Paragraph 1 Method of calculating actual cost of purchasing certain electricity

The method of calculating the total cost to each public electricity supplier P of purchasing electricity supplied by him during qualifying months, n = 1 to 12 inclusive within period y, which was generated in pursuance of qualifying arrangements (which, when combined with the like total cost attributable to every other public electricity supplier, is expressed as Ay in paragraph 2 of Schedule 2) is given by the formula–

where

• Σ_n signifies the summation over all the qualifying months within the period y;

• S_n is the aggregate of the amounts due from supplier P under his qualifying arrangements in respect of electricity supplied in month n (whether or not such amounts have been paid) excluding any advance or deferred payments;

• T_n is the aggregate of any advance payments supplier P is required under his qualifying arrangements to make in month n; and

• U_n is the aggregate of any deferred payments supplier P is required under his qualifying arrangements to make in month n;

together with interest as provided for in the correction factor K_y in Schedule 2.