How is the CAP value set?
The process for reviewing and setting the CAP is defined in the CAP Review guidance document.
On the first day of the week, Elexon calculates a reference price derived from forward market prices. If the difference between the CAP and the reference price exceeds a pre-set trigger value Elexon issues an industry consultation seeking views on the CAP change.
Following the end of the consultation period, the Credit Committee, a Panel sub-committee made out of members of the industry, meets to decide on a new CAP value if necessary. In order to make this decision, the Credit Committee considers consultation responses, current and future trends in market prices.
The agreed reviewed CAP is implemented at least 15 Working Days after the decision is communicated.