One of the more common questions that generators and funders have around the new Contract for Difference – the 400-page behemoth that governs the new subsidy regime for large-scale renewables – is: what scope do we have to change the bits of the contract we don't like?
DECC only introduced the concept of amendment to the standard terms late on in the consultation process, and the new draft statutory instrument published on 23 June, The Contracts for Difference (Standard Terms) Regulations 2014, puts more meat on the bone.
The Regulations provide as follows:
- An applicant may apply to the CfD Counterparty for a modification to the standard terms after an allocation round notice has been published, and no later than 20 working days before the application closing date specified in the allocation round notice
- The applicant must provide an explanation as to how the effect of the modification is minor and why it is necessary (the implication being that only minor modifications are encouraged!)
- The CfD Counterparty is directed to consider that an application is not minor in certain circumstances, e.g. where it changes the period during which payments may be made under the CfD, or the circumstances that may trigger a requirement for collateral
- The CfD Counterparty may determine that a modification is necessary where, in its opinion, an applicant acting reasonably could not accept the offer of a CfD without it
Under the Regulations, an offer of a CfD is made by the CfD Counterparty signing two copies of a CfD and sending both copies to an eligible generator. A copy signed by the generator must be returned to the CfD Counterparty within 10 working days, failing which the offer lapses.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
