EGL23300 - Generation receipts: receipts that are not generation receipts

When a generating undertaking sells power, it is the revenue received for that power which is to be taken into account, and any element of the revenues which relates to other services or items is to be excluded. The following are particular items that should be excluded:

  • Renewable Obligations Certificates (ROCs)
  • Renewable Energy Guarantees of Origin (REGOs)
  • Ofgem-regulated Feed-in Tariff generation and export tariff payments
  • Capacity Market Payments in those limited instances where a renewable generator is eligible to receive them
  • other payments received in connection with matters other than exported power, such as ancillary services. However, see EGL23100 which explains which payments under the balancing mechanism are to be included as generation receipts. ROCs and REGOs are tradeable certificates issued under Ofgem administered schemes to registered renewable energy producers.

In many instances a generating station that is a certified Feed-in Tariff site will not be a relevant generating station, so its power output and any associated generation receipts will be ignored for the generating undertakings EGL computation. However, if a generating station that is certified as a Feed-in Tariff site has opted to forego the export tariff payments and export its power on commercial terms, then these power exports and the associated revenues will be taken into account for the EGL. Generation tariff payments in such a case will still be excluded from generation receipts.

Part of the Government’s Electricity Market Reform package, the Capacity Market ensures security of electricity supply by providing a payment for reliable sources of capacity, alongside their electricity revenues, to ensure they deliver energy when needed. This encourages investment to replace older power stations and provide backup for more intermittent and inflexible low carbon generation sources. The payments are made in advance of generation and are not treated as receipts for actual generation, so should be excluded when identifying generation receipts for a qualifying period.

“Other payments …” for ancillary services in this context refers to items that may be payable or receivable on a basis that is related to the amount of power generation by an undertaking, but by their nature are not amounts that are directly referrable to the price received for wholesale purchases of power. These may be encountered in relation to charges for, or subsidies received in connection with, the transmission and distribution of power to users. Specific items, whether net positive receipts or charges, that should not be taken into account when calculating attributable generation receipts include (but are not limited to):

  • Transmission Network Use of Service and Distribution Use of Service payments - use of service charges for transmission and distribution networks.
  • Assistance for Areas with High Electricity Distribution Costs (AAHEDC) – which are subsidies payable to distributed generators supplying customers in defined remote areas.