Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment he has made of the effect of current charging arrangements on the ability of gas plants which already possesses capacity contracts to bid into the early capacity auction on 31 January 2017.

Ofgem’s review of network charges for smaller generators (so called ‘embedded benefits’) was prompted by concerns that current arrangements may over-reward smaller generators at the expense of the end consumer and may distort competition, including within Capacity Market auctions.

The timing of the review is a matter for Ofgem as independent regulator. Ofgem has said that it will undertake a further consultation and impact assessment in early 2017, with a final decision later in the year.

Ofgem published an open letter in December 2016 which confirmed that none of the proposed modifications would alter charges for 2017/18, the delivery year of the early Capacity Market auction, and outlined a level of embedded benefits in future years that it would be prudent for participants in the Capacity Market auctions to assume.

Departmental officials will work with Ofgem as part of its assessment process to ensure that key Government policy interests are taken into account, including aspects such as the potential impacts on security of supply.