The Warm Home Discount (Reconciliation) Regulations 2022

Made: at 11.24 a.m. on 9th November 2022

Laid before Parliament: at 4.00 p.m. on 9th November 2022

Coming into force: 30th November 2022

In accordance with section 14(1) of the Energy Act 2010, the Secretary of State has consulted the Gas and Electricity Markets Authority, licensed electricity suppliers, licensed gas suppliers and such other persons as the Secretary of State thinks appropriate[^f00002].

PART 1 — Introductory

Citation, commencement and extent

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• (1) These Regulations may be cited as the Warm Home Discount (Reconciliation) Regulations 2022.

• (2) These Regulations come into force on 30th November 2022.

• (3) These Regulations extend to England and Wales and Scotland.

Interpretation: general

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In these Regulations—

• “England & Wales Scheme Regulations” means the Warm Home Discount (England and Wales) Regulations 2022[^f00003];

• “Scotland Scheme Regulations” means the Warm Home Discount (Scotland) Regulations 2022[^f00004].

PART 2 — Reconciliation Mechanism: England & Wales Scheme Regulations

CHAPTER 1 — Introductory

Part 2: Interpretation

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• (1) In this Part—

• “Bank of England base rate” means— the percentage rate announced from time to time by the Monetary Policy Committee of the Bank of England as the official dealing rate, being the rate at which the Bank is willing to enter into transactions for providing short term liquidity in the money markets; or where an order under section 19 of the Bank of England Act 1998[^f00005] is in force, any equivalent percentage rate determined by the Treasury under that section;

• “calculation date” has the meaning given in regulation 4(7);

• “final reconciliation” means the calculation by the Authority[^f00006] of the amounts to be paid by, or received by, scheme electricity suppliers as final reconciliation payments for a scheme year;

• “final reconciliation payment” has the meaning given in regulation 10(1);

• “interim reconciliation” has the meaning given in regulation 6(2);

• “interim reconciliation direction” has the meaning given in regulation 6(3);

• “interim reconciliation payment” has the meaning given in regulation 7(1);

• “interim reconciliation period” has the meaning given in regulation 6(5);

• “reconciliation payment” means— an interim reconciliation payment; or a final reconciliation payment;

• “reporting date” has the meaning given in regulation 4(7);

• “working day” means any day other than a Saturday or Sunday or a day which is a bank holiday or public holiday in England and Wales or in Scotland.

• (2) In this Part the following expressions have the same meanings as in the England & Wales Scheme Regulations[^f00007]—

• “core group customer”;

• “GB domestic customer”;

• “scheme electricity supplier”;

• “scheme gas supplier”;

• “scheme year” and “scheme year” followed by a number.

Notification of GB domestic customer numbers: scheme years 13 to 15

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• (1) For each of scheme years 13 to 15, the Secretary of State may give a notice to the Authority specifying as a calculation date for the scheme year, a date falling—

• (a) no more than two months before the start of the scheme year; and

• (b) at least two months before the end of the scheme year.

• (2) If the Authority is given a notice under paragraph (1), the Authority must give a notice to all relevant suppliers—

• (a) stating the calculation date; and

• (b) specifying a reporting date, which must be a date falling—

• (i) within the scheme year;

• (ii) at least one month after the calculation date; and

• (iii) more than 14 days after the day on which the notice is given to all relevant suppliers.

• (3) A relevant supplier who is given a notice under paragraph (2) must notify the Authority on or before the reporting date of the supplier’s number of GB domestic customers on the calculation date.

• (4) If a relevant supplier does not notify the Authority in accordance with paragraph (3), the Authority must determine the number of the supplier’s GB domestic customers on the calculation date.

• (5) For the purposes of paragraphs (3) and (4), a relevant supplier’s number of GB domestic customers on the calculation date is the number of GB domestic customers to whom the supplier supplies—

• (a) electricity (other than as part of the supply of dual fuel);

• (b) gas (other than as part of the supply of dual fuel); and

• (c) dual fuel,

on that date.

• (6) For the purposes of paragraph (5)—

• (a) “dual fuel” means electricity and gas, where both are supplied to a GB domestic customer at the same domestic premises by a person who is both a licensed electricity supplier and a licensed gas supplier;

• (b) a supply of dual fuel to a GB domestic customer is to be treated as a supply to two GB domestic customers.

• (7) In this regulation—

• “calculation date”, in relation to a scheme year, means a date specified as a calculation date for the scheme year in a notice given by the Secretary of State under paragraph (1);

• “relevant supplier” means— a scheme electricity supplier; or a scheme gas supplier;

• “reporting date”, in relation to a scheme year, means a date falling within the scheme year and specified as a reporting date in a notice given by the Authority under paragraph (2).

Determination of market share for scheme electricity suppliers

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• (1) The Authority must—

• (a) in relation to each scheme year, determine the market share of each scheme electricity supplier on 31st December preceding the start of the scheme year; and

• (b) where the Secretary of State has given a notice under regulation 4(1) specifying a calculation date for the scheme year, determine the market share of each scheme electricity supplier on the calculation date.

• (2) The Authority must make the determination—

• (a) under paragraph (1)(a), as soon as is reasonably practicable after the start of the scheme year;

• (b) under paragraph (1)(b), as soon as is reasonably practicable after the reporting date for the scheme year.

• (3) The market share of a scheme electricity supplier (“E”) is calculated as follows—

$$XY×100%$ where— “X” is the relevant number of GB domestic customers; and “Y” is the total number of GB domestic customers of— all scheme electricity suppliers; and all scheme gas suppliers.$

• (4) For the purposes of paragraph (3)(a), the relevant number of GB domestic customers is—

• (a) if E is connected to one or more scheme gas suppliers but is not connected to any other scheme electricity suppliers, the total number of GB domestic customers of—

• (i) E; and

• (ii) E’s connected scheme gas suppliers;

• (b) if E is connected to one or more scheme gas suppliers and to one or more other scheme electricity suppliers, a number equal to E% of (CE + CG) where—

• (i) “E%” is E’s number of GB domestic customers as a percentage of CE;

• (ii) “CE” is the total number of GB domestic customers of—

• (aa) E; and

• (bb) E’s connected scheme electricity suppliers;

• (iii) “CG” is the number of GB domestic customers of E’s connected scheme gas suppliers;

• (c) otherwise, E’s number of GB domestic customers.

• (5) For the purposes of paragraphs (3) and (4)—

• (a) a reference to a supplier’s number of GB domestic customers is a reference to the supplier’s number of GB domestic customers—

• (i) in relation to a determination under paragraph (1)(a), on 31st December preceding the start of the scheme year as notified, or treated as notified, to the Authority by the supplier under regulation 5(1) of the England & Wales Scheme Regulations, or, as the case may be, determined by the Authority under regulation 5(3) of those Regulations;

• (ii) in relation to a determination under paragraph (1)(b), on the calculation date for the scheme year as notified to the Authority by the supplier under regulation 4(3) of these Regulations or, as the case may be, determined by the Authority under regulation 4(4);

• (b) a supplier is to be treated as connected to another supplier only if they both belonged to the same group of companies on 31st December preceding the start of the scheme year.

• (6) For the purposes of paragraph 5(b) “group of companies” has the meaning given in regulation 3(1) of the England & Wales Scheme Regulations.

CHAPTER 2 — Interim reconciliation

Direction to carry out interim reconciliation

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• (1) The Secretary of State may direct the Authority to carry out an interim reconciliation for a scheme year or any part of a scheme year.

• (2) An interim reconciliation is a calculation of the amounts to be paid by, or received by, scheme electricity suppliers on account of final reconciliation payments for the scheme year.

• (3) A direction under paragraph (1) (an “interim reconciliation direction”) may be given at any time—

• (a) after the Secretary of State has given a rebate notice in the scheme year under regulation 8(1) of the England & Wales Scheme Regulations; but

• (b) before the Authority has notified scheme electricity suppliers in relation to that scheme year under regulation 8 of these Regulations.

• (4) The Secretary of State may give more than one interim reconciliation direction to the Authority in relation to different parts of the scheme year.

• (5) An interim reconciliation direction must specify the period to which it relates (the “interim reconciliation period”).

• (6) The interim reconciliation period specified must end on or before the date on which the interim reconciliation direction is given.

• (7) If the Secretary of State gives an interim reconciliation direction to the Authority, the Secretary of State must—

• (a) notify the Authority of—

• (i) the number of eligible domestic customers of each scheme electricity supplier; and

• (ii) the total number of eligible domestic customers of all scheme electricity suppliers,

to be used for the purposes of calculating interim reconciliation payments; and

• (b) notify each scheme electricity supplier of—

• (i) the interim reconciliation direction;

• (ii) the interim reconciliation period;

• (iii) the number of eligible domestic customers of the supplier notified to the Authority under sub-paragraph (a)(i); and

• (iv) the total number of eligible domestic customers notified to the Authority under sub-paragraph (a)(ii).

• (8) For the purposes of paragraph (7), the number of eligible domestic customers of a scheme electricity supplier is A – B where—

• (a) “A” is the number of persons that are specified in rebate notices given to the supplier under regulation 8(1) of the England & Wales Scheme Regulations during the interim reconciliation period; and

• (b) “B” is the number of persons the supplier has notified to the Secretary of State during the interim reconciliation period in accordance with regulation 12(5) of the England & Wales Scheme Regulations—

• (i) as not being core group customers; or

• (ii) whom the supplier is unable to identify as core group customers.

Calculation of interim reconciliation payments

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• (1) If the Authority is given an interim reconciliation direction in accordance with regulation 6, it must calculate the amount (the “interim reconciliation payment”) to be paid or received by each scheme electricity supplier in accordance with this regulation.

• (2) If the amount of interim liability of a scheme electricity supplier (“E”) for the interim reconciliation period exceeds the amount of E’s market share liability for that period, E is entitled to receive an interim reconciliation payment equal to the difference between those two amounts.

• (3) If E’s amount of interim liability for the interim reconciliation period is less than the amount of E’s market share liability for that period, E must make an interim reconciliation payment equal to the difference between those two amounts.

• (4) For the purposes of paragraphs (2) and (3)—

• (a) a scheme electricity supplier’s interim liability for a period is £150 × N, where “N” is the number of eligible domestic customers of that supplier notified to the Authority under regulation 6(7)(a)(i) for the purpose of calculating the interim reconciliation payment;

• (b) a scheme electricity supplier’s market share liability for a period is £150 × (M% of T), where—

• (i) “M%” is the supplier’s latest market share for the relevant scheme year; and

• (ii) “T” is the total number of eligible domestic customers notified to the Authority under regulation 6(7)(a)(ii) for the purpose of calculating the interim reconciliation payment.

• (5) In this regulation—

• “latest market share”, in relation to a scheme electricity supplier and a relevant scheme year, means the most recent of any of the following determinations or recalculations of the supplier’s market share made by the Authority before the relevant date— a determination under regulation 5(1)(a) of the supplier’s market share on 31st December preceding the start of the relevant scheme year; a determination under regulation 5(1)(b) of the supplier’s market share on a calculation date for the relevant scheme year; a recalculation under regulation 13(4) of the supplier’s market share for the relevant scheme year;

• “relevant date” means the date on which the Authority makes the calculation referred to in paragraph (1);

• “relevant scheme year” means the scheme year for which, or for part of which, the interim reconciliation is carried out.

CHAPTER 3 — Final reconciliation

Notification of amounts of rebates provided

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As soon as is reasonably practicable after the end of a scheme year, the Authority must notify each scheme electricity supplier of—

• (a) the total amount of rebates provided, or treated as being provided, to core group customers in the scheme year by the scheme electricity supplier (as determined in accordance with regulation 27(1)(a) of the England & Wales Scheme Regulations); and

• (b) the sum of the amounts so determined for all scheme electricity suppliers.

Estimate of the number of undelivered rebates

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• (1) This regulation applies where a scheme electricity supplier has not complied with regulation 12(8) of the England & Wales Scheme Regulations in relation to a scheme year.

• (2) The Authority must estimate the number of undelivered rebates—

• (a) provided by the scheme electricity supplier in the scheme year; or

• (b) treated as being provided by the supplier in the scheme year by virtue of regulation 10(6)(b) of the England & Wales Scheme Regulations.

• (3) In this regulation—

• “prescribed rebate” has the meaning given in regulation 3(1) of the England & Wales Scheme Regulations;

• “undelivered rebate” means a prescribed rebate provided by a scheme electricity supplier under Part 3 of the England & Wales Scheme Regulations, where the rebate was— provided to a customer by tendering payment of the amount of the prescribed rebate to the customer, but the customer has not accepted that payment; or provided to a customer who pre-pays for electricity or gas with credit in the amount of the prescribed rebate against the cost of future electricity or gas use, but the customer has not accepted that credit.

Calculation of final reconciliation payments

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• (1) The Authority must calculate, in relation to each scheme year, the amount (the “final reconciliation payment”) to be received or paid by each scheme electricity supplier in accordance with this regulation.

• (2) The calculation referred to in paragraph (1) must be made as soon as is reasonably practicable after—

• (a) the Authority has given a notification to each scheme electricity supplier under regulation 8; and

• (b) either—

• (i) each supplier has complied with regulation 12(8) of the England & Wales Scheme Regulations; or

• (ii) the Authority has made an estimate under regulation 9(2) of these Regulations in respect of each supplier who has not so complied.

• (3) If the adjusted contribution of a scheme electricity supplier (“E”) for the scheme year exceeds E’s market share contribution for the scheme year, E is entitled to receive a final reconciliation payment equal to the difference between those two amounts.

• (4) If E’s adjusted contribution for the scheme year is less than E’s market share contribution for the scheme year, E must make a final reconciliation payment equal to the difference between those two amounts.

• (5) For the purposes of paragraphs (3) and (4)—

• (a) a scheme electricity supplier’s adjusted contribution for a scheme year is the supplier’s actual contribution for the scheme year adjusted by—

• (i) adding the amounts of any interim reconciliation payments for the scheme year made by the supplier; and

• (ii) subtracting the amounts of any interim reconciliation payments for the scheme year received by the supplier;

• (b) a scheme electricity supplier’s market share contribution for a scheme year is M% of the aggregate amount of delivered rebates for the scheme year , where “M%” is the supplier’s latest market share for the scheme year.

• (6) For the purposes of paragraph (5)(a), a scheme electricity supplier’s actual contribution for a scheme year is—