Decision on market coupling and Levy Exemption Certificates, and applicability to other schemes
Decision
Publication date
Scheme name
CCL
There is currently a shift at European level towards greater market coupling and trading of electricity through implicit auctions. This is not addressed in Ofgem's current guidance for the Climate Change Levy (CCL) scheme. In particular, we understand that many stakeholders are keen to understand more about routes for consumption in the UK and what evidence would be required to demonstrate this when this type of trading is used.
Providing such proof is not straightforward under market coupling, as it relies on the implicit allocation of cross-border interconnector capacity by the power exchanges based on price differentials, as opposed to the explicit booking and nomination of interconnector capacity by market participants.
On 24 March 2015 Ofgem published a “Consultation on market coupling and Levy Exemption Certificates (LECs)”, to seek stakeholder views on the matter. The consultation period closed on 19 June 2015 and we have published the decision document below to summarise the responses received and outline our decision. Alongside this decision document, we are also publishing a consultancy report on market coupling and a further consultation document, as the analysis underpinning this decision found other areas which we need more of your input on.