Alternative CAP Review process consultation

This consultation seeks views on including an alternative review process in the Credit Assessment Price (CAP) Review Guidance Document in light of volatile electricity market prices.

Summary

This change aims to allow the alternative review process to be used temporarily in volatile market conditions, that will give more flexibility to the Credit Committee to set a CAP faster, and based on a wider range of data sources.

Consultation questions

This consultation seeks answers to the following questions:

  • Is there a definition of a ‘fast market’ that the Credit Committee should take into account to use the alternative process rather than the existing process?
  • To reduce the time to implement a new CAP we are proposing shortening the CAP Review consultation period to one working day. Do you agree with this reduced consultation period?  If one day is too short how long should be used?
  • The Credit Committee will consider an average of recent System Prices as well as forward market prices in determining a proposed CAP. Do you agree with this approach?
  • Are there any additional methodologies that could be used in determining a proposed CAP?

How it relates to you

Respondents are invited to express their views on this draft alternative CAP Review process during periods of price volatility. The alternative process will give more flexibility to the Credit Committee to set a CAP quicker.

The Credit Committee believes new members from different types of parties would be an asset to its work. If you are interested in joining the Credit Committee please fill in our online form.

When the CAP changes it may affect the amount of credit cover that suppliers and generators are required to lodge with us. For a few Parties this may mean additional collateral needs to be lodged.

We recommend monitoring your Indebtedness and Credit Cover Percentage calculations on the Elexon Portal to understand how this change may affect your Party.

  • Go to Elexon Portal> Financial and Credit > Credit / Credit Alerting > Party Energy Indebtedness

How to respond

You can respond to this consultation online. All responses must be submitted by 17:00 on 22 October 2021. For any enquiries about responding to this consultation, please contact [email protected]

Documents

Please read the consultation documents before submitting your response.

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