We are incentivised to minimise the cost of constraint management through the constraint management incentive. Through this incentive, we are exposed to 44% of the costs of constraint management up to a cap (£20m) and collar (£60m) on costs/revenues (both values in 2009/10 prices).
Additionally, sales of non-obligated capacity feed into the incentive as a revenue, as do sales of obligated capacity on the day, sales of interruptible capacity, and shipper overruns. Therefore, we are incentivised to maximise the sales of capacity, but may be exposed to the costs of capacity buybacks if we sell too much.
There is a target cost associated with the incentive each year of £22m (in 2009/10 prices). If we keep constraint management costs below this figure then we will receive a revenue from the incentive whereas if costs are higher than an incentive, a penalty is incurred.