The Energy Bill Relief Scheme Regulations 2022

• (b) the quantity of electricity supplied in any period which, having been stored, was grid-delivered (together with a corresponding proportion of the electricity used or lost in storage),

is an “ineligible quantity” for the purposes of the scheme.

• (2) Where this Chapter applies in respect of a supply contract—

• (a) the supplier must as soon as practicable after receiving the customer’s declaration under regulation 43(1)(b) give notice to the customer of each periodic declaration date and the declaration period for each such date;

• (b) the customer must, as soon as practicable and in any event within 14 days after each periodic declaration date, determine and send to the supplier a declaration of the quantity of electricity or gas supplied in the relevant declaration period which is an ineligible quantity;

• (c) the supplier must, on the basis of the ineligible quantity declared in each such declaration—

• (i) determine the amount of the supply quantity for the declaration period to which the discounted supply price is to apply;

• (ii) determine or redetermine its charges for energy supplied in the declaration period accordingly.

• (3) The contract parties may agree a basis on which—

• (a) an estimate of the ineligible quantity will be used in determining charges for a billing period before the steps in paragraph (2) are completed; and

• (b) a subsequent reconciliation will be performed when those steps are completed.

Rules in relation to this Chapter

45

The Secretary of State may make rules about—

• (a) the kinds of arrangements which fall or do not fall, or factors which indicate whether arrangements fall or do not fall, within regulation 42(1)(b);

• (b) the circumstances in which, by virtue of regulation 42(2), this Chapter does not apply;

• (c) the basis on which it is to be determined what part of the quantity of gas or electricity supplied is an ineligible quantity;

• (d) the basis on which a proportion (corresponding to the grid-delivered quantity) of electricity used or lost in storage is to be determined;

• (e) the form and content of a declaration to be made by the customer.

CHAPTER 3 — Abuse of scheme

Interpretation of this Chapter

46

In this Chapter—

• (a) “abusive arrangement” means an arrangement of the kind described in regulation 47(1);

• (b) “benefit of the scheme” means the amount by which the charges to a customer for energy supplied under a supply contract are reduced under the scheme;

• (c) the “declaration date”, in relation to an abusive arrangement, is—

• (i) the date on which the abusive arrangement is made, or

• (ii) if the abusive arrangement was made before the scheme introduction date, the scheme introduction date;

• (d) in relation to an abusive arrangement, “relevant party” means—

• (i) the supplier, if it is party to the abusive arrangement;

• (ii) otherwise, the customer.

Application of this Chapter and declaration of abusive arrangement

47

• (1) This Chapter applies in respect of a supply contract if either the customer or the supplier or each of them is party to an arrangement the purpose or main purpose of which is to achieve an increase in the benefit of the scheme (an “abusive arrangement”).

• (2) Where this Chapter applies in relation to a supply contract, each contract party which is party to the abusive arrangement must, as soon as practicable and in any event within 21 days after the declaration date, send to the other contract party a declaration to that effect.

Reduction of discount

48

If in relation to a supply contract either the customer or the supplier is party to an abusive arrangement—

• (a) the base discount is to be reduced by such amount as will ensure that the benefit of the scheme is not increased by that arrangement;

• (b) the relevant party must promptly and as frequently as is required to give effect to this regulation—

• (i) determine the reduction in the discount required under paragraph (a);

• (ii) give notice of that reduction to the other contract party;

• (c) the supplier must—

• (i) reduce the base discount by the amount determined under paragraph (a);

• (ii) determine or redetermine its charges for energy supplied accordingly.

Rules in relation to this Chapter

49

The Secretary of State may make rules about—

• (a) the kinds of arrangements which are or are not, or factors which indicate whether arrangements are or are not, abusive arrangements;

• (b) the determination of the amount by which the benefit of the scheme is increased by an abusive arrangement;

• (c) how the discount is to be reduced to ensure such increase is not achieved.

PART 5 — Qualifying financially disadvantaged customers

Interpretation of this Chapter

50

In this Part—

• “qualifying amount” means any amount payable by a customer to a supplier under a supply contract, that is not an amount payable in respect of value added tax or climate change levy;

• “qualifying supply” means energy that a supplier supplies to a qualifying financially disadvantaged customer under a variable price contract during— the period beginning 15 days after the scheme introduction date and ending on 31st March 2023, or if the customer is a QFDC of the supplier only for a part of that period, that part of that period;

• “required reductions” has the meaning given in regulation 52(1);

• “required reductions rules” means rules made under regulation 52.

Qualifying financially disadvantaged customers

51

• (1) Subject to paragraph (2), for the purposes of this Part, a customer that was a customer of a supplier on the scheme commencement date is a “qualifying financially disadvantaged customer” or “QFDC” of the supplier if, and for so long, during the scheme period, as—

• (a) it continues to be a customer of the supplier on and after the scheme introduction date, and

• (b) the supplier supplies it with energy under a deemed contract or an out-of-contract contract.

• (2) A customer is not a QFDC for the purposes of this Part if, and for so long, during the scheme period, as—

• (a) any qualifying amount due and payable by it under its supply contract has been unpaid for more than 28 days after it became payable, and

• (b) in respect of that amount—

• (i) the customer has not proposed or accepted a plan for payment, or

• (ii) such a plan has been agreed, but the customer has failed to make two or more payments when they fell due under the plan.

Rules in relation to this Part

52

• (1) The Secretary of State must, no later than 14 days after the scheme introduction date, make rules (“required reductions rules”) about further reductions that suppliers are to apply under regulation 53(1)(b), in addition to any discount applied under regulation 19(1)(b), to the qualifying amounts payable by QFDCs (“required reductions”).

• (2) The purpose of the required reductions rules is to mitigate the financial disadvantage otherwise experienced by QFDCs in obtaining an affordable supply of energy.

• (3) The required reductions rules—

• (a) must specify—

• (i) the required reductions, or

• (ii) a methodology for determining them, and

• (b) must provide for required reductions to be specified or determined—

• (i) by reference to qualifying amounts, and

• (ii) in p/kWh, in pounds, or as a percentage.

• (4) The required reductions rules may provide—

• (a) that where specified conditions are satisfied, the amount of a required reduction is reduced (or that no required reduction is applicable);

• (b) that required reductions are to be different in different cases, as specified in or determined under the rules;

• (c) for the Secretary of State or suppliers to publish required reductions.

Reduction in qualifying amounts payable by qualifying financially disadvantaged customers

53

• (1) A supplier must, in respect of any billing period in which it makes a qualifying supply—

• (a) identify which of its customers are QFDCs for some or all of that period;

• (b) for as much of the billing period as a QFDC is a QFDC, apply the required reductions, as specified in or determined under the required reductions rules, to the qualifying amounts payable by it in respect of its qualifying supply;

• (c) inform each QFDC in respect of whose qualifying supply it has applied the required reductions of the amount of such reductions, or the basis on which they can be determined, either in, or within 15 days of issuing, an invoice or other statement account in respect of that period.

• (2) If a supplier issues an invoice or statement of account to a QFDC in respect of any billing period in which it makes a qualifying supply without having applied the required reductions in accordance with paragraph (1)(b), it must as soon as practicable—

• (a) revise the invoice or statement or issue a credit note to reflect the required reductions, and

• (b) if the customer pays any amount in respect of such invoice or statement, it must credit to the customer’s account the amount by which such payment exceeds what was payable on the basis of the required reductions, or at the customer’s request reimburse such amount to the customer.

Terms of supply to qualifying financially disadvantaged customers

54

If a supplier changes the terms on which it provides a qualifying supply, the terms applicable to that qualifying supply immediately after that change must not be less favourable to the QFDC than those applicable to it immediately before the change.

PART 6 — Further provisions

CHAPTER 1 — Duties of suppliers in connection with the scheme

Increases in charges and other changes in relation to supply contracts

55

• (1) A supplier must not, in respect of energy supplied under a supply contract, unreasonably—

• (a) increase the rates at which it charges qualifying amounts,

• (b) expose a customer to any additional risk, or

• (c) change—

• (i) the terms of the supply contract;

• (ii) the terms on which the supplier offers to enter into supply contracts;

• (iii) the process by which prices or charges payable under supply contracts are set;

• (iv) the way in which the supplier exercises its rights under its supply contracts,

so that any of them are less favourable to the customer.

• (2) For the purposes of determining whether a supplier has behaved unreasonably in doing any of the things referred to in paragraph (1)(a) to (c)—

• (a) a supplier’s conduct is, in particular, unreasonable if, and to the extent that, the conduct, or the supplier’s ability to retain the customer as a customer while engaging in it, is facilitated by the existence or operation of the scheme;

• (b) it is, in particular, reasonable for a supplier to increase its charges—

• (i) to its customers collectively, by an amount that in aggregate does not exceed the efficiently incurred costs of complying with these Regulations;

• (ii) to any customer, by an amount that does not exceed its fair and reasonable share of such efficiently incurred costs (but this does not entitle a supplier to increase the qualifying amounts payable by a QFDC above the levels resulting from the application of regulation 53(1)(b)).

CHAPTER 2 — Deemed terms of supply contracts

Deemed terms of supply contracts

56

• (1) Subject to paragraphs (3) and (4), terms to the following effect are implied into a supply contract—

• (a) that in respect of energy supplied under the contract during the scheme period, the supply price is reduced by the discount as required under Part 2 and Part 4;

• (b) if the customer is a qualifying financially disadvantaged customer, that the qualifying amounts payable by it are reduced as required under regulation 53(1)(b);

• (c) that where the application of the Regulations changes the discount or a quantity of energy to which the discount applies, the rights and obligations of the supplier and customer in respect of payment for energy supplied are determined, or as necessary redetermined, so as to reflect such change in discount or quantity;

• (d) that no term of the contract, and no act or omission on the part of the customer, is to be construed as entitling the supplier to require the customer, at any time or in any circumstances—

• (i) to pay a greater amount than the supplier would have been entitled to require it to pay if acting in accordance with the Regulations, or

• (ii) to be otherwise subject to terms that it would not have been lawful under the Regulations for the supplier to have included in a supply contract,

in respect of any energy supplied by the supplier in the scheme period;

• (e) that nothing done by the supplier or the customer in order to comply with these Regulations or rules made under them, or in following guidance issued by the Secretary of State in relation to the scheme, is a breach of any provision of the contract;

• (f) that none of: the coming into force of the Act, the making of these Regulations or rules under them, or the issuing of guidance by the Secretary of State in relation to the scheme, is—

• (i) a change in the law for the purposes of any provision (however expressed) of the contract which permits the supplier to increase its prices or charges or take any other action in consequence of a change in the law;

• (ii) an event or circumstance which under any provision of the contract (however expressed) excuses the supplier or the customer from performance of its obligations, or from liability for failure to perform its obligations, under the contract.

• (2) In paragraph (1)(b), the reference to—

• (a) the application of the Regulations includes the making or revision of any determination or other decision under the Regulations;

• (b) a change includes a change applying in respect of energy already supplied to the customer;

• (c) rights and obligations include rights and obligations for adjustment of charges already made or paid.

• (3) Paragraph (1) does not apply to an excluded fixed price contract or a supply contract for which an opt-out notice has been given, and has not been withdrawn, under regulation 4(4).

• (4) None of the terms listed in paragraph (1) is to be construed as preventing a supplier from increasing its charges to a customer in order to recover the costs of complying with Parts 2 and 3 if and to the extent it is permitted to do so under the terms of its supply contract, its electricity supply licence or gas supply licence, and regulation 55(2)(b).

CHAPTER 3 — Reporting, information requests and audit

Regular reporting by suppliers

57

• (1) The Secretary of State may by notice require suppliers to provide to the Secretary of State at specified intervals a report about the operation of the scheme as respects the supplier and its customers.

• (2) The notice shall specify—

• (a) the matters which are to be included in the report;

• (b) the dates when the report is to be provided.

• (3) The Secretary of State may by further notice modify, revoke or replace a notice given under paragraph (1).

• (4) A supplier must provide reports as required by the notice.

Information requests

58

• (1) Where the Secretary of State considers it necessary or expedient to do so for any of the purposes set out in regulation 60, the Secretary of State may give notice to any supplier or any customer requiring it, by a time specified in the notice—

• (a) to produce to the Secretary of State or a person nominated by the Secretary of State any document specified, or of a description specified, in the notice that is held by that supplier or customer, or

• (b) to provide to the Secretary of State or a person nominated by the Secretary of State, such information as may be specified or described in the notice.

• (2) No person is to be compelled under this regulation to produce any document which they could not be compelled to produce in civil proceedings in the court or to provide any information which they could not be compelled to give in evidence in any such proceedings.

Audit

59

• (1) Where the Secretary of State considers it appropriate to do so for the purposes set out in regulation 60(a), (b) or (c), the Secretary of State may by notice to a supplier require that an audit of the books, records, systems, processes and methodologies of the supplier is performed by a suitably qualified person (the “auditor”) appointed by the Secretary of State.

• (2) Where the Secretary of State requires an audit to be performed under paragraph (1)—

• (a) the supplier shall procure for the auditor access to its personnel, books, records, systems, processes and methodologies sufficient for performance of the audit;

• (b) the audit shall be performed so far as practicable without causing disruption to the supplier in carrying on its business;

• (c) the costs of the auditor are to be borne by the Secretary of State.

Purposes for which powers under this Chapter may be exercised

60

The purposes are—

• (a) ascertaining whether any provision of the Regulations is being complied with;

• (b) ascertaining whether pursuant to any provision of Part 3 or Part 4, any significant amount—

• (i) is payable to, or

• (ii) upon that provision being complied with, would become payable to, or would not be payable by,

the Secretary of State;

• (c) otherwise ensuring the proper accounting for, tracing or control of public money in discount recovery;

• (d) obtaining information in connection with any review, including a review under section 9(5) of the Act, by the Secretary of State of the operation and effects of the scheme;

• (e) otherwise obtaining information in connection with the exercise of any of the functions of the Secretary of State in or under these Regulations.

Application of data protection legislation

61

• (1) Nothing in these Regulations authorises or requires a disclosure of information if the disclosure would contravene the data protection legislation, as defined in section 3 of the Data Protection Act 2018¹⁷.

• (2) In determining whether a disclosure would contravene that legislation, the powers conferred and duties imposed by regulations 57 to 59 are to be taken into account.

CHAPTER 4 — Certain determinations made under the Regulations

Interpretation of this Chapter

62

• (1) In this Chapter—

• (a) “applicant” in relation to a review request, means the supplier or, under regulation 65(1), customer making the request;

• (b) reference to a “determination” includes a redetermination;

• (c) “Part 2 or Part 4 matter” means any matter which is to be determined or declared in relation to a supply contract by a supplier or customer under Part 2 or Part 4;

• (d) “Part 3 decision” means a decision by the Secretary of State—

• (i) under regulation 27, to withhold payment to a supplier of any amount in respect of a recovery claim amount;

• (ii) under regulation 28, as to the release of an amount withheld under regulation 27;

• (iii) under regulation 29, as to the reconciliation cut-off date in relation to any supplier;

• (iv) under regulation 31(1), to decline to make payment (in whole or part) in respect of a discount recovery claim on the grounds of invalidity;

• (v) under regulation 31(2), to adjust the amount of a discount recovery claim;

• (vi) under regulation 31(3), to give a notice that is to be treated as a discount recovery claim;

• (e) “other party” in relation to a review request under regulation 65(1), means the contract party which is not the applicant;

• (f) “reconsidered decision” has the meaning given in regulation 65(4)(c)(i);

• (g) “relevant decision” in relation to a review request, means the determination or decision in respect of which the request is made;

• (h) a “review request” is a request made to the Secretary of State under regulation 65(1) or (2).

• (2) For the purposes of this Chapter a referral under regulation 63 or a review request does not meet the applicable threshold if—

• (a) it is vexatious or frivolous,

• (b) the financial consequences for the applicant or (where applicable) the other party of a determination under regulation 63(3) or a reconsidered decision would not be material, or

• (c) the referral or review request is not made within a period which (in all the circumstances) is reasonable after—

• (i) the customer was notified or otherwise informed of the supplier’s determination referred to in regulation 63(1)(a), or

• (ii) (as the case may be) the relevant decision was made.

Referrals in respect of disagreement between contract parties

63

• (1) Where, in relation to a supply contract, the customer disagrees with a determination made by the supplier in respect of a Part 2 or Part 4 matter—

• (a) the customer may, within a reasonable time after the supplier gave notice to or otherwise informed the customer of the determination, give notice to the supplier setting out what it disagrees with and explaining why it does;

• (b) following such notice the customer and the supplier must endeavour to resolve the disagreement, but this does not require or entitle the supplier to make any determination which is not consistent with these Regulations.

• (2) If the disagreement is resolved, the supplier shall, if such resolution so requires, redetermine the matter in question and give a revised notice to or otherwise inform the customer of such redetermination accordingly.

• (3) Subject to the exception in paragraph (3A), If the disagreement is not resolved within a reasonable time after the notice was given—

• (a) the supplier’s determination shall remain effective, and the relevant matter shall be determined on the basis of what is said in the notice, pending any determination pursuant to a reference under sub-paragraph (b);

• (b) the supplier or the customer may refer the matter for determination by the Secretary of State;

• (c) the Regulations shall apply in relation to the supply contract on the basis of the determination made by the Secretary of State and the contract parties shall comply with that determination.

• (3A) Where the disagreement is not resolved and the matter concerns a determination made by the supplier under or by virtue of regulations 19(3A) and (3B) or 39(1)(e) and (f)—

• (a) paragraph (3) does not apply, and

• (b) the supplier's determination remains effective.

• (4) The Secretary of State may decline to determine a matter referred under this regulation where the Secretary of State considers that the referral does not meet the applicable threshold, by giving notice to that effect to the contract parties setting out the reasons for so considering.

Power of the Secretary of State to make determinations

64

• (1) This regulation applies if the Secretary of State considers that, in relation to a supply contract—

• (a) a determination by the supplier of any Part 2 or Part 4 matter, or a declaration by the customer in respect of a Part 4 matter, is not in conformity with the Regulations or is otherwise incorrect, or

• (b) a determination by the supplier or declaration by the customer which should have been made in respect of a Part 2 or Part 4 matter has not been made.

• (2) Where this regulation applies the Secretary of State may determine the Part 2 or Part 4 matter in question by giving notice of such determination to the contract parties.

• (3) Before making a determination under this regulation the Secretary of State must—

• (a) give notice to the contract parties—

• (i) setting out the matter in question;

• (ii) setting out the reasons for which the Secretary of State proposes to make a determination;

• (iii) setting out the determination which the Secretary of State proposes to make;

• (iv) inviting the contract parties to make representations in respect of the proposal by a time specified in the notice;

• (b) consider any representations made and not withdrawn by either contract party by that time.

• (4) The Regulations apply, in relation to the supply contract, on the basis of the determination made by the Secretary of State and the contract parties must comply with that determination.

Review of decisions of the Secretary of State

65

• (1) A supplier or a customer may request the Secretary of State to review a determination made by the Secretary of State under regulation 63 or 64 in respect of a Part 2 or Part 4 matter.

• (2) A supplier may request the Secretary of State to review a Part 3 decision.

• (3) The Secretary of State may decline to review a relevant decision where the Secretary of State considers that the request does not meet the applicable threshold, by giving notice to that effect to the applicant setting out the Secretary of State’s reasons for so considering.

• (4) Except as provided in paragraph (3), upon receiving a review request, the Secretary of State must—

• (a) where the request relates to the determination of a Part 2 or Part 4 matter, give the other party a reasonable opportunity to submit its views on the determination;

• (b) reconsider the relevant decision;

• (c) give notice to the applicant and (where applicable) the other party of—

• (i) the outcome of the reconsideration (the “reconsidered decision”), and

• (ii) the reasons for the reconsidered decision.

• (5) The reconsidered decision is final and binding on the applicant and (where applicable) the other party, and a court may entertain proceedings for questioning the decision only if the proceedings are brought by a claim for judicial review.

Rules in relation to this Chapter

66

• (1) The Secretary of State must, no later than 14 days after the scheme introduction date, make rules setting out procedures for—

• (a) a supplier or customer to make a referral under regulation 63;

• (b) the Secretary of State to determine a matter referred under regulation 63;

• (c) the Secretary of State to determine a matter under regulation 64;

• (d) a supplier or customer to request a review under regulation 65(1);

• (e) a supplier to request a review under regulation 65(2);

• (f) the Secretary of State to reconsider a relevant decision under regulation 65.

• (2) The rules may specify—

• (a) time periods within which any step to be taken in respect of a referral or review request must be taken;

• (b) thresholds of materiality for the purposes of regulation 62(2)(b).

CHAPTER 5 — Enforcement

Supplier obligations enforceable as relevant requirements

67

• (1) The obligations of suppliers under the following provisions are enforceable by GEMA as if they were relevant requirements on a regulated person for the purposes of section 25 of the Electricity Act 1989¹⁸ or section 28 of the Gas Act 1986¹⁹—

• (a) Chapters 2 and 3 of Part 2;

• (b) Part 4;

• (c) Part 5;

• (d) Chapters 1, 2 and 3 of this Part.

• (2) Paragraph (1) applies in respect of a person which has ceased to hold an electricity supply licence or gas supply licence as described in regulation 4(3).

• (3) For the purposes of considering whether a supplier has contravened any obligation enforceable under paragraph (1), no—

• (a) determination of the Secretary of State under regulation 63 or 64;

• (b) reconsidered decision of the Secretary of State under regulation 65,

shall be called into question.

• (4) Where it appears to the Secretary of State that a supplier may be contravening, or may have contravened, any of the requirements referred to in paragraph (1) the Secretary of State may so inform GEMA.

Civil penalties for customers

68

• (1) A customer is liable to the civil penalty referred to in paragraph (4) where the customer fails to make a relevant declaration by the required time.

• (2) A customer is liable to the civil penalty referred to in paragraph (5) where the information in a relevant declaration made by the customer is defective.

• (3) But the customer is not liable—

• (a) to the civil penalty referred to in paragraph (4), if the customer demonstrates to the satisfaction of the Secretary of State that it had a reasonable excuse for failing to make the relevant declaration by the required time or (in the case of paragraphs (4)(b) and (c)) within the relevant period after the required time (but see paragraph 12);

• (b) to the civil penalty referred to in paragraph (5), if the customer demonstrates to the satisfaction of the Secretary of State that it took reasonable care to ensure that the information in the relevant declaration was not defective.

• (4) For the purposes of paragraph (1) the civil penalty is—

• (a) £1,000 for failure to make a relevant declaration by the required time;

• (b) an additional £1,000 for failure to make a relevant declaration within 28 days after the required time;

• (c) an additional civil penalty equal to 10 per cent of the default amount, for failure to make a relevant declaration within a further 30 days after that 28 days.

• (5) For the purposes of paragraph (2) the civil penalty is 10 per cent of the default amount.

• (6) If the Secretary of State considers that a customer is liable to the civil penalty referred to in paragraph (4) or (5) the Secretary of State must impose the civil penalty on the person by giving a notice (a “penalty notice”) to the customer.

• (7) The penalty notice must set out—

• (a) the grounds for liability;

• (b) the amount of the penalty;

• (c) the date by which the penalty must be paid (the “due date”), which must not be less than 28 days after the day on which the notice is given;

• (d) how payment may be made;

• (e) information about rights of appeal.

• (8) The customer to whom a penalty notice is given must pay the civil penalty set out in the notice as set out in the notice on or before the due date.

• (9) A civil penalty imposed by a penalty notice is recoverable by the Secretary of State as a civil debt.

• (10) A customer may appeal to the court against the imposition of a civil penalty.

• (11) In this regulation—

• (a) “default amount” means the amount by which the charges for energy supplied to the customer in the default period are increased as a result of the application of Part 4 following the making of the relevant declaration or the correction of the defective declaration;

• (b) in paragraph (a) the “default period” is the period between—

• (i) the required time or (as the case may be) the making of a defective declaration, and

• (ii) the time when the declaration was made or (as the case may be) a declaration which is not defective was made, or (if earlier) the end of the scheme period;

• (c) a declaration is “defective” where it is false or materially misleading or incomplete;

• (d) “penalty notice” has the meaning given in paragraph (5);

• (e) “relevant declaration” means a declaration required to be made by a customer under Part 4;

• (f) “required time” means the time by which, under the relevant provision of Part 4, a customer was required to make a relevant declaration.

• (12) For the purposes of paragraph (3)(a) it is not a reasonable excuse that a supplier did not inform the customer of a determination under regulation 38(2)(b) or 43(2)(b), or send a declaration under regulation 47(2).

CHAPTER 6 — Notices

Notices

69

• (1) Any notice or other communication to be given by the Secretary of State, a supplier or a customer under these Regulations must be given in writing.

• (2) Any notice to be given by the Secretary of State under the Regulations (unless it is to be given to a particular supplier or customer) may be given by the Secretary of State publishing the notice in such manner as the Secretary of State considers appropriate.

Signed

Graham Stuart — Minister of State for Climate — Department for Business, Energy and Industrial Strategy — 2022-10-27

Explanatory note

(This note is not part of the Regulations)

EXPLANATORY NOTE

These Regulations, which apply in Great Britain, establish the Energy Bill Relief Scheme for Non-Domestic Customers in Great Britain (“EBRS”). EBRS is a scheme for reducing the costs, to non-domestic customers, of being supplied with electricity or gas (“energy”) by a supplier that holds a supply licence under the Electricity Act 1989²⁰ or Gas Act 1986²¹.

The Regulations require suppliers to reduce, by amounts prescribed by the Secretary of State, the prices that they charge customers for energy during the “scheme period” (1st October 2022 to 31st March 2023). Suppliers are entitled to recover from the Secretary of State reductions made under Parts 2 and 4, but not under Part 5, of the Regulations.

Part 1 (introductory) defines key terms and parameters of EBRS. With certain exceptions, EBRS applies in respect of all contracts for the supply of electricity and gas by licensed suppliers to non-domestic customers during the scheme period. However, the detail of its application to any given contract (including how discounts are calculated) depends on how prices are set under it.

Part 2 (discounted supply price) sets out how the discounts that are to be applied by suppliers are to be calculated, based on wholesale energy prices. The Regulations set out how the figures to be used in calculating discounts are derived (regulations 10 and 11). A supplier must first assign each contract to the correct category (e.g. “fixed price contract”: see regulations 12 and 14 to 16) before calculating the applicable discount and providing it to the customer (regulations 17 to 20).

Part 3 (discount recovery) deals with the process by which each supplier is entitled to be paid by the Secretary of State an amount equal to the charges it has foregone in applying discounts under Part 2. In specified circumstances, the amount that a supplier receives in response to its claim for payment of an amount in respect of discounts is adjusted. Where such adjustments result in a negative sum, the customer must pay that sum (as a positive amount) to the Secretary of State. Amounts claimed by suppliers may be withheld in certain cases, for example where a supplier has acted dishonestly or failed to take proper measures to prevent fraud.

Part 4 (adjustment of discount or supply quantity in certain cases) makes provision to prevent suppliers or customers from deriving greater benefit from EBRS than is intended in certain scenarios. The Regulations provide for the benefits that customers and suppliers receive from the scheme to be reduced to take account of their entry into specified kinds of arrangements.

Part 5 provides for an additional reduction to be applied to the amounts payable for energy by a defined group of customers who are supplied under so-called “deemed” or “out-of-contract” contracts. Reductions applied under Part 5 are not recoverable from the Secretary of State.

Part 6 (further provisions) deals with a number of different matters. Regulation 55 prohibits unreasonable increases in suppliers’ charges and other changes adverse to the customer. Regulation 56 implies terms relating to the scheme into non-domestic supply contracts. Regulations 59 to 62 impose information and reporting obligations. Regulations 62 to 66 make provision about the resolution of disputes arising from the operation of the scheme. Regulation 67 provides that specified obligations of suppliers under the regulations are enforceable by the Gas and Electricity Markets Authority. Regulation 68 provides for the Secretary of State to impose civil penalties in respect of missing or defective declarations under Part 4.

A full impact assessment of the effect that this instrument will have on the costs of business and the voluntary sector is available from the Department for Business, Energy and Industrial Strategy at 1 Victoria Street, London, SW1H 0ET and is published with the Explanatory Memorandum alongside the instrument on www.legislation.gov.uk.

Footnotes

Editorial notes