The price starts at the Auction Price Cap (as set out in the Auction Guidelines).
The price is reduced in each round by a set decrement.
Bidders submit Exit Bids to retract a CMU from the Auction at a particular price.
An Exit Bid is the minimum price at which a Bidder would accept a Capacity Agreement.
As the price descends and exit bids are submitted, the total remaining capacity decreases with price.
The Auction ends when a price is reached at which the total remaining capacity is equal to the capacity demanded, the "Clearing Price".
Successful CMUs (those that have not submitted Exit Bids above the clearing price) all receive a Capacity Agreement at the Clearing Price.
The Auction is managed by National Grid and conducted via a web-based Auction System.
CMUs that are Price Makers are free to submit Exit Bids at any price less than the Auction Price Cap.
If the price falls below a particular level, a Bidder may wish to decrease the duration to one year, or in the case of a Refurbishing CMU, choose not to continue with the Refurbishing component of the CMU. A bidder can achieve these aims by submitting 'Duration Bid Ammendments' via the Auction System.
The Capacity Market Rules provide for an alternative arrangement, "Variable Price Duration" Auctions, where the price received is a function of the delivery year. The 2015 Auction will not be a "Variable Price Duration" Auction.
Government may choose to make the Provisional Results public on the morning following the Auction closing.
Within 2 Working Days of the Capacity Auction closing, the Auction Monitor must report to the Secretary of State on whether the procedures in the Rules and Auction Guidelines have been properly followed in the conduct of the Capacity Auction.
Within 8 Working Days of the Capacity Auction closing, unless instructed otherwise by the Secretary of State, National Grid will make public the Final Auction Results.
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