22Definitions

22 Definitions

22 Definitions

In this Part—

basis risk means the risk arising from differences in the variables between LTES agreements and risk management contracts, including price, volume and timing.

fixed shape, fixed volume derivative arrangement means a derivative arrangement in which—

(a) the amount paid by an LTES operator or the scheme financial vehicle on the exercise of an option is the difference between—

(i) the regional reference price in the wholesale electricity market, and

(ii) the fixed price for electricity under the LTES agreement, settled against the delivery of specified amounts of electricity at specified times of day, and

(b) the LTES operator has financial exposure to the wholesale electricity market.

cl 22 (previously cl 16AA): Renumbered 2022 (366), Sch 1[7]. Am 2022 (382), Sch 1[6].