Cowork spending policy: capacity pack policy did not take effect after deleting the PAYG spending policy — users lost access

We are using Microsoft Copilot Cowork with usage-based billing in the Microsoft 365 admin center (Copilot > Cost Management).

Setup:

• We have a Copilot Studio capacity pack (25,000 credits/month).

We originally had a spending policy configured to use the capacity pack. When the pack was exhausted mid-cycle, we created a second spending policy with pay-as-you-go as the billing method so users could continue working.

Problem:

After the capacity pack renewed, all Cowork usage continued to be billed to pay-as-you-go. The Overview tab showed Prepaid capacity pack credits used = 0 and Pay-as-you-go credits used = 726 (MTD). We deleted the pay-as-you-go spending policy, expecting users to fall back to the existing capacity pack policy. Instead, users immediately lost access to Cowork and were still unable to use it after one hour. The capacity pack policy did not appear to apply to them.

Questions:

When a user is covered by two spending policies and the one they are assigned to is deleted, are they automatically reassigned to the remaining applicable policy, or does the policy need to be recreated or re-saved for reassignment to happen? Is there an expected delay? Does the "Users in multiple policies" selection order (highest per-user limit, then largest policy limit, then most recently created) mean that a newer PAYG policy will always override an older capacity pack policy when both cover the same users? On the Billing method page, available capacity pack credits are shown as purchased credits minus credits pre-allocated to environments in the Power Platform admin center. If all pack credits are allocated to an environment there, will a spending policy with billing method = capacity packs show zero available credits and block users? Is deleting and recreating the policy the only supported way to change a policy's billing method, or is there a supported way to change it in place?

Please confirm the correct configuration for Cowork to consume capacity pack credits first, with pay-as-you-go used only for overage.