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This report was commissioned by the UK Department of Trade and Industry (DTI)—now the Department for Business, Enterprise and Regulatory Reform (BERR)—as part of a broad consultation initiative, the result of which was a white paper published in February 2003, “Our Energy Future: Creating a Low Carbon Economy.” The paper outlines a strategic, long-term vision for energy policy incorporating the BERR’s environmental, security of supply, competitive, and social goals. It builds on the Performance and Innovation Unit’s February 2002 Energy Review and on reports such as NERA’s, which have looked at major areas of energy policy.

This report was commissioned as a follow-up to NERA’s earlier report, “Security in the Gas and Electricity Markets: Final Report for the Department of Trade and Industry.” Several deregulated electricity generation markets have obliged retailers to show that they have sufficient capacity to serve their load, as a part of the market framework. This paper examines these capacity obligations from theoretical, practical, and empirical perspectives.