Paragraph 5 New regulation 49A

After regulation 49 insert—

“Reducing capacity payments: offsetting relevant expenditure

49A.

(1)

This regulation applies if, before the time when a credit note is issued to a capacity provider (“C”) for a capacity payment, the Delivery Body has acknowledged receipt of a declaration under the Rules that relevant expenditure has been incurred, or is expected to be incurred, in respect of the capacity committed CMU for which C is responsible.

(2)

If this regulation applies, the Settlement Body must ensure that the credit otherwise payable to C is reduced—

(a)

by the amount of any outstanding relevant expenditure; or

(b)

to nil, if the amount of any outstanding relevant expenditure is equal to or greater than the amount of the credit.

(3)

The Settlement Body must ensure that the credit note issued to C states the amount by which the credit is reduced, and the reason for the reduction.

(4)

This regulation applies to a credit note issued in respect of a transferred part as it applies to a credit note issued in respect of a capacity agreement, and where a capacity agreement has been transferred pursuant to regulation 30A(1)(b) or regulation 30(2)(b), the reduction in the amount payable to C is to be calculated so that it is proportionate to the period and part of the capacity obligation held by C during the month to which the credit note relates.

(5)

In this regulation—

• “outstanding relevant expenditure” means relevant expenditure that has not been deducted from capacity payments pursuant to this regulation; and

• “relevant expenditure” has the meaning given in the Rules.”.