Explanatory note

These Regulations are made under the powers contained in Chapter 2 (contracts for difference) of Part 2 (electricity market reform) of the Energy Act 2013 (c. 32). They make amendments to the Contracts for Difference (Standard Terms) Regulations 2014 (S.I. 2014/2012) (“the 2014 Regulations”).

The contracts for difference scheme is subject to state aid approval from the European Commission, which imposed a condition^f1 on the contracts for difference scheme requiring that contracts for difference signed from 1st January 2016 should not permit payments to be made to generators during periods of negative electricity prices (where the price of electricity on the day-ahead power auction falls to less than £0).

Regulation 3 amends regulation 3 of the 2014 Regulations to enable the Secretary of State to issue standard terms which comply with the European Commission’s requirements and provides a definition of “negative price periods” which is linked to the provisions of the specific CFD contract.

Regulation 9 of the 2014 Regulations provides that, at the same time as issuing an allocation round notice, the Secretary of State must issue a standard terms notice specifying the terms which must be included in contracts for difference for a particular allocation round. Regulation 4 of these Regulations amends regulation 9 of the 2014 Regulations to enable the Secretary of State to issue a replacement CFD standard terms notice to the CFD counterparty where this is required for the purpose of correcting errors in the standard terms notice or updating a reference to a version of the standard terms where a new version of the standard terms has been issued after publication of the CFD standard terms notice. A replacement CFD standard terms notice can only be issued where twenty working days remain before the commencement date specified in the allocation round notice.

A full impact assessment of the effect that the CFD regime will have on the costs of business and the voluntary sector is available from the Department of Energy and Climate Change at 3 Whitehall Place, London, SW1A 2AW and is published with the Explanatory Memorandum alongside this instrument on www.legislation.gov.uk.