Cap And Floor Regime

As part of our ipa decisions we placed a number of conditions on projects.

Cap and floor regime. The consultation also outlines our proposed methodology for setting the cap and floor on returns which is informed by proposals from cepa 6 we propose to set the. The regulator says all three could deliver significant benefits to uk consumers primarily by providing access to lower electricity prices. Ofgem has made a final decision on a series of variations to the cap and floor regime requested by the developers of the greenlink and. It is expected to be operational in 2019.

Ofgem has decided to change aspects of the electricity interconnector cap and floor regime for the greenlink and neuconnect interconnector projects to enable project finance solutions. In august 2014 we confirmed our cap and floor regime for electricity interconnectors and opened our first application window window 1. An interest rate cap is a derivative in which the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price an example of a cap would be an agreement to receive a payment for each month the libor rate exceeds 2 5. The regime also includes a symmetric financial availability incentive linked to the cap.

Any additional monies ics require to meet the floor will come from customers via tnuos and excess revenue over the cap will also be paid via tnuos with the. The cap and floor regime is the regulated route to develop electricity interconnectors in gb. Nemo link was the pilot cap and floor project and we developed the regime with the belgian energy regulator creg. The interconnector cap and floor regime was brought in to limit the monies that interconnectors ics can make by establishing a cap and limit any losses by placing a floor.

Nemo link s cap and floor regime applies to the whole interconnector and is split 50 50 between gb and belgium. Against these cap and floor values to determine whether the cap or floor is triggered. Cap and floor regime in 2014. Our analysis indicates that all three projects are likely to generate significant net benefits for gb consumers the cap and floor regime places minimum and maximum limits on the revenues.

Tweaks to cap and floor regime for interconnectors. This is a relatively new regime we decided to roll out the cap and floor regulatory regime to new near term electricity interconnectors in may 2014 through the cap and floor approach developers identify propose and build interconnectors and there is a cap and floor mechanism to regulate how much money a developer can earn once in operation. This follows a october 2019 consultation in which ofgem outlined its minded to position on changes requested by the two projects developers. The first cap and floor application window was.