger event will be in October. Therefore, we need to calculate an estimate for the reference price. A 5-day rolling average of Month +1 and Month +2 forward market prices gives the reference price. We used the 5-day rolling average of November and December forward market prices to calculate the reference price which was £136.99/MWh. We subsequently rounded to the nearest pound to return the new CAP of £137/MWh, which is what we are consulting on.
Further guidance
If any Parties have questions or concerns about the CAP, please reach out to our team at [email protected]. If you have questions or concerns about how the change to CAP may impact your Credit Cover please get in contact with [email protected].