Question

To ask the Secretary of State for Energy and Climate Change, what estimate his Department has made of the additional cost to electricity suppliers in the capacity market of carrying the liability for meeting the payments of a defaulting participant.

The Department has not made an estimate of the additional cost to suppliers of carrying the liability in the event of one participant defaulting. In the first instance each supplier is required to post credit cover which will be used to cover a missed payment. In the unlikely event a defaulted payment is mutualised across other suppliers, the actual amount would depend on the overall cost of the capacity market payments in that year, and the share of these costs due to be paid by the defaulting supplier. Electricity suppliers have been consulted on these arrangements.