Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023

Lord Callanan Excerpts

Monday 30th January 2023 Grand Committee

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[Lord Callanan]

That the Grand Committee do consider the Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023.

Relevant document: 26th Report from the Secondary Legislation Scrutiny Committee (Instrument not yet reported by the Joint Committee on Statutory Instruments.)

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

My Lords, the Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023 were laid before the House on 11 January 2023.

Throughout this winter, the Government have responded rapidly to the unprecedented rise in energy prices. This includes introducing emergency legislation on energy support. The Government’s support package has protected and will continue to protect households and non-domestic consumers across the United Kingdom.

In December, the Government announced details of the merged delivery of the energy bills support scheme, EBSS, and alternative fuel payment, AFP, in Northern Ireland. Householders in Northern Ireland have already received or will soon receive £600 in a single payment for support with their energy bills. In recognition of the high prevalence of alternative fuel usage in Northern Ireland, the AFP will be delivered to all domestic households in Northern Ireland. The total of £600 is composed of £400 of EBSS, which provides support for the energy costs of all domestic households, and the AFP, which provides an additional £200 of support.

To deliver the scheme, in December the Secretary of State made a direction pursuant to Section 22 of the Energy Prices Act. This placed requirements on Northern Ireland electricity suppliers to provide this crucial support to households this winter. Delivery has commenced and households are already benefiting. We expect the vast majority of eligible households to have benefited by the end of February.

Turning to the pass-through requirements, these regulations will place a legal obligation on intermediaries to pass any benefits received through the schemes to end-users. This will help ensure that the energy support is received by the intended beneficiaries. These regulations have been created under the Energy Prices Act 2022. They are essential secondary legislation to fully implement the schemes.

The regulations are modelled on the pass-through requirements for other energy schemes, such as the EBSS in Great Britain. In that, we are not waiting for intermediaries to act on their own accord; we are legally requiring that they pass on the financial benefit to end-users.

An intermediary is any individual who is party to a domestic electricity contract, has a domestic electricity meter and is the recipient of government energy support. This group includes landlords. An end-user is an individual who consumes the energy and pays for this energy usage. This includes tenants. The regulations also outline when and how intermediaries should communicate with end-users about information regarding pass-through of benefit from the schemes.

The enforcement approach for EBSS AFP NI is consistent with other support such as the energy bills support scheme in Great Britain and the UK-wide energy price guarantee. Namely, if the intermediary does not pass on the benefit, the end-user could pursue recovery of the benefit as a debt through civil proceedings. Should a court rule in the end-user’s favour, they would be entitled to the payment plus interest. The interest is set at 2% above the Bank of England’s base rate.

The Government continue to ensure that the intermediaries and end-users are clear on their obligations and rights. In particular, we have published guidance on GOV.UK to help support intermediaries to discharge their obligations. There are also template letters to support tenants, should they wish to raise concerns with their landlords about their energy bills and the pass-through.

I thank the Secondary Legislation Scrutiny Committee for its view on these regulations. I have noted that its concerns remain the same as those it previously raised on the pass-through requirements of the energy bills support scheme in Great Britain. The committee’s concerns relate to the definition of “just and reasonable”, and to an “inequality of arms” and how that affects vulnerable groups.

The energy market is complex. There is a vast range of contracting structures relating to the supply, resale, provision and charging of energy. This means that there are many different circumstances for how energy can be consumed. That is why it continues to be important that the regulations can account for the numerous configurations of an intermediary/end-user relationship. It is highly risky to draw a narrow and limiting definition which could result in some intermediaries falling outside the pass-through requirements. By requiring landlords to pass on the financial benefit in a just and reasonable manner, end-users will be treated fairly and lawfully.

The fact that the regulations require intermediaries to pass on the amount in a just and reasonable manner means that situations where there could be an inequality of arms are also covered. For example, if a landlord owns multiple properties and receives the scheme benefit on them all, he or she must divide and allocate the amount among their end-users and inform them how they have calculated the financial benefit.

The committee’s other concern, about vulnerable groups, is of course valid. The Government are also making sure that all groups in scope of the pass-through regulations, including vulnerable groups, receive what they are entitled to through our engagement with those impacted. Over the past several months, we have engaged with consumer groups, landlords, housing associations and charities to disseminate communications and to underline the obligations placed on intermediaries and the rights of end-users. Our extensive engagement activities include organisations in Northern Ireland.

In conclusion, these regulations are essential to ensure the effectiveness of the energy bills support scheme and the alternative fuel payment Northern Ireland scheme and that the support reaches the people it is intended to help. Without the regulations, there would be a risk that intermediaries did not pass on the £600 benefit in a just and reasonable way, leaving some households in Northern Ireland exposed to high energy costs. I therefore commend the regulations to the Committee.

[Lord Teverson (LD)]

My Lords, I thank the Minister for going through yet another of these SIs. I am sure he will not mind if I ask him some just and reasonable questions about it.

First, I note that the measure came into force on 12 January, so it is already in place. Obviously, it is administered, to a degree, by the energy companies, but who is policing it? Is it the Northern Ireland civil servants, or is it BEIS directly? I would be interested to understand that. If it is Northern Ireland officials, are we confident that sufficient management governance will take place from here?

I welcome that the Government and the department have spoken at length to consumer organisations in Northern Ireland. I am interested to understand whether there have been any complaints yet of end-users not receiving this when they feel that they should have, to get some idea of how well it is working.

The Minister talked about the method of civil law, and having fines—plus, generously, an interest-rate benefit if people manage to get through a whole court process. We have said before that it is very unlikely that much of that would happen, but, if an intermediary ignored the need under this legislation to pass on those payments, would the Government have the ability to prosecute that person? I can imagine there being a certain number of landlords who will just think, “No one’s looking at me, there’s not a lot of publicity about this, I’ll just keep the money”. I would be interested to understand whether there is, at the end of the day, a criminal long-stop prosecution ability in terms of fraud and so on. Also, will the Minister say how many more SIs around these schemes are still to come?

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[Lord Callanan (Con)]

I thank the noble Lords, Lord Teverson and Lord Lennie, for their comments. I guess they do not disagree with the principle, but nevertheless had some notable questions which I will address in a second.

These regulations are critical to the successful implementation of the energy bills support scheme and alternative fuel payment in Northern Ireland. The Government’s focus has been on delivering this support to those who need it in Northern Ireland. That is why we focused on creating a delivery mechanism which could be rapidly implemented this winter and allow consumers to feel the benefit immediately, which is quite a challenge in government. This includes combining the support from two schemes into a single payment. Now that delivery has commenced, more than 800,000 households in Northern Ireland will benefit from this support. This comes on top of support households in Northern Ireland have received and will continue to receive through the energy price guarantee.

Spearheaded by the energy bills relief scheme and energy price guarantee reviews, the Government are considering the broader energy affordability landscape. Naturally, our considerations will include the needs of those in Northern Ireland.