Explanatory note

These Regulations amend the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014 (S.I. 2014/2014) (the “ESO Regulations”).

The ESO Regulations impose a requirement on electricity suppliers to make contribution payments to the CFD counterparty. Regulation 4 of the ESO Regulations deals with the calculation of the supplier's daily contribution to the CFD counterparty. Under regulation 4 the supplier’s daily contribution is calculated on the basis of payments made and received by the CFD counterparty, which are dependent on the amount of electricity generated on that day by a generating station. Regulation 3 of these regulations introduces a definition of “transport and storage provider”. Regulation 4 of these regulations amends regulation 4 of the ESO Regulations so that where calculations are based on the amount of electricity generated, they can also be based on electricity capacity made available, transport and storage payments, the amount of carbon dioxide captured and the amount of carbon dioxide capture capability made available.

Regulation 7 of the ESO Regulations sets out the basis on which the CFD counterparty must estimate certain matters (such as the amount of money it believes it will need). Regulation 5 of these regulations amends regulation 7 of the ESO Regulations so that the list of matters that the CFD counterparty must have regard to includes matters relating to: the amount of generating capacity made available, the amount of capital or operational costs of a transport and storage provider, the amount of revenue shortfalls of a transport and storage provider, the amount of carbon dioxide captured by a generating station and the amount of carbon dioxide capture capability made available by a generating station.

A full impact assessment of the effect that this instrument will have on the costs of business and the voluntary sector and community bodies is available from the Department for Energy Security and Net Zero at 3-8 Whitehall Place, London, SWA 2EG and is published with the Explanatory Memorandum alongside this instrument on www.legislation.gov.uk.