January 10, 2019 / 12:43 PM / 2 months ago

UPDATE 1-UK expects to make retrospective power capacity payments -minister

(Updates throughout with details)

LONDON, Jan 10 (Reuters) - Britain expects to make retrospective payments to companies under its power capacity market scheme, Minister of State for Energy and Clean Growth Claire Perry said in a letter published on Thursday.

The EU General Court ruled last November that Britain must halt payments under the scheme, worth billions of pounds, pending an investigation by European Union regulators.

Perry said Britain expects the European Commission inquiry to rule in favour of reinstating the scheme, with an opening decision expected in early 2019 and final decision later in the year.

“We would expect to make deferred payments to those capacity agreement holders who have continued to meet their obligations during the standstill period,” she said in a letter to the Business, Energy and Industrial Strategy (BEIS) Committee.

Britain began power capacity auctions in 2014, offering to pay providers for making supplies available at short notice, thus avoiding shortages that might occur as coal plants close and low prices dissuade investors from building new power plants.

However, British company Tempus Energy launched an appeal against the capacity market, saying it discriminated against technology designed to cut electricity demand during peak times.

Last year’s General Court ruling annulled an initial decision by the European Commission, which had said Britain’s so-called power capacity market was compatible with EU state aid rules.

Britain’s National Grid said it does not expect the scheme’s suspension would lead to any power shortages this winter.

Several power companies such as SSE, Centrica , Drax and EDF have all been awarded capacity market contracts.

Reporting by Susanna Twidale; editing by Jason Neely and Kirsten Donovan

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