1. CMC_04_19 Finalisation of Exchange Rate in Auction Information Pack
30/01/2019

2. Background & Proposal
This modification looks to address the mismatch between the Sterling Auction Price Cap finalised in the Initial Auction Information Pack and the Sterling Auction Price Cap that should be available as per the updated exchange rate.
Method;
indicative values in the Initial Auction Information Pack for parameters that are in Euro and Sterling, and
finalising the values in the Final Auction Information Pack for parameters that are in Euro and Sterling.
Example of issue:
Auction Parameter
IAIP
FAIP
FAIP Modified
Auction Price Cap (€/MW per year)
123,190.00
Auction Price Cap (£/MW per year)
110,710.85
111,807.24
Existing Capacity Price Cap (€/MW per year)
41,060.00
Existing Capacity Price Cap (£/MW per year)
36,900.62
37,266.06
Annual Capacity Payment Exchange Rate (£/€)
0.8987
0.9076

3. Relevant CRM SEMC Decisions
CRM 1 Decision (SEM )
The SEM Committee has decided that the exchange rate for option fees should be fixed at the time providers submit their bids to the capacity auction.
CRM CMC Decision (SEM )
4.2.4: If the exchange rate for the Price Caps is not fixed until the Final Auction Information Pack is issued, the situation arises that the caps applied to CMUs in Northern Ireland will have changed after the opportunity to apply for a Unit Specific Price Cap or to Opt-Out has passed…This is against the general principle of equality of treatment of Participants in the two jurisdictions.
4.2.5: CMUs in both jurisdictions can apply for a USPC knowing that the approved value will be the one used to cap their offers into the Capacity Auction.
Current Decision v Proposed Modification
Current Rules
Discrimination between all NI and ROI CMUs
Proposed Modification
Discrimination between NI USPC applicants and NI non USPC applicants.
No discrimination if USPC finalised with FAIP.
CRM qualification (USPC) should be updated with FAIP exchange rate.

4. Legal Drafting Change
D The Initial Auction Information Pack for a Capacity Auction shall set out:
(a)….
(f) the final indicative Auction Price Cap to be used in the Capacity Auction (in Euro and Sterling);
(g) the final indicative Existing Capacity Price Cap to be used in the Capacity Auction (in Euro and Sterling);
After review, this part of the modification is not required;
(k) in respect of Performance Securities:
(i) the final indicative Performance Security Posting Dates/ Events applicable to Awarded Capacity allocated in the Capacity Auction; and
(ii) for each Performance Security Posting Date/ Event, the final indicative €/MW rate to be applied in setting Performance Securities applicable to Awarded Capacity allocated in the Capacity Auction;
(l) the final indicative €/MW fee rates for calculating Termination Charges
After review this modification is not required, we would want to remove the below proposed section
(k) in respect of Performance Securities:
(i) the final indicative Performance Security Posting Dates/ Events applicable to Awarded Capacity allocated in the Capacity Auction; and
(ii) for each Performance Security Posting Date/ Event, the final indicative €/MW rate to be applied in setting Performance Securities applicable to Awarded Capacity allocated in the Capacity Auction;
(l) the final indicative €/MW fee rates for calculating Termination Charges

5. Justification Justification: Code Objectives:
The current rules require the Initial Auction Information Pack to finalise a number of parameters that are Euro and Sterling, however, the exchange rate is not finalised until the Final Auction Information Pack.
The finalisation of the Auction Price Cap and Existing Capacity Price Cap, but not the exchange rate, in the Initial Auction Information Pack can result in a different price caps for Capacity Market Units (CMUs) in Northern Ireland compared to Ireland.
This modification is looking to address the potential discriminatory treatment between NI and ROI Capacity Market participants.
Code Objectives:
(f) to ensure no undue discrimination between persons who are or may seek to become parties to the Capacity Market Code; and
Implications of not implementing:
If this proposal is not implemented it fails to provide a level playing field for all participants in the Capacity Auctions.