Explanatory note
England, Wales and Scotland
(This note is not part of the Regulations)
These Regulations make provision for the establishment and operation of reconciliation mechanisms for the purposes of the Warm Home Discount (England and Wales) Scheme and the Warm Home Discount (Scotland) Scheme (each a “Scheme”). The Schemes are made by the Warm Home Discount (Scotland) Regulations 2022 and the Warm Home Discount (England and Wales) Regulations 2022 (the “Scheme Regulations”). The Scheme Regulations place obligations on electricity suppliers to incur spending in each scheme year (as defined in regulation 3(1) of each of the Scheme Regulations) on the provision of benefits, including rebates, to customers in or at risk of fuel poverty.
The reconciliation mechanisms provide for payments to be made to, or by, each electricity supplier that provides rebates to customers (“core group customers”) as specified in rebate notices given by the Secretary of State under Part 3 of each of the Scheme Regulations, so that the cost to each electricity supplier of providing rebates to core group customers is proportionate to its market share.
Part 1 contains general interpretation provisions.
Part 2 makes provision for the reconciliation mechanism in relation to the Warm Home Discount (England and Wales) Scheme—
Chapter 1 provides for the determination of the market share of each scheme electricity supplier. A “scheme electricity supplier” is a licensed electricity supplier that is required to participate in the Scheme or has been approved by the Gas and Electricity Markets Authority (the “Authority”) as a voluntary participant (and the expression is defined in regulation 3(1) of each of the Scheme Regulations).
Chapter 2 provides for interim reconciliations to be carried out during the scheme year, under which each scheme electricity supplier will make or receive a payment on account of its liability or entitlement for that year.
Chapter 3 provides for the final reconciliation to be carried out after the end of each scheme year.
Chapter 4 makes provision about payments. These set out how and when payments are to be made by scheme electricity suppliers or the Authority. Provision is also made for the adjustment of liability or entitlement to payments where a scheme electricity supplier defaults on making a payment or the supplier’s electricity supply licence is terminated. Provision is also made for interest payments and for the correction of errors.
Part 3 makes provision for the reconciliation mechanism in relation to the Warm Home Discount (Scotland) Scheme.
Part 4 enables the Authority to set-off payments to be made to scheme electricity suppliers against payments to be made by the scheme electricity supplier.
A full impact assessment has not been produced for this instrument. An analysis of the effect of each of the Schemes on the costs of business and the public sector has been produced and is available alongside the Scheme Regulations on www.legislation.gov.uk. Paper copies can be obtained from the Warm Home Discount Team, Department for Business, Energy and Industrial Strategy, 1 Victoria Street, London SW1H 0ET.