December 7, 2018 / 2:14 PM / 9 days ago

Britain confident of EU decision on power capacity market by October 2019

LONDON (Reuters) - Britain has asked the European Commission to conclude its inquiry into its power capacity market mechanism in time for the government to resume payments to power suppliers in October, a senior official said on Friday.

FILE PHOTO: Electricity pylons are seen in London, Britain August 1, 2017. REUTERS/Neil Hall/File Photo

The Commission is looking into the mechanism, which pays utilities to make electricity available at short notice, after a European court ruling halted the scheme and payments.

This halt of payments raised questions about the security of supply especially during the winter months should utilities such as Centrica (CNA.L), SSE (SSE.L) and Drax (DRX.L), which won contracts under the scheme, fail to deliver.

“We’d like that (the Commision process) to be concluded ahead of the start of the delivery year in October,” said Dan Monzani, Director of Energy Security at the Ministry for Business, Energy and Industrial Strategy (BEIS).

“Resumption of payments before the next delivery year would be a useful thing,” he told investors on a call, adding that the timing ultimately rested with the EU Commission.

The government says power volumes expected under the scheme will be supplied because payments to utilities have only been suspended subject to the EU’s ruling.

The government has also said the ruling queried the Commission’s procedure in approving Britain’s scheme rather than the mechanism itself.

“I’m pretty optimistic. It’s something a number of other countries have done with very similar schemes approved by the Commission. We therefore believe we have a very strong case.”

Monzani said communication with the European Commission were not hurt by the Brexit turmoil as Britain seeks to leave the EU with a future agreement on ties in place by March 2019.

In the event of a so-called hard Brexit, where Britain snaps its EU ties without further agreements, British legislation concerning state aid - under which capacity auctions take place - comes into law, he said.

He said a so-called T-1 top-auction for supplies next winter should go ahead in the summer as planned but with technical changes made to the terms to make clear the sale was conditional on the Commission’s approval of the auction mechanism.

Reporting by Sabina Zawadzki; Editing by Elaine Hardcastle

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