by Trevor Loveday
UK plans for a system to reward electricity generation capacity for being available as backup could be anticompetitive and breach European Union laws.
A European Commission report slated for publication after Utility Week went to press was due to warn that capacity mechanisms could distort competition, according to a source close to the Commission. That warning could affect UK government plans for a capacity mechanism as part of its Electricity Market Reform package.
The Commission was to flag the issue in a review of the long-overdue EU internal energy market. It is committed to having a single energy market in place by 2014.
The report was expected to say ill-designed capacity mechanisms that were not co-ordinated across the bloc could create bottlenecks in trading at national borders.
The Commission was expected to counsel against national government intervention to set up capacity mechanisms, urging EU member states to look instead to cross-border links.
This article first appeared in Utility Week’s print edition of 16th November 2012.
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