Energy Bill Relief Scheme (Non-Standard Cases) Regulations 2023

Monday 30th January 2023 Grand Committee

Considered in Grand Committee

16:07

Moved by

[Lord Callanan]

That the Grand Committee do consider the Energy Bill Relief Scheme (Non-Standard Cases) Regulations 2023.

Relevant document: 26th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I beg to move that the Energy Bill Relief Scheme (Non-Standard Cases) Regulations 2023, which were laid before the House on 11 January, be approved.

The EBRS regulations require licensed suppliers to discount their prices for the supply of electricity and gas to non-domestic consumers. Licensed suppliers provide the vast majority of electricity and gas supplied to non-domestic customers but some UK businesses do not receive their energy in this way. The Energy Prices Act 2022 allows us to provide financial assistance for energy costs using non-legislative schemes. On 9 January 2023, the EBRS non-standard customers scheme opened for applications. This is a grant scheme that allows payments to be made to those non-domestic customers who receive an unlicensed supply of electricity or gas that has been drawn from the public electricity or gas grid over the period from 1 October 2022 to 31 March 2023. The regulations we are discussing today are ancillary to the non-standard customers scheme.

The businesses eligible to benefit from the scheme include energy-intensive critical national infrastructure. They have been exposed to high energy costs in the same way as those who have benefited from discounts under the EBRS regulations. The scheme enables them to receive relief at a level comparable to the customers of licensed suppliers. We expect businesses to begin receiving support under the scheme this month; this will be applied retrospectively. The EBRS non-standard cases regulations are essential secondary legislation needed to support the operation and delivery of the EBRS non-standard cases scheme. I pay tribute to the work of the Secondary Legislation Scrutiny Committee for reviewing these regulations and note that it has no comments.

Let me turn now to the detail of the regulations for the benefit of the Committee. Identifying who is eligible to receive payments under the scheme is not always straightforward. The regulations provide the Secretary of State with powers to obtain information from those involved in the often quite complex supply chains through which this energy flows, so that we can be sure that the right businesses are admitted to and benefit from the scheme. They imply some terms into the contracts between those involved in these supply chains to help the scheme work more smoothly.

Finally, as in the case of all the schemes put in place under the Act, they provide for certain intermediary businesses—again, often landlords—that receive a benefit under the scheme but which in turn provide energy to others, often in another form, such as heat, and pass a fair share of the benefit that they receive on to their end-users. The regulations also make provisions for pass-through requirements. The energy provider must calculate and pass through a just and reasonable amount of the benefit to end-users as soon as reasonably practicable.

These regulations set out the information which relevant intermediaries are required to provide end-users about the scheme benefit, including the amount and supporting details about how they have calculated this in a just and reasonable manner. Where the energy provider fails to effect a pass-through, the amounts are recoverable from the energy provider by the customer as a civil debt.

To accompany the regulations, we have published a suite of scheme terms and non-statutory guidance, which provides further detail on how the scheme for non-standard cases works. Given the urgency of ensuring that organisations receive the support they need this winter, we have not launched a formal consultation. Instead, we launched a call for evidence on 17 November requesting examples from organisations that are unable to access the EBRS because they are non-licensed suppliers of energy or supply energy to businesses in non-standard ways.

We have also had informal consultation with energy providers, and their energy-intensive customers, on the scheme terms and guidance. My department will continue to monitor this instrument following its implementation, including any feedback from stakeholders, and will of course review as necessary.

Support delivered through the scheme provides relief on the wholesale element of customers’ gas and electricity bills. Customers eligible for support under the scheme are exposed—sometimes very exposed—to high energy costs. In some cases, relief from those costs may well help to avoid firm closures and potential redundancies. More broadly, by reducing industry’s energy costs, the scheme should support economic growth and limit inflation.

In conclusion, the EBRS non-standard customers are a source of critical support for non-domestic customers in the UK, particularly those in energy-intensive industries, many of which are essential to our national infrastructure. I emphasise that the measures in these regulations are crucial for the effective operation of the non-standard cases scheme. The scheme complements the existing large-scale support that the Government are providing during the energy crisis. On that basis, I hope that noble Lords will support these measures and their objectives and I commend these regulations to the Committee.

[Lord Teverson (LD)]

My Lords, again, this instrument came into force on 12 January and we are now more or less into February. Can the Minister remind us when the scheme ends, because we must be getting quite close to that?

I have only one question on this, and I will not ask the one about prosecution, because these are large amounts of money; I would have thought it was more important. According to the Explanatory Note on page 11,

“Regulations 3 and 4 provide the Secretary of State with a power to obtain information about the supply of gas or electricity to persons who are or may be eligible for assistance under the Scheme.”


I am interested in whether the Minister’s officials have done that, and how they found it.

[Lord Lennie (Lab)]

My Lords, this requires energy providers to share information with the Government, such as meter readings and contract agreements, to allow BEIS to ensure that appropriate relief can be passed on to businesses that are not eligible for the energy bill relief scheme because their energy is supplied by the grid, not from a licensed supplier. The current energy bill relief scheme, announced in September, comes to an end in March 2023. It supports businesses and public sector organisations such as schools and hospitals, and so on, by providing the discount on wholesale gas and electricity prices.

First, this instrument applies only until March 2023; it has been in effect since September without this information. How much relief has not gone to the relevant businesses in this time period? What impact will this error have had on these businesses and how long will it take the Government to gather this information, analyse it and enact the required changes?

The Government have announced a new energy bills discount scheme, the EBDS, from April 2023 to April 2024 for eligible non-domestic customers in Great Britain and Northern Ireland. Is the error that occurred in the original scheme now fixed so that, from day one, the EBDS will be fully effective?

16:15

For customers to benefit from the scheme, they and the energy they consume must meet certain criteria, and the supply chains by which the energy is provided to customers often involve different numbers of parties. In any given case, to establish a party’s eligibility to benefit from the scheme or otherwise to ensure that it is operating as intended, the Secretary of State may need to obtain information from third parties which are involved in the supply chains but are not parties to a scheme agreement. The instrument also implies terms in certain contracts connected with the provision of energy to persons who may or may not be eligible for assistance under the scheme to ensure that the scheme’s operation and the information provisions in Part 2 are not obstructed by existing provision, or the lack of it, in those contracts.

In the end, as we said on the previous instrument, it is about the intermediaries and their willingness. The vast majority of intermediaries are good, honest people who will follow the regulations; we are looking to discover the occasional one who will not and find the appropriate means of dealing with them. All that is offered is that the individuals can be taken to the civil courts and fined. That does not seem to be a disincentive to the intermediary doing what he had already planned to do—keep the discount for himself rather than passing it on to the end-users.

[Lord Teverson (LD)]

They are not even fined; they just get the money back plus the interest.

[Lord Lennie (Lab)]

I agree; there is no penalty at all. They just have to pay back the money to the individual that they should have paid in the first place, plus a bit of additional assistance.

[Lord Callanan (Con)]

I again thank the noble Lords, Lord Teverson and Lord Lennie, for their contributions. As both noble Lords have said, the EBRS Great Britain and Northern Ireland regulations are already in force and delivering support to organisations across the United Kingdom. However, the Government have responded to the concerns of stakeholders to ensure that a further group of non-domestic energy consumers, including some critical to national infrastructure, can also receive support to avoid decreases in production or, even worse, the closure of some businesses. These regulations are essential secondary legislation which is needed to support the delivery and operation of the EBRS non-standard scheme.

The Government remain committed to taking decisive action during this energy crisis to assist the widest possible range of consumers. As well as providing immediate assistance, this relief will support economic growth and limit inflation caused by increasing energy bills and their knock-on impacts on prices, labour, goods and services. We are confident that providing relief via the non-standard cases scheme will help mitigate the risks of closures and redundancies among eligible businesses and ensure that they can continue to operate.

The scheme has been designed to operate robustly and guard against fraud, error and gaming. We will continue to monitor it to ensure that this support is provided to the businesses it is designed to help. The Government remain committed to ensuring that consumers receive help with the rising cost of energy. The regulations are vital in ensuring that support is delivered to those businesses.

I turn to the questions asked by both noble Lords. The noble Lord, Lord Teverson, asked whether the scheme will run for the same period as the standard EBRS. Yes, it runs from 1 October to 31 March. He also asked about passing information to the Secretary of State—whether the department has done this and how it found it. So far, we have found that energy suppliers are providing the information we require to support their claims in a timely manner, which ultimately supports their own customers and end-users.

The noble Lord, Lord Lennie, asked why it applies only until March 2023; that is, the same finishing date as the existing EBDS. Of course, there are substantial costs on the Exchequer. I am sure the Chancellor keeps all these things under review, but at the moment, the scheme ends at that point. The noble Lord also asked whether the EBDS will be fully effective after the EBRS is ended. I assure him that many civil servants in my department are working to ensure that that is exactly the case and that there is a smooth transition between the two schemes.

The noble Lord also asked whether a mistake has been rectified with EBRS. It was not a mistake. We identified that there was a group of businesses supplied with energy by unlicensed suppliers and we have set up this scheme to provide support for those businesses which did not benefit when others benefited because they receive their energy through licensed suppliers. We stood up the scheme as quickly as we possibly could, given all the demands that have been placed on the department from all the other schemes as well.

In response to the noble Lord’s questions about intermediaries, we believe that in those cases, energy providers are working closely with their end-customers to ensure that they are all offered support. Of course, in many cases, these are very big businesses, and we have direct communication with many of the end-customers. Normally, we do not have a problem making sure they realise their eligibility, but we are of course seeking to provide as much information as possible to ensure that they are aware of their rights—although, in those cases, I am sure they are well aware of them themselves.

I think I have dealt with the questions from both noble Lords, and I therefore commend the regulations to the Committee.

Motion agreed.