Consultation on amending the methodology for setting the Contracts for Difference (CfD) cap allowance

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This policy consultation sets out our proposal on how to amend the Contracts for Difference (CfD) price cap allowance methodology to better reflect the costs faced by suppliers in all instances.

We are proposing to replace the interim levy rate used in the current methodology with an expected levy payment that can be negative. We consider that it betters balances simplicity of implementation with ensuring customers pay a price that more accurately reflects supplier costs/benefits. We are also proposing that this is based on the latest available forecast at the time the cap is set. 

We are requesting responses by 17 May 2022 and responses to this consultation can be submitted to Ofgem by emailing retailpriceregulation@ofgem.gov.uk.

Respond name

Leonardo Costa

Respond telephone

[020 7901 7000](tel: 020 7901 7000)

Respond email

retailpriceregulation@ofgem.gov.uk

Main document

[Consultation on amending the methodology for setting the Contracts for Difference (CfD) cap allowance [PDF, 279.21KB]

](https://www.ofgem.gov.uk/sites/default/files/2022-04/Contracts%20for%20Difference%20Consultation_0.pdf)

Subsidiary documents

[Annex 4 - Policy cost allowance methodology v1.11 [XLSX, 423.37KB]

](https://www.ofgem.gov.uk/sites/default/files/2022-04/Annex%204%20%20Policy%20cost%20allowance%20methodology%20v1.11.xlsx)

Response documents

[CfD April consultation - EDF response [PDF, 116.41KB]

](https://www.ofgem.gov.uk/sites/default/files/2022-06/CfD%20April%20consultation%20-%20EDF%20response.pdf)

[CfD April consultation - Octopus response [PDF, 208.69KB]

](https://www.ofgem.gov.uk/sites/default/files/2022-06/CfD%20April%20consultation%20-%20Octopus%20response.pdf)

[CfD April consultation - ScottishPower response [PDF, 241.80KB]

](https://www.ofgem.gov.uk/sites/default/files/2022-06/CfD%20April%20consultation%20-%20ScottishPower%20response.pdf)

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