# The Contracts for Difference (Electricity Supplier Obligations) Regulations 2014, Regulation 17: Mutualisation

Extent: E+W+S+N.I.

(1) Where an electricity supplier (“the defaulting supplier”) fails to make a relevant payment the CFD counterparty may, subject to paragraph (3), require non-defaulting suppliers to pay a share of an amount equal to the amount which was not paid by issuing a notice (“a mutualisation notice”) to each non-defaulting supplier who supplied electricity during the reference period.
(1A) For the purposes of this regulation a “non-defaulting supplier” in relation to a mutualisation notice means an electricity supplier who has—
(a) not failed to make any relevant payment within the time limit for making the payment under these Regulations;
(b) failed to make one or more relevant payments not all of which have subsequently been paid to the CFD counterparty by the time the defaulting supplier was required to make the relevant payment referred to in paragraph (1); or
(c) failed to make one or more relevant payments not all of which have subsequently been paid to the CFD counterparty by the time the defaulting supplier was required to make the relevant payment referred to in paragraph (1), but the CFD counterparty is of the opinion that it will hold some collateral (within the meaning given by regulation 19) provided by that supplier by the 5th working day after the day on which the CFD counterparty intends to issue that mutualisation notice.
(2) A mutualisation notice must state—
(a) the amount which the defaulting supplier failed to pay;
(b) the date by which the defaulting supplier should have paid that amount;
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(e) the amount (“the mutualisation amount”) which the non-defaulting supplier to whom the notice is issued must pay, calculated in accordance with paragraph (7);
(f) the date (“the mutualisation date”) by which the mutualisation amount must be paid which must be—
(i) in the case of a mutualisation notice issued in respect of a relevant payment which the defaulting supplier was required to make by virtue of regulation 8(1) or 9(2), no earlier than 5 working days after the date on which the notice was issued; or
(ii) in the case of a mutualisation notice issued in respect of any other relevant payment which the defaulting supplier was required to make, no earlier than 30 days after the date on which the notice was issued.
(2A) A mutualisation date must be the same for each mutualisation notice issued in respect of a relevant payment which a defaulting supplier failed to pay.
(3) A mutualisation notice may only be issued where the CFD counterparty is of the opinion that it will not hold any collateral (within the meaning given by regulation 19) provided by the defaulting supplier by the 5th working day after the day on which the CFD counterparty intends to issue that notice.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) Where the CFD counterparty has issued a mutualisation notice to an electricity supplier, that supplier must pay the mutualisation amount specified in the notice by the date specified in the notice.
(6) Where an electricity supplier fails to pay all or part of a mutualisation payment in accordance with paragraph (5), that supplier must pay the CFD counterparty simple interest on any unpaid amount at the rate specified in regulation 35(1) from the day after the day on which the payment should have been made.
(7) The mutualisation amount to be stated in a mutualisation notice to be issued to a non-defaulting supplier is the amount given by—
DA×(SRES−EXENDPE−AXE)
where—
DA is the amount which the defaulting supplier failed to pay;
SRES is the amount of electricity supplied by the non-defaulting supplier in the reference period as determined immediately before the notice is issued; ...
EXE is the amount of EII excluded electricity supplied by the non-defaulting supplier in the reference period as determined immediately before the notice is issued;
NDPE is the total amount of electricity supplied by all non-defaulting suppliers in the reference period as determined immediately before the notice is issued;
AXE is the total amount of EII excluded electricity supplied by all non-defaulting suppliers in the reference period as determined immediately before the notice is issued.
(8) For the purposes of paragraphs (1) and (7)—
(a) the reference period is—
(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(ii) ... the most recent period of 30 consecutive days in respect of which the BSCCo has carried out an Initial Volume Allocation Run; and
(b) the amount of electricity supplied by an electricity supplier in a reference period is the amount of electricity which the BSCCo determines, on the basis of the most recent BSC volume allocation run which the BSCCo has carried out in relation to each day in that period, as the amount of electricity supplied by that supplier in that reference period.
(9) In this regulation and regulation 18 “relevant payment” means any payment which an electricity supplier is required to make by virtue of regulation 8(1), 9(2), 11(1), 14(3), 16(3)(a) or 17(5).

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Source: https://www.legislation.gov.uk/uksi/2014/2014/regulation/17 (the official version)
Page: https://openlegislation.uk/contracts-for-difference-electricity-supplier-obligations-regulations-2014/regulation-17
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.