Energy (Windfall Gains in the Energy Sector) (Cap on Market Revenues) Act 2023

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Monthly market revenue and monthly capped revenue

10. (1) The amount of monthly market revenue in respect of which a payment referred to in section 8 (1) is liable to be made shall be calculated, in accordance with subsection (2), by the producer, intermediary or trader for each month of the relevant period in respect of the revenue obtained by the producer, intermediary or trader, as the case may be, from the sale of electricity in that month (in this Act referred to as “monthly market revenue”).

(2) Monthly market revenue—

(a) in relation to a producer—

(i) who does not participate directly in the electricity market but enters a contract with a person (other than an export only supplier) to participate in the electricity market on the producer’s behalf, shall be calculated for each generating unit as the total revenue (whether or not payable during the month concerned) obtained by the producer pursuant to the contract for each imbalance settlement period in that month,

(ii) who participates directly in the electricity market as or through an export only supplier, established by the producer for the purpose of sale of electricity produced by the producer, shall be calculated for each generating unit as the sum of the relevant quantity in each imbalance settlement period in the month concerned multiplied by the market index price for each imbalance settlement period in that month, or

(iii) who participates directly in the electricity market other than as or through an export only supplier, shall be calculated for each generating unit as the sum of the relevant quantity in each imbalance settlement period in the month concerned multiplied by the market index price for each imbalance settlement period in that month,

(b) in relation to an intermediary, shall be calculated for each generating unit in respect of which the intermediary participates in the electricity market on behalf of a producer, as the sum of the relevant quantity in each imbalance settlement period in the month concerned multiplied by the market index price for each imbalance settlement period in that month, and

(c) in relation to a trader—

(i) who sells electricity on behalf of a producer or intermediary in the ex-ante market, shall be calculated for each generating unit in respect of which the trader sells electricity in the ex-ante market on behalf of the producer or intermediary, as the sum of the ex-ante quantity of the generating unit in each imbalance settlement period in the month concerned multiplied by the market index price for each imbalance settlement period in that month, or

(ii) who sells electricity on behalf of a producer or intermediary in the balancing market, shall be calculated for each generating unit in respect of which the trader sells in the balancing market on behalf of the producer or intermediary, as the sum of the loss-adjusted metered quantity of the generating unit in each imbalance settlement period in the month concerned multiplied by the market index price for each imbalance period in that month.

(3) The amount of monthly capped revenue in respect of which a payment referred to in section 8 (1) is liable to be made shall be calculated, in accordance with subsection (4), by the producer, intermediary or trader for each month of the relevant period in respect of the revenue obtained from the sale of electricity in that month (in this Act referred to as “monthly capped revenue”).

(4) Monthly capped revenue—

(a) in relation to a producer—

(i) referred to in subparagraph (i) of subsection (2)(a), shall be calculated, for each generating unit as the sum of the relevant quantity of electricity for which the contract referred to in that subparagraph provides, produced in each imbalance settlement period in the month concerned, multiplied by the amount of the cap applying to the electricity under section 8 (2),

(ii) referred to in subparagraph (ii) of subsection (2)(a), shall be calculated, for each generating unit as the sum of the loss-adjusted metered quantity of electricity produced in each imbalance settlement period in the month concerned, multiplied by the amount of the cap applying to the electricity under section 8 (2), and

(iii) referred to in subparagraph (iii) of subsection (2)(a), shall be calculated, for each generating unit as the sum of the relevant quantity of electricity produced in each imbalance settlement period in the month concerned, multiplied by the amount of the cap applying to the electricity under section 8 (2),

(b) in relation to an intermediary, shall be calculated, for each generating unit in respect of which the intermediary participates in the electricity market on behalf of a producer, as the sum of the relevant quantity of electricity produced in each imbalance settlement period in the month concerned multiplied by the amount of the cap applying to the electricity under section 8 (2), and

(c) in relation to a trader—

(i) referred to in subparagraph (i) of subsection (2)(c), shall be calculated, for each generating unit in respect of which the trader sells electricity in the ex-ante market on behalf of the producer or intermediary, as the sum of the ex-ante quantity produced in each imbalance settlement period in the month concerned multiplied by the amount of the cap applying to the electricity under section 8 (2), or

(ii) referred to in subparagraph (ii) of subsection (2)(c), shall be calculated, for each generating unit in respect of which the trader sells in the balancing market on behalf of the producer or intermediary, as the sum of the loss adjusted metered quantity produced in each imbalance settlement period in the month concerned multiplied by the amount of the cap applying to the electricity under section 8 (2).

(5) In this section, “relevant quantity” means the relevant quantity for an imbalance settlement period for a generating unit which shall be calculated according to the following formula:

relevant quantity_u΃ = QMLF_u΃ – Σ_oΣ_i (QABLF_uio΃ – Min(QABBIAS_uio΃, QABUNDEL_uio΃, QABNFLF_uio΃, QABCURLLF_uio΃))

where—

U refers to a generating unit,

O refers to bid offer acceptance,

i refers to a band,

΃ refers to an imbalance settlement period,

QMLF_u΃ is the loss-adjusted metered quantity,

Σ_o is a summation over all bid offer acceptances,

Σ_i is a summation over all bands,

QABLF_uoi΃ is the loss-adjusted accepted bid quantity,

QABBIAS_uoi΃ is the biased accepted bid quantity,

QABUNDEL_uoi΃ is the undelivered accepted bid quantity,

QABNFLF_uoi΃ is the loss-adjusted non-firm accepted bid quantity,

QABCURLLF_uoi΃ is the loss-adjusted curtailment accepted bid quantity.

(6) In this section—

“band” shall be construed in accordance with the Glossary to Part B of the Trading and Settlement Code;

“biased accepted bid quantity” shall be construed in accordance with Section F.6.7.10 of Part B of the Trading and Settlement Code;

“bid offer acceptance” shall be construed in accordance with the Glossary to Part B of the Trading and Settlement Code;

“cap applying to the electricity” means the market cap applying to the fuel source from which the electricity is produced;

“contract” includes—

(a) a contract under which electricity generated by a generating unit is subtracted, by a party to the contract other than the producer, from the electricity demand a producer or generating unit would otherwise have in the electricity market,

(b) a REFIT power purchase agreement, and

(c) a power purchase agreement;

“ex-ante quantity” means, in relation to a producer, intermediary or trader concerned in respect of a generating unit, the amount of electricity in megawatt hours notified to the producer, intermediary or trader by SEMO, in advance of an imbalance settlement period, that the generating unit is required to generate in the imbalance settlement period;

“loss-adjusted accepted bid quantity” shall be construed in accordance with Section F.6.2 of Part B of the Trading and Settlement Code;

“loss-adjusted curtailment accepted bid quantity” shall be construed in accordance with Section F.8.1 of Part B of the Trading and Settlement Code;

“loss-adjusted non-firm accepted bid quantity” shall be construed in accordance with Section F.6.5 of Part B of the Trading and Settlement Code;

“power purchase agreement” means a power purchase agreement between a producer and a buyer for the sale or purchase of electricity pursuant to the terms and conditions of the agreement which shall include terms and conditions related to the price and quantity of electricity sold and purchased and the period during which the electricity shall be supplied by the producer;

“undelivered accepted bid quantities” shall be construed in accordance with Section F.6.6.6 of Part B of the Trading and Settlement Code.