FAQs

Electricity Market Reform (EMR)

What is Electricity Market Reform?

In its July 2011 White Paper, the UK Government committed to a series of reforms (known collectively as Electricity Market Reform, or EMR) in order to, in the Government’s own words: “transform the UK’s electricity system to ensure that our future electricity supply is secure, low-carbon and affordable”. EMR will deliver greener energy and reliable supplies, at the lowest possible cost. It will transform the UK electricity sector to enable low-carbon generation to compete with conventional fossil fuel generation.

The About EMR pages of our website provide more information.

Governance

Who is EMR Settlement Limited?

Electricity Market Reform Settlement Limited (EMRS) is a wholly owned subsidiary of ELEXON Ltd. It was set up in March 2014 after DECC (now BEIS) recognised that ELEXON has the experience and capability to be the Settlement Agent for the Contract for Difference (CFD) scheme and the Capacity Market (CM), due to seeing the similarities between the data, systems and processes that successfully operate the BSC and those that are required for CFD and CM.

What is the role of EMR Settlement Limited?

We act as the EMR Settlement Services Provider on behalf of both Low Carbon Contracts Company (the CFD Counterparty) and Electricity Settlements Company (the Capacity Market settlement body). Our role is to provide settlement services so that means it is our responsibility to run the settlement system and operate the processes that enable CFD payments to be calculated and settled for both CFD Generators and Suppliers. As well as to manage settlement of payments on behalf of Electricity Settlement Company  to Capacity Providers and Suppliers.

For more information about our role please see the our role in EMR page of the website.

What are authorised contacts and why do we need them?

EMR Party information is required from Suppliers, CFD Generators and Capacity Providers in order to undertake settlement service activities for CFD and the Capacity Market. This information includes:

  • Company information (e.g. its registered address);
  • Bank information (e.g. bank account details)
  • Contact information

This information is required to ensure that we are providing accurate settlement information to, and working with, the correct Parties. It will be used to:

  • Issue invoices, notices and other communications
  • Ensure actions are taken with, or instigated by, those persons or organisations who are authorised representatives of the Party

Therefore, we require controls to ensure this information is current and accurate, with Authorised Persons forming a key part of these controls.

An Authorised Person is someone recognised by EMRS to act on behalf of their Party. This provides Parties with a framework to enable the delegation of certain activities to appropriate persons within their organisation, in line with their own governance and controls.

Further details are available in the EMR Settlement Authorisation document available on the Guidance page on our website.

Contract for Difference (CFD) – CFD Generator

What is Contract for Differences (CFD) and the role of the EMR Settlement Services Provider?

Contract for Differences (CFD) is a long-term contract between an electricity generator and Low Carbon Contracts Company (LCCC). The contract enables the generator to stabilise its revenues at a pre-agreed level (the Strike Price) for the duration of the contract. Under the CFD, payments can flow from the LCCC to the generator, and vice versa. Under the CFDs, when the market price for electricity generated by a CFD Generator (the reference price) is below the Strike Price set out in the contract, payments are made by the LCCC to the CFD Generator to make up the difference. However, when the reference price is above the Strike Price, the CFD Generator pays the LCCC the difference.

In our role as the EMR Settlement Services Provider we are responsible for the following;

  • Collecting metering data for CFD Generators.
  • Setting up and maintaining the systems that allow us to collect, securely store, and where appropriate securely transmit the data necessary for CFD settlement.
  • Managing the settlement of payments by generators and suppliers.
  • Holding and managing reserve funds.
  • Calculating payments and charges.
  • Invoices and collecting any payments due.

When would a CFD Generator get paid?

CFD Generators will be paid 28 calendar days after the billing period.

What reports will CFD Generators receive from the EMR Settlement Services Provider, and how will they be sent?

Generators with CFDs will receive a number of reports from the EMR Settlement Services Provider, in accordance with the Terms and Conditions of the CFD contract. These include:

  • Billing Statements, setting out the amounts to be paid to (or by) the Generator, and providing details of how these amounts have been calculated; and
  • Collateral Posting Notices (in the event that a Generator is required to post collateral, following 3 Payment Failures within a 12 month period).

The Billing Statement is also sent with Backing Data. This provides more information about how payments were calculated. It is made available in two formats, Data Transfer Catalogue (DTC) format or CSV downloadable format. For further information about what is contained in the Backing Data please see ‘D0365 – CFD Generator Invoice Backing Data‘ flow.

As a CFD Generator, what happens if there have been payment failure/s?

If there have been payment failures on three or more occasions in any twelve month period, the CFD Counterparty may give a notice to the Generator (a “Collateral Posting Notice”) to post collateral.  Collateral will be accepted as cash or an irrevocable standby Letter of Credit (LC) from at least an A-1 rated financial institution (Standard and Poor’s short term rating), or equivalent.  The collateral must remain until the Generator is without a “strike” for 12 consecutive months.

For more information about this process please see Working Practice 43 – CFD Generator Collateral.

As a CFD Generator do I need to lodge Credit Cover/Collateral?

Only in this circumstance, if there have been payment failures on three or more occasions in any twelve month period, the CFD Counterparty may give a notice to the Generator (a “Collateral Posting Notice”) to post collateral.  Collateral will be accepted as cash or an irrevocable standby Letter of Credit (LC) from at least an A-1 rated financial institution (Standard and Poor’s short term rating), or equivalent.  The collateral must remain until the Generator is without a “strike” for 12 consecutive months.

For more information about this process please see Working Practice 43 – CFD Generator Collateral.

How can metered volumes be submitted to EMRS?

What is the process for registering Additional BM Units ?

For information on the process for registering Additional BM Units, please refer to ELEXON Guidance document – Registration for BM Units for EMR.

Supplier Payments

What frequency do Suppliers receive invoices for CFD and CM payments? What types of payments are included in the invoice?

CFD – Suppliers will be invoiced on a daily basis. Suppliers will have five Working Days, from the date the invoice is received, to make this payment. Invoices received will cover both Interim  Levy Payments and Supplier Operational Cost payments. Suppliers will also receive Backing Data which provides more information about how payments were calculated.  To see what is contained in the Backing Data, please see ‘D0362 CFD Supplier Invoice Backing Dataflow.

Capacity Market – Suppliers will be invoiced on the first working day of each month of a delivery year. The invoice will cover CM Supplier Charge and Settlement Cost Levy. Suppliers will have five Working Days, from the date the invoice is received, to make this payment. To see what is contained in the Backing Data, please see ‘D0364 CM Supplier Invoice Backing Dataflow.

Does backing data have a VAT line?

VAT isn’t included within the backing data and the invoice indicates that VAT is out of scope.

Please find the relevant government rulings on VAT being out of scope for the Capacity market at: https://www.gov.uk/government/publications/hmrc-view-of-vat-treatment-of-the-capacity-market.

Is there a time limit for disputes to be resolved (where they are not about BSC data)?

If the disputes relates to a determination made by the LCCC the Supplier has 28 day from when the determination was made to raise a dispute with the LCCC by sending a notice to the LCCC.  This is outlined within Regulation 26 ‘Dispute notices’ of the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014.

The LCCC has up to 28 days from receipt of the notice either:

(a) Reject the notice; or

(b) Accept the notice (in full or in part) and make such determination under that provision as it thinks is necessary in consequence.

Once the determination is made any payment either to or by LCCC should be within 5 working days of that determination.

 

Where can I find information the key rates and amounts used in the calculation of Supplier payments?

Please see the Key Figures for  Payments document on the settlement data page of our website. It sets out the key rates and amounts used in the calculation of  Supplier payments under both the Contracts for Difference (CFD) and Capacity Market (CM) schemes.

Is there a schedule of when payments will be invoiced?

The EMRS Settlement Calendar, provides a schedule of when payments will be invoiced, when payment is due, and if applicable, the Settlement Date and the Settlement Code.  It is available on the Settlement Data page of our website.

Is Direct Debit available?

Direct Debit is available to Suppliers for both CFD and CM payments. Where Suppliers choose to make payments via Direct Debit for both CFD and CM this will cover all payments types. Note: Supplier Credit Cover is not covered by the Direct Debit.

For more information about how to set up Direct Debit, please refer to EMRC69. The Direct Debit mandate forms are available on the Supplier stakeholder page.

We’ll provide information to CFD Generators and Capacity Providers separately if they wish to have a Direct Debit in place.

When are Energy Intensive Industries (EII) and Green Energy Imports available from?

The earliest a Supplier may seek a determination from LCCC for an exemption from the Supplier Obligation Levy Rate for “green excluded electricity” is after 31 March 2015. This is for renewable electricity generated by plant commissioned after 31 March 2015 in other EU Member States and supplied to consumers in Great Britain.

The earliest that an Energy Intensive Industries certificate may be issued is 1 October 2015, subject to State Aid approval and the Parliamentary process. The exemption cannot be retrospectively applied.

LCCC is working with EMRS, BEIS and DECC in developing further the exemptions process, including the ‘relevant arrangements’. BEIS and LCCC will issue guidance in advance of the scheme starting.

This exemption will be implemented through the supplier obligation by excluding any exempt electricity supplied from the levy calculation when looking at the relevant suppliers’ market share.

Total Reserve Amount, Reserve Payment and Interim Levy Rate

What are Reserve payments?

Low Carbon Contracts Company (LCCC) sets the Total Reserve Amount, three months in advance of the financial quarter during which the reserve payments are needed. EMRS apportions the Total Reserve Amount between each supplier based on its market share to determine its individual reserve payment.  The Total Reserve Amount is a way of managing the unpredictability, volatility and cash flow timing mismatches that will arise within the LCCC payment framework. The Total Reserve Amount is not designed to protect the LCCC from non-payment by suppliers.

Our guidance document on the ‘CFD Reserve Payment’ is available here and explains what reserve payments are in more detail.

How are Suppliers' Reserve Payments calculated?

EMR Settlement Ltd (EMRS) will apportion the Total Reserve Amount amongst licensed suppliers according to each supplier’s market share. Supplier market share is determined using the supplier’s demand measured in metered volumes during a Reference Period.  A supplier’s demand will be calculated using metered data provided by the Balancing and Settlement Code Company (BSCCo).

The Reference Period is the 30 calendar days for which there is metered data (excluding Interim Information data) prior to the date on which the Total Reserve Amount is determined by the LCCC. For any given 30 calendar day period this would mean using BSCCo metered data from either the Initial Volume Allocation Run (SF) or the First Reconciliation Volume Allocation Run (R1).

For further information please do refer to our guidance document on the ‘CFD Reserve Payment’  available here.

When are Reserve Payments due?

A Supplier’s Reserve Amount is invoiced as part of the Quarterly Reconciliation. For the dates of when the Quarterly Reconciliation is invoiced and the associated payment date, please see the EMRS Settlement Calendar on the Settlement Data page of our website.

How are Reserve Payments reconciled?

Reserve payments are reconciled at the end of each Quarterly Obligation Period. A Quarterly Obligation Period is a financial quarter during which the reserve payments are needed to ensure there is no shortfall between payments in from suppliers and out to generators. EMRS will send a notice of reconciliation payment to each supplier and this invoice will be due 90 Calendar days later. At a high level, this compares what a supplier paid to what they should have paid over the quarter and takes into account past and future reserve payments.

For further information please do refer to our guidance document on the ‘CFD Reserve Payment’  available here.

What happens if a supplier enters or exits the market?

If a supplier has demand during the Reference Period, the supplier will be required to pay the reserve payment for the quarter to which the Reference Period relates. Similarly a supplier would not be required to make a payment when the BSCCo does not record any metered volumes within the Reference Period. The Reference Period is the 30 calendar days for which there is metered data (excluding Interim Information data) prior to the date on which the total reserve amount is determined by the LCCC.

For further information please do refer to our guidance document on the ‘CFD Reserve Payment’  available here.

 

Is a forecast for future Interim Levy Rates and Total Reserve Amounts available?

LCCC’s Transparency Tool provides a 15 month forecast, with base cases and sensitivities, for both the Interim Levy Rate and Total Reserve Amount.

 

What data is used in the calculation of Interim levy payments?

To calculate the interim levy payment for a Supplier gross demand data is used. Our approach is that it must correctly implement the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014, which require that Suppliers’ CFD charges and credit cover requirements should be determined based on the amount they have supplied to premises in Great Britain.

For Supplier BM Units, because ‘Active Import’ is separated from ‘Active Export’ in SVA with separate Metering System IDs (MSIDs) and Consumption Component Classes. The Supplier Volume Allocation Agent (SVAA) system has been amended to sum the Active Import data and report it as BM Unit gross demand for use in CFD Settlement.

For other BM Units, we’ll calculate the BM Unit gross demand from the BM Unit Metered Volume (QMij). BM Unit Metered Volumes will be included in BM Unit gross demand (and hence treated as chargeable for CFD purposes) if:

BM Unit Metered Volume is negative (in that Settlement Period);

  • Lead Party for the BM Unit holds a supply licence;
  • It is not an Interconnector BM Unit (or Distribution Interconnector with a derogation from the requirement to register Interconnector BM Units); and
  • The premises are not being occupied for the purposes of operating a Licensable Generating Plant.

The relevant Transmission Loss Multiplier will be applied to gross demand in BSC systems.

Further details are available within EMR Circular 25.

Supplier Credit Cover

As a Supplier do I need to lodge Credit Cover for CFD?

Any Supplier (new or existing) who is supplying electricity has an obligation to lodge sufficient valid Credit Cover to meet their minimum calculated requirements.

This is a rolling daily requirement. The minimum Credit Cover requirement is a Supplier’s metered volumes for a 21 day reference period multiplied by the Interim Levy Rate in force on the day for which the calculation is being performed. The Interim Levy Rate changes every quarter. Suppliers need to ensure they have sufficient Credit Cover lodged they day before an increase in the Interim Levy Rate. For Interim Levy Rates, please see Key figures for Payments.

 

To understand how to lodge, calculate and monitor your Credit Cover please use the following documents:

As a Supplier do I need to lodge Credit Cover for the Capacity Market?

Suppliers will be required to lodge Credit Cover against their Capacity Market Supplier Charge for each month. A Supplier’s minimum Credit Cover requirement in respect of a month is 110% of their monthly Supplier Charge. Suppliers are required to lodge Credit Cover by no later than 12 Working Days before the start of a month within a Delivery Year.

Suppliers will receive a schedule of their monthly minimum Credit Cover requirements by the end of July before a Delivery Year.

For more information please see Working Practice 45 – Supplier CM Credit Cover

 

What are the differences between Supplier's Credit Cover requirements for CFD and CM?

The below table provides a summary of the Credit Cover requirements for both the CFD and Capacity Market schemes.

  Contracts For Difference (CFD) Capacity Market (CM)
Why is Credit Cover required to lodged To protect against the risk of non-payment by suppliers of charges which fund CFD Generator Payments. To protect against the risk of non-payment by Suppliers of charges which fund Capacity Providers Payments.
Frequency of Credit Cover requirement Daily

Only when there is an Interim Levy Rate in place

Monthly

12 Working Days before the start of a month within the Delivery Year

When does the first Credit Cover need to be lodged One Working Day before the start of the Quarterly Obligation Period 12th Working Day before the beginning of October, the first month of a Delivery Year
Minimum Amount Required to be Lodged 21 days of metered volume x Interim Levy Rate Monthly Capacity Market Supplier Charge x 110%
What types of Credit can be used Letter of Credit, cash or a combination of the two Letter of Credit, cash or a combination of the two
Letter of Credit Beneficiary: Low Carbon Contracts Company

Bank Ratings: Short term

F1 rating by Fitch

P-1 rating by Moody

A-1 Rating by Standard and Poor’s

Beneficiary: Electricity Settlements Company

Bank Rating: Long term

A3 rating by Moody

A- rating by Standard and Poor’s

Communications to Suppliers Daily Credit Cover report

 

Schedule to be issued by end July before the start of the Delivery Year and will be revised and reissued by the following March.

What types of Credit Cover can be used for CFD and CM?

Credit Cover can be lodged as cash, Letter of Credit or combination of both for both CFD  and CM.

The bank account details and the approved Letter of Credit template to be used by a Supplier  for lodging CFD Credit Cover, can all be found in WP42 – Supplier CFD Credit Cover.

The bank account details and the approved Letter of Credit template to be used by a Supplier lodging CM Credit Cover, can be found in Working Practice 45 – Supplier CM Credit Cover

We’d like to recommend the following when lodging Credit Cover:

  • Once Credit Cover has been provided (either cash or Letter of Credit) please notify us this has been actioned including the amount and format to contact@emrsettlement.co.uk.
  • If you are lodging  as a cash amount please include your EMR Party ID in the reference

In order for Credit Cover to be considered to be lodged the cash amount must have been received in the relevant bank account or a valid Letter of Credit must have been received electronically by EMRS.

How much CFD Credit Cover is required to be lodged?

The minimum Credit Cover requirement is calculated as:

  • A Supplier’s metered volumes for a 21 day reference period multiplied by the Interim Levy Rate

This calculation is performed each Working Day and a Supplier will be sent a Daily Credit Cover Report to enable the Supplier to manage their Credit Cover position. The Interim Levy Rate will be the one applicable on the day of the report.

For  information about Daily Credit Cover Report and how the reference period is calculated please to refer to Guidance G5 – Supplier CFD Credit Cover

What happens if I lodge insufficient Credit Cover?

EMRS will review the amounts of Credit Cover lodged on a daily basis for CFD and monthly basis for CM to ensure Suppliers meet their obligations. Escalating action will be taken if a Supplier does not meet their obligations and does not take action to rectify their position.

The process that is followed if insufficient Credit Cover is lodged is detailed, for CFD, within Working Practices 42 – Supplier CFD Credit Cover  and within Working Practice 45 – Supplier CM Credit Cover for CM.

What is the process for requesting excess Credit Cover to be returned?

Suppliers can request return of their Credit Cover at any point in time. Credit Cover will be released subject to the Supplier holding excess Credit Cover and not having any outstanding obligations that affect it, or when the Supplier has provided replacement Credit Cover.

The process for requesting the return of excess CFD Credit Cover is detailed within Working Practices 42 – Supplier CFD Credit Cover document.

The process for requesting the return of excess CM Credit Cover is detailed within Working Practice 45 – Supplier CM Credit Cover.

Capacity Market (CM) – Capacity Provider

What is Capacity Market and the role of the EMR Settlement Services Provider?

The Capacity Market is designed to ensure sufficient reliable capacity is available by providing payments to encourage investment in new capacity or for existing capacity to remain open.

Our role as the EMR Settlement Services Provider we are responsible for the following;

  • Collecting  metering data for Capacity Providers
  • Setting up and maintaining the systems that collect, securely store, and where appropriate securely transmit the data necessary for Capacity Market settlement.
  • Managing settlement of payments between Capacity Providers and suppliers.
  • Calculating payments and charges.
  • Invoicing, and collecting any payments due.

What reports will capacity providers receive from the EMR Settlement Services Provider, and how will they be sent?

Capacity Providers will receive monthly advice notes showing their capacity payments, together with Backing Data which provides details of how these amounts were calculated.

For more information about what is contained in the Backing Data, please see D0366 CM Capacity Provider Invoice Backing Data flow.

 

What frequency as a Capacity Provider will I get paid for the provision of capacity?

Monthly payments for the provision of capacity are made to Capacity Providers during the Delivery Year. It is issued on 26th Working Day after the end of each month in a Delivery Year.

If you have more than one CMU than they will all be include on one invoice or credit note.

The EMRS Settlement Calendar provides a schedule of when payments will be issued.  It is available on the Settlement Data page of our website.

 

What is System Stress Event?

“System Stress Event” means a Settlement Period in which a System Operator Instigated Demand Control Event occurs where such event lasts at least 15 continuous minutes (whether the event falls within one Settlement Period or across more than one consecutive Settlement Periods, and where the event falls across multiple consecutive Settlement Periods, each of those Settlement Periods will be a “System Stress Event”).

 

What is a Capacity Market Notice?

A Capacity Market Notice is published by the System Operator at times when either;

  • System Operator Instigated Demand Control Event occurs; or
  • There will be an Inadequate System Margin (determined in the Capacity Market Rule Book), within the next four hours.

The Capacity Market Warning must be published by the System Operator and the Capacity Market Notice will contain specified information. For more information please see https://gbcmn.nationalgrid.co.uk/.

 

Capacity Market (CM) – Applicant Credit Cover

How are Applicants informed that they must provide Credit Cover?

The Delivery Body will tell Applicants if they must lodge Credit Cover by giving notice of a CMU’s conditional prequalification
  • Regulation 53  states that those that have applied to pre-qualify in a capacity auction and have received a notice from the Delivery Body under the capacity market rules (a “conditional pre-qualification notice”) that it has prequalified in respect of that CMU must satisfy the credit cover requirements.
  • Rules 4.6.1. states that Applicants that receive notice from the Delivery Body under Rule 4.5.1.(b)(ii), (iii) or (iv) of its conditional pre-qualification must within 15 Working Days provide Applicant Credit Cover to the Settlement Body.

It is recommended that Applicants review the Regulations and Capacity Market Rules to assess whether or not their CMUs would qualify to lodge Credit Cover.

 

What are the timescales for lodging Credit Cover?

Applicants are required to lodge Credit Cover within 15 working days of receiving a conditional prequalification notice from the Delivery Body.

What are the requirements for the Letter of Credit?

A Letter of Credit needs to comply with Regulation 54(3) of the Electricity Capacity Regulations 2014, which states that the letter of credit must be —

–(a) issued by a qualifying bank;

–(b) in sterling;

–(c) available for payment at a London branch of the issuing bank against a notice of drawing delivered by the Settlement Body; and

–(d) valid—

(i) at least until the end of the credit obligation period; or

(ii) if the credit obligation period is more than 6 months, for a period of not less than 6 months.

The approved Letter of Credit template is available in WP35 – Applicant / Capacity Provider Credit Cover available on the Working Practice page in the publication section on the EMRS website.

What banks are qualifying bank that can issue a valid Letter of Credit?

Regulations 53(3) of the Electricity Capacity Regulations 2014, states that a “qualifying bank” means—

–(a) a United Kingdom clearing bank;
–(b) any other bank which has a long term debt rating of—
(i) not less than A– by Standard & Poor’s; or
(ii) not less than A3 by Moody’s

In the definition of “qualifying bank”
–“Moody’s” means the corporation known as Moody’s Investors Service, Inc, incorporated in the US State of Delaware with the file number 0577904;
–“Standard & Poor’s” means the corporation known as Standard & Poor’s Corporation, incorporated in the US State of Delaware with the file number 4621989.

Can I lodge one Letter of Credit or perform one bank transfer for multiple CMUs?

Yes, if possible, please make it clear which CMUs (using the CMU Identifier provided by the Delivery Body) you are intending the payment or Letter of Credit to cover as this will aid us in verifying your Credit Cover.

What happens if I lodge insufficient Credit Cover and I have more than one CMU?

If an Applicant has more than one CMU and lodges insufficient Credit Cover then the Credit Cover for all of the CMUs would be insufficient unless a Applicant has specified otherwise.

For example, if Applicant A must lodge a total of £435,000 to cover their three CMUs. However, if Applicant A lodges only £400,000 the Settlement Body would allocate the £400,000 by weighted proportion and ask for the remaining £35,000.

If the Applicant would like to apply certain funds against one or more CMUs and allow another CMU to have insufficient Credit Cover then the Nominated Contact may put this in writing. Contact information may be found in the Working Practice Document.

Who will receive notification following the validation of Credit Cover?

Following validation of the Applicants Credit Cover the notification will be issued to the following email addresses specified on the Capacity Market Registration Form:

  • Company Primary Email Addresses
  • Credit Cover Contact

If no Credit Cover Contact is specified the Finance Authorities will be included in on the notification.

How do I amend my registration details?

If you need to amend any information held by us, please follow WP31 – Amending EMR Party Details, available on the Working Page of our website. Details such as changes to company name or change of CMU ownership will be driven by updates via the Capacity Market Register maintained by the EMR Delivery Body.

Who can request the release of Credit Cover?

The following Authorised Persons/Contacts would be valid to request the release of Credit Cover once the required update to the Capacity Market Register had been made:

  • Credit Cover Contact
  • Finance Authorities
  • Primary Party Authority

Upon receipt of a request, one of the initial checks would be to ensure the request has been sent from an appropriate Authorised Persons/Contacts. These details are confirmed to us via the Capacity Market Registration Form or subsequent amendment.

The request is as per Regulation 58(2)(a) giving notice in writing to EMRS (on behalf of the Settlement Body, the Electricity Settlements Company).

For further details on the process to request the reduction or release of Credit Cover is detailed within WP35 – Applicant / Capacity Provider Credit Cover Process available on the Working Practice page in the publication section on the EMRS website.

What happens if the Letter of Credit is no longer valid?

Regulation 56 of the Electricity Capacity Regulations 2014, states that where a letter of credit is due to expire on a date before the end of the credit obligation period (“the expiry date”), the Applicant must, not later than 10 working days before the expiry date, provide to the EMRS (on behalf of the Settlement Body, the Electricity Settlements Company):
  • written confirmation from the issuing bank that the letter of credit will be extended by a further period of not less than
    • 6 months;
    • or the remaining duration of the credit obligation period, if less; or
  • provide replacement credit cover
What happens if the bank rating changes and a Letter of Credit is no longer valid?

Regulation 57 of the Electricity Capacity Regulations 2014, states that if the Applicant becomes aware that the bank issuing the letter of credit ceases to be a qualifying bank, then the Applicant must give notice to EMRS (on behalf of the Settlement Body, the Electricity Settlements Company) as soon as it becomes aware.

Once EMRS (on behalf of the Settlement Body, the Electricity Settlements Company) are aware of a downgrade must give notice to the Applicant of this fact. The Applicant must then within 8 days of either sending or receiving the notice (whichever is earlier) provide replacement credit cover to EMRS.