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UPDATED: Companies face higher trading costs as credit-setting price rises – but further hike on 7 January now eased until 25 January

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UPDATE 5 January: The BSC Credit Committee has decided to cancel an expected increase in the Credit Assessment Price (CAP) that would have seen it rise to £380/MWh on 7 January. Instead, the committee has decided to retain the current CAP of £305/MWh and has proposed a new CAP value of £340/MWh fromn 25 January. The next scheduled Credit Committee meeting is on 11 January, so the CAP of £340/MWh will be in place at a minumum from 25 January to 27 January. The Committee is consulting on its decision until 17:00 on Friday 7 January and responses can be made on the committee’s website here.

UPDATE: Further to the CAP increase noted below, the BSC’s Credit Committee has proposed a further rise in January. After a meeting on 16 December the Credit Committee that the CAP value increase to £380/MWh on 7 January 2022. Companies have to respond to the consultation by 17:00 on Monday 20 December.The minimum period this CAP value will be live is 7-17 January 2022 as the CAP is reviewed every two weeks.

30 November:
Energy companies may be hit for requests to provide more credit cover and collateral, as the Balancing and Settlement Code’s (BSC’s) Credit Committee is consulting on whether to go forward with a huge rise in the Credit Assessment Price (CAP) from £230/MWh to £305/MWh in December. The CAP is likely to go still higher just two weeks later.
When the CAP rises it may affect the amount of credit cover that suppliers and generators have to lodge. For some BSC Parties this may mean additional collateral is requiredd. The CAP is now reviewed every two weeks to keep pace with volatile market movements, and the latest reassessment has arisen before the £230MWh price takes effect on 3 December.
The proposed CAP will be live between 17 December and 30 December 2021 ‘at a minimum’. The Credit Committee said the CAP could increase still further at the end of that period: it said that when it met, average forecast market prices were at £305/MWh for December, with latest peak prices at £350/MWh and base prices at £260/MWh. But it warned that average forecast market prices were increasing to £375/MWh in January, suggesting the CAP would rise in accordance.
Consultation over the 17-30 December CAP will close in just two days, on 2 December.