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European Court Blocks U.K. Capacity Market

November 16,2018

The Court of Justice of the European Union has blocked the U.K.'s capacity market construct

The Court found that the European Commission (essentially an EU regulator) erred when it raised no objections to the U.K.'s capacity market construct and did not initiate a further investigation of the market

The Court found that the Commission erred in not further investigating, in particular, arguments that demand response would be unduly disadvantaged under the market design

While the decision is obviously based on EU law, what we find notable is the EU Court's discerning description of the U.K. capacity market, stripping away euphemisms and calling the market what it truly is: "state aid"

In other words, a subsidy. A revenue stream that would not exist in the competitive market, but for state (or in the U.S., federal regulator) intervention

While this is hardly a piercing insight, we do compare this unambiguous label of the capacity market as a subsidy with how so-called market advocates -- and market operators -- describe domestic capacity constructs, which generally have the same purpose and design as the U.K. market -- they're somehow markets, not subsidies

And somehow these capacity construct subsidies, that aren't the result of any elected representatives, are superior to other subsidies in the market -- those which require action to protect the "integrity" of the market.

See the EU Court's decision here

Capacity Market   U.K.  

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