CAP consultation issued on 20 September on further record level of £184/MWh

We are consulting on an increase of the CAP to £184/MWh from the last notified value of £137/MWh.


Who will this impact?

A CAP trigger event occurred on 20 September meaning the difference between the last notified Credit Assessment Price (CAP) value (£137/MWh) and the reference price was greater than the trigger level of +/-£14/MWh.

The reference price is derived from forward looking electricity market prices currently provided by Independent Commodity Intelligence Services (ICIS).

Elexon makes sure that payments for imbalances in wholesale electricity supply and demand are settled accurately and efficiently. Setting the Credit Assessment Price (CAP) is part of the estimation process we use to ensure that suppliers and generators have enough credit cover to match their expected Settlement charges.

Forward prices have been increasing steadily since spring 2021 and we continually compare these against the CAP level, to ensure that the CAP reflects market developments.

We are now consulting the industry on increasing the CAP to a record level of £184/MWh, from 19 October. This would be the ninth increase in the CAP in 2021.

How it relates to you

When the CAP rises 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

Relevant dates

The consultation closes at 17:00 on 28 September.

The Credit Committee only meet if one or more respondents or a Credit Committee member requests it. As the new CAP value is a significant increase from the last notified value, the Credit Committee have agreed to meet to discuss the new CAP following the closure of this consultation.

We will send out a circular afterwards regarding the consultation results and Credit Committee’s decision.

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] by 17:00 on Tuesday 28 September 2021.

How we calculate the CAP value 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 would look like on the day the new CAP value 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 response from the industry or Credit Committee disagrees with the proposed CAP, then the new CAP value will be notified to the BSC Parties and will be implemented after 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 in October.

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 £184.27/MWh on 20 September.

We subsequently rounded to the nearest pound to return the new CAP of £184/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].


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