Question

To ask Her Majesty’s Government, in the rules governing capacity market auctions, what measures have been included to guard against undue market dominance by any of the companies bidding in the capacity market mechanism; and whether OFGEM has a role in overseeing fair competition in the mechanism.

The Capacity Market has been designed to mitigate the risks of gaming. We commissioned expert external advice from Charles River Associates on this issue and implemented the recommendations contained within that report which is available on the DECC website:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/252746/CRA_Report_on_the_Capacity_Market_Gaming_Risks.pdf.

Anti-gaming measures include having in place an auction monitor who will ensure that the rules are properly followed by all participants during the auction. If the auction monitor were to find any irregularities, the Secretary of State ultimately has the ability to annul the auction after it has taken place.

Ofgem has the power to investigate any company bidding into the auction should they consider this necessary.