In the meantime, at the request of the UK Government, National Grid and Electricity Settlements Company continue to operate the Capacity Market programme to ensure that capacity providers can benefit from deferred payments after the standstill period (subject to State aid authorisation). Additional steps are being taken to verify the continuity of billing agreements for suppliers. The capacity market must ensure that sufficiently reliable capacity is available by providing payments to encourage investment in new capacity or to keep existing capacity open. EMRS manages the payment mechanism. The capacity market has also been developed to support the development of more active demand management in the electricity market. Smaller operators are faced with a slightly different calculation. They may have expected capacity payments to repay creditors and are therefore facing cash flow problems. The government says it is: update of target capacity for capacity auction The lower amounts paid so far under the main capacity market program are technically illegal and could be recovered. The government says it is “currently taking no steps to recover payments and hopes this can be avoided.” If the UK left the EU without a deal, it would technically no longer be subject to EU state aid rules or EU decisions. Nevertheless, according to Yule-Bennett, the UK Competition and Market Authority, which in this scenario would be responsible for any future capacity market, would likely have to take EU case law into account in its decisions. However, according to the draft withdrawal agreement between the UK and the EU, EU state aid rules would remain in force for a transitional period until 2021 or 2022. Meanwhile, the draft political declaration on the future relationship between the UK and the EU also states that the UK would maintain a “level playing field” on state aid.
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