Written Statements

Monday 31st October 2022 Written Statements

Monday 31 October 2022

Energy Support Package: Secondary Legislation

Monday 31st October 2022 Written Statements

[The Minister for Climate (Graham Stuart)]

The Energy Prices Act 2022 received Royal Assent on 25 October 2022. The Act establishes the legislative framework necessary to deliver the Government’s energy support package and will ensure that households and businesses receive the urgent support they need to help pay their energy bills this winter.

To ensure these crucial schemes are placed on a secure legislative footing, the Government are tabling a number of statutory instruments (SIs) using the powers in the Energy Prices Act. These SIs contain the detailed regulations necessary to deliver our support schemes. They are essential in ensuring that the entire energy support package can be delivered this winter. To ensure energy consumers receive the urgent support they require, we are laying the majority of these regulations using the made affirmative procedure.

The Energy Bill Relief Scheme Regulations 2022

These regulations, subject to the made affirmative procedure, make provisions for the effective operation and implementation of the energy bill relief scheme. The GB energy bill relief scheme is established under sections 9 and 10 of, and schedule 1 to, the Act. The regulations provide powers to the Secretary of State to require suppliers to discount business bills, to require regular reporting by suppliers, to request information from suppliers and customers, and to require an audit of the supplier in relation to the scheme. In addition, the regulations will enable Ofgem to enforce the obligations placed on licensed suppliers under the schemes. Additional details of the schemes will be set out in accompanying rules. Guidance will also be issued.

The Energy Bill Relief Scheme (Northern Ireland) Regulations 2022

These regulations, subject to the made affirmative procedure, make provisions for the effective operation and implementation of the energy bill relief scheme (Northern Ireland) which is established under sections 11 and 12 of, and schedule 2 to, the Act. The regulations provide powers to the Secretary of State to require suppliers to discount business bills, to require regular reporting by suppliers, to request information from suppliers and customers, and to require an audit of the supplier in relation to the scheme. In addition, the regulations will enable the Northern Ireland utility regulator UREGNI, to enforce the obligations placed on licensed suppliers under the schemes. Additional details of the schemes will be set out in accompanying rules. Guidance will also be issued.

The Energy Prices (Designated Domestic Energy Price Reduction Schemes for Great Britain and Designated Bodies) Regulations 2022

These regulations, subject to the negative procedure, designate the domestic electricity price reduction scheme and the domestic gas price reduction scheme in Great Britain (the energy price guarantee) under the Energy Prices Act 2022. The effect of designation is that the provisions in section 2 and section 3 of the Act apply, including obliging suppliers to apply to join the scheme and, when joined, to remain in and comply with it. Ofgem is empowered to enforce compliance with the obligations set out in sections 2 and 3 using its existing enforcement powers. The regulations also designate district councils for an area in England for which there is a county council as a designated body for the purposes of section 15 of the Act. The effect of designation is district councils can now take action to support steps taken by the Secretary of State to meet energy costs under section 13 of the Act.

The Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022

These regulations, subject to the made affirmative procedure, provide the definitions of “NI domestic electricity supply” and “NI domestic gas supply” for the purposes of reducing the charges for such supply under the domestic electricity/gas price reduction schemes for Northern Ireland (the energy price guarantee NI), made under section 5 of the Energy Prices Act 2022.

The Energy Bill Relief Scheme Pass-through Requirement (England and Wales and Scotland) Regulations 2022

These regulations, subject to the made affirmative procedure, will require defined intermediaries provided with the benefit of support from the energy bill relief scheme to pass on that benefit to end users. An example of an intermediary and an end user is a landlord and tenant. The regulations also require intermediaries to provide information to end users on the benefit provided to the intermediary and whether, and how much, they are required to pass on to the end user, including where relevant a justification of why the pass-through amount is just and reasonable. The regulations provide for the ways in which an intermediary can effect a pass-through, as well as the details of enforcement through civil proceedings should an intermediary fail to effect a pass-through.

The Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (England and Wales and Scotland) Regulations 2022

These regulations, subject to the made affirmative procedure, will require defined intermediaries provided with the benefit of support from the energy price guarantee, and/or the energy bills support scheme to pass on that benefit to end users. An example of an intermediary and an end user is a landlord and tenant. The regulations also require intermediaries to provide information to end users on the benefit provided to the intermediary and whether and how much they are required to pass on to the end user, including where relevant a justification of why the pass-through amount is just and reasonable. The regulations provide for the ways in which an intermediary can effect a pass-through, as well as the details of enforcement through civil proceedings should an intermediary fail to effect a pass-through.

The Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (England and Wales and Scotland) Regulations 2022

These regulations, subject to the made affirmative procedure, will require heat suppliers to pass through the cost reductions they receive via the energy bill relief scheme to their heat network customers and to explain to consumers their plans to reduce bills. The energy ombudsman will provide consumers with independent redress if heat suppliers do not comply with these requirements. The regulations also require heat suppliers to notify the Government (or an authorised person carrying out regulatory functions) of the address details of all the buildings supplied by a heat network. This will ensure that the energy ombudsman has access to a complete database of heat suppliers when investigating consumer complaints.

[HCWS349]

Bulb Energy Administration and Energy Bill Relief Scheme

Monday 31st October 2022 Written Statements

[The Secretary of State for Business, Energy and Industrial Strategy (Grant Shapps)]

I am today updating the House on the mergers and acquisition process for Bulb Energy Ltd (‘Bulb’) in special administration.

Bulb Energy Ltd (‘Bulb’) was taken into special administration by an order of the court on 24 November 2021. Ofgem applied to court, with the consent of my predecessor but one, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng), based on their determination that the special administration regime (SAR) was the most appropriate route for protecting Bulb’s circa l.5 million customers in the circumstances prevailing at that time—a recommendation which had subsequent BEIS accounting officer and ministerial concurrence.

The court appointed three individuals from Teneo Financial Advisory Ltd (‘Teneo’) as joint energy administrators and, following an application by Teneo, directed they enter into the circa £l.7 billion funding agreement with BEIS to support the achievement of their statutory objective of ensuring continuity of supply to Bulb’s customers at the lowest practicable cost until such time as the company may be rescued, or the business transferred to another company or companies. Bulb’s parent company, Simple Energy, was taken into “normal”—not special—administration on the same date by their secured creditors.

The energy administrators and their MSA advisers have delivered a competitive and extensive sales process over recent months, culminating in their recommendation to transact Octopus Energy’s bid as the optimal way to achieve their statutory objectives. Their recommendation has been reached after an extensive negotiation process to secure the best terms in the circumstances and detailed analysis of the counterfactual options, all of which show less favourable anticipated outcomes and carry significant operational and execution risks.

I have therefore approved the Octopus bid transaction and associated amendments to the existing funding facility and establishment of their new loan facility.

The BEIS-led consultation process on the energy transfer scheme (ETS) has commenced. Subject to Government approval, the energy administrators will arrange for a court hearing date for commencement of the ETS and to enable the completion of the transaction as all agreements take effect by mid-November.

Energy bill relief scheme (EBRS)

Vital businesses, charities, schools and hospitals up and down the country have seen an unprecedented rise in energy prices following Putin’s illegal war in Ukraine, and this new Government will take the difficult decisions when necessary to support our essential British businesses and public sector services. Support has already been introduced to help families with their energy bills this winter, and this new measure will help support growth, prevent unnecessary insolvencies and protect jobs.

The energy bill relief scheme (EBRS) will provide a price reduction for all eligible businesses and other non-domestic customers such as charities, schools and hospitals, who have recently experienced unprecedented rises in gas and electricity prices. The EBRS is a significant Government intervention reflecting the seriousness of the situation we face. It aims to support growth, prevent unnecessary insolvencies and protect jobs.

Subject to the will of Parliament, the price reduction will come into force at the beginning of November 2022 in time to cover energy consumed in October and will apply to the non-domestic customer’s actual gas and electricity consumption. It is intended to run for six months from 1 October 2022 until 31 March 2023. The price reduction will be linked to the wholesale element of a non-domestic customer’s gas and electricity bill. The actual price reduction received will vary depending on the contract type that a non-domestic customer is on, as well as the tariff and volume used. Government will reimburse suppliers in accordance with the scheme.

Funding for the EBRS will be sought through the estimates process. Any future costs for the delivery of the EBRS can only be projections and will depend upon energy usage levels and changes to the wholesale price of energy. As a result, the EBRS will give rise to an uncapped contingent liability. A review of the EBRS will be published after three months to assess effectiveness of the scheme and consider how support might be extended, further targeted, or revised beyond the initial six-month period for non-domestic customers most at risk from inflated energy prices. The Treasury-led review will determine support from April 2023—an update will be provided in due course.

I have laid before Parliament a Departmental minute describing contingent liabilities arising from the energy bill relief scheme (EBRS). It is normal practice when a Government Department proposes to undertake a contingent liability of £300,000 and above, for which there is no specific statutory authority, for the Department concerned to present Parliament with a minute giving particulars of the liability created and explaining the circumstances. If the liability is called, provision for any payment will be sought through the normal supply procedure.

I regret that due to the urgency of this scheme, I have not been able to follow the usual timelines for issuing notice at least 14 parliamentary sitting days before the liability begins to be incurred.

The Treasury has approved spending for this proposal in principle. I will continue to update Parliament on this scheme.

[HCWS348]